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0	What is considered a business expense on a business trip?	[ { "id": "18850", "score": 0.7595993280410767, "text": "The IRS Guidance pertaining to the subject. In general the best I can say is your business expense may be deductible. But it depends on the circumstances and what it is you want to deduct. Travel Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses. Taxpayers are considered “traveling away from home” if their duties require them to be away from home substantially longer than an ordinary day’s work and they need to sleep or rest to meet the demands of their work. The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced record keeping requirements. Regardless of the method used, meal deductions are generally limited to 50 percent as stated earlier. Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation. Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable. More information is available in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Entertainment Expenses for entertaining clients, customers or employees may be deducted if they are both ordinary and necessary and meet one of the following tests: Directly-related test: The main purpose of the entertainment activity is the conduct of business, business was actually conducted during the activity and the taxpayer had more than a general expectation of getting income or some other specific business benefit at some future time. Associated test: The entertainment was associated with the active conduct of the taxpayer’s trade or business and occurred directly before or after a substantial business discussion. Publication 463 provides more extensive explanation of these tests as well as other limitations and requirements for deducting entertainment expenses. Gifts Taxpayers may deduct some or all of the cost of gifts given in the course of their trade or business. In general, the deduction is limited to $25 for gifts given directly or indirectly to any one person during the tax year. More discussion of the rules and limitations can be found in Publication 463. If your LLC reimburses you for expenses outside of this guidance it should be treated as Income for tax purposes. Edit for Meal Expenses: Amount of standard meal allowance. The standard meal allowance is the federal M&IE rate. For travel in 2010, the rate for most small localities in the United States is $46 a day. Source IRS P463 Alternately you could reimburse at a per diem rate" } ]	[ { "id": "562777", "score": 0.7200203537940979, "text": "There is no law that requires you to have a separate bank account for your business, or to pay all expenses from a business bank account. It is a GOOD IDEA to have a separate bank account and pay all business expenses from that account and all personal expenses from your personal account, because that makes sorting out what is what much simpler, both in case of an audit and for your own accounting. Whether a particular expenditure is a deductible business expense has nothing to do with what account you pay it from. If you pay advertising expenses for your business from your personal account, that's still (almost certainly) a deductible business expense. If you buy groceries from your business account, that's almost certainly not a deductible business expense. In your case, there are all kinds of rules about when and how much travel is deductible.", "topk_rank": 0 }, { "id": "328853", "score": 0.7161737084388733, "text": "Its best you start this venture as a Business entity. Whatever the customer pays you is your income. Whatever you pay to the hotel will be your expenses. Apart from this there will be other expenses. So essentially difference between your income and expense will be the profit of the entity and tax will be on the profit. If you do not want to start an Business entity and pay as an individual then please add the country tag, depending on the country there may different ways to account for the funds.", "topk_rank": 1 }, { "id": "421301", "score": 0.7137573957443237, "text": "\"Worksheets/ Documentation: (From my experience filing my business deductions through several tax preparers.) Keep all your calculations, but only submit the calculations and worksheets requested by the tax form. Most travel deductions are just a category total. If the IRS wants more info, it will ask for it. Information from the book Home Business Tax Deductions (from Nolo) (2012): Traveling with kids: In chapter 9 (\"\"Leaving Town: Business Travel\"\"), in the section \"\"Taking People With You\"\", it specifically discusses your situation. Paraphrasing, it says that you can deduct the amount any eligible expenses would have cost you if you were traveling without your kids. So, you can deduct the cost the smaller hotel room that you and your wife would have normally rented if you were alone. How your side trips affect your business deductions: According to the book, since you spent 50% or more of your time on business activities while traveling in the U.S.: Deducting meals shared with your kids: You can deduct meals as either entertainment or travel expenses. I would recommend you buy one of Nolo's books on deductions, as it goes into much more detail than I do here.\"", "topk_rank": 2 }, { "id": "351169", "score": 0.7110323309898376, "text": "I think you can. I went to Mexico for business and the company paid for it, so if you are self employed you should be able to expense it.", "topk_rank": 3 }, { "id": "540395", "score": 0.706842303276062, "text": "Alright, IRS Publication 463: Travel, Entertainment, Gift, and Car Expenses Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose. Example. You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense Obviously nothing helpful in the code. So I would use option 1, weight the maintenance-related mileage by the proportion of business use. Although if you use your car for business a lot (and perhaps have a spouse with a car), an argument could be made for 3. So I would consider my odds of being audited (even lower this year due to IRS budget cuts) and choose 1 or 3. And of course never throw anything away until you're room temperature.", "topk_rank": 4 }, { "id": "447231", "score": 0.704039990901947, "text": "You don't say what country you live in. If it's the U.S., the IRS has very specific rules for business use of a car. See, for starters at least, http://www.irs.gov/publications/p463/ch04.html. The gist of it is: If you use the car 100% for business purposes, you NEVER use it to drive to the grocery store or to your friend's house, etc, then it is a deductible business expense. If you use a car party for business use and partly for personal use, than you can deduct the portion of the expense of the car that is for business use, but not the portion that is for personal use. So basically, if you use the car 75% for business purposes and 25% for personal use, you can deduct 75% of the cost and expenses. You can calculate the business use by, (a) Keeping careful records of how much you spent on gas, oil, repairs, etc, tracking the percentage of business use versus percentage of personal use, and then multiplying the cost by the percentage business use and that is the amount you can deduct; or (b) Use the standard mileage allowance, so many cents per mile, which changes every year. Note that the fact that you paid for the car from a business account has absolutely nothing to do with it. (If it did, then everyone could create a small business, open a business account, pay all their bills from there, and all their personal expenses would magically become business expenses.) Just by the way: If you are going to try to stretch the rules on your taxes, business use of a car or personal computer or expenses for a home office are the worst place to do it. The IRS knows that cars and computers are things that can easily be used for either personal or business purposes and so they keep a special eye out on these.", "topk_rank": 5 }, { "id": "528838", "score": 0.7038944959640503, "text": "No, you cannot deduct it. There's no business substance in such a trip, it is your vacation, and as such cannot be claimed as an expense against the rental income. You may be able to deduct the coffee you buy for the meeting with the property manager while there, but there's no way you can justify a 7-10 days vacation with your whole family as an expense to maintain the rental property. Since you will only have less than 2 weeks personal use, you won't need to prorate expenses, so you have that at least.", "topk_rank": 6 }, { "id": "104464", "score": 0.7008495926856995, "text": "\"Disclaimer: My answer is based on US tax law, but I assume Australian situation would be similar. The IRS would not be likely to believe your statement that \"\"I wouldn't have gone to the country if it wasn't for the conference.\"\" A two-week vacation, with a two-day conference in there, certainly looks like you threw in the conference in order to deduct vacation expenses. At the very least, you would need a good reason why this conference is necessary to your business. If you can give that reason, it would then depend on the specifics of Australian law. The vacation is clearly not just incidental to the trip. The registration for the conference is always claimable as a business expense.\"", "topk_rank": 7 }, { "id": "327002", "score": 0.7005072832107544, "text": "\"To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. (IRS, Deducting Business Expenses) It seems to me you'd have a hard time convincing an auditor that this is the case. Since business don't commonly own cars for the sole purpose of housing $25 computers, you'd have trouble with the \"\"ordinary\"\" test. And since there are lots of other ways to house a computer other than a car, \"\"necessary\"\" seems problematic also.\"", "topk_rank": 8 }, { "id": "47260", "score": 0.700340747833252, "text": "Typically you can only claim as business deductions those expenses which strictly relate to your business. In some cases, if you have a dedicated home office in your house, you can specify that expenses related to this space (furniture, etc.) are business expenses because it is a dedicated space. For example, I know of someone in sports broadcasting who claimed several TVs as a business expense, but these are for a room in his house that he uses only for watching games related to his work responsibilities, and never for entertaining, having friends over, etc. I think it will be difficult for you to count any portion of this type of installation as a business expense as it would relate to both your business as well as your residence. If you intend to try to get this deducted, I would strongly recommend consulting a CPA or tax attorney first. I think it will be difficult to prove that the only benefit is to your LLC if your electricity bills/credits are co-mingled with those for your residence. Best of luck!", "topk_rank": 9 }, { "id": "55200", "score": 0.6994158029556274, "text": "As I understand it... Generally housing can't be considered a business expense unless taken at your employer's explicit direction, for the good of the business rather than the employee. Temporary assignment far enough from you home office that commuting or occasional hotel nights are impractical, maybe. In other words, if they wouldn't be (at least theoretically) willing to let you put it on an expense account, you probably can't claim it here.", "topk_rank": 10 }, { "id": "192843", "score": 0.6990472078323364, "text": "\"Reimbursements for business expenses are generally not taxable, but the commute from home to the job and back is not considered business travel and if they're paying for that it is taxable income. I don't think carpooling changes that, but I am not a tax lawyer or accountant. The rest of your questions seem to be company policy issues. There is no \"\"should\"\" here. You aren't required to pick up the other guys, but he isn't required to reimburse those miles (or employ you) so think carefully about your priorities before pushing back. Never invoke what thou canst not banish.\"", "topk_rank": 11 }, { "id": "513362", "score": 0.6982941627502441, "text": "Yes, the business can count that as an expense but you will need to count that as income because a computer = money.", "topk_rank": 12 }, { "id": "397608", "score": 0.6978572607040405, "text": "I contacted Stephen Fishman, J.D., the author of Home Business Tax Deductions, to let him know that this question was missing from his book. He was kind enough to send a reply. My original phrasing of the question: If your car is used for both business and personal use, and you deduct via the actual expense method, do trips to the mechanic, gas station, and auto parts store to service or repair the car count as business miles, personal miles, or part-business-part-personal miles? What about driving the newly-purchased car home from the dealership? And his response: Good question. I can find nothing about this in IRS publication or elsewhere. However, common sense would tell us that the cost of driving to make car repairs should be deductible. If you use your car for business, it is a business expense, just like transporting any other piece of business equipment for repairs is a business expense. This should be so whether you use the standard mileage rate or actual expense method. You should probably reduce the amount of your deduction by the percentage of personal use of the car during the year. The same goes for driving a car home from the dealer.", "topk_rank": 13 }, { "id": "446984", "score": 0.6972466111183167, "text": "The relevant IRS publication is pub 463. Note that there are various conditions and exceptions, but it all starts with business necessity. Is it necessary for you to work from the UK? If you're working from the UK because you wanted to take a vacation, but still have to work, and would do the same work without being in the UK - then you cannot deduct travel expenses. It sounds to me like this is the case here.", "topk_rank": 14 }, { "id": "437877", "score": 0.6949076056480408, "text": "\"There is no simple rule like \"\"you can/can't spend more/less than $X per person.\"\" Instead there is a reasonableness test. There is such a thing as an audit of just your travel and entertainment expenses - I know because I've had one for my Ontario corporation. I've deducted company Christmas parties, and going-away dinners for departing employees, without incident. (You know, I presume, about only deducting half of certain expenses?) If the reason for the entertainment is to acquire or keep either employees or clients, there shouldn't be a problem. Things are slightly trickier with very small companies. Microsoft can send an entire team to Hawaii, with their families, as a reward at the end of a tough project, and deduct it. You probably can't send yourself as a similar reward. If your party is strictly for your neighbours, personal friends, and close family, with no clients, potential clients, employees, potential employees, suppliers, or potential suppliers in attendance, then no, don't deduct it. If you imagine yourself telling an auditor why you threw the party and why the business funded it, you'll know whether it's ok to do it or not.\"", "topk_rank": 15 }, { "id": "571711", "score": 0.6936389803886414, "text": "I'm not an expert, but here's my $0.02. Deductions for business expenses are subject to the 2% rule. In other words, you can only deduct that which exceeds 2% of your AGI (Adjusted Gross Income). For example, say you have an AGI of $50,000, and you buy a laptop that costs $800. You won't get a write-off from that, because 2% of $50,000 is $1,000, and you can only deduct business-related expenses in excess of that $1,000. If you have an AGI of $50,000 and buy a $2,000 laptop, you can deduct a maximum of $1,000 ($2,000 minus 2% of $50,000 is $2,000 - $1,000 = $1,000). Additionally, you can write off the laptop only to the extent that you use it for business. So in other words, if you have an AGI of $50,000 and buy that $2,000 laptop, but only use it 50% for business, you can only write off $500. Theoretically, they can ask for verification of the business use of your laptop. A log or a diary would be what I would provide, but I'm not an IRS agent.", "topk_rank": 16 }, { "id": "354716", "score": 0.6916749477386475, "text": "Credit card fees on a credit card used for personal expenses are not tax deductible. Credit card fees on a business credit card are deductible on schedule C (or whatever form you're using to report business income and expenses). If you are using the same card for both business and personal ... well, for starters, this is a very bad idea, because it creates exactly the question you're asking. If that's what you're doing, stop, and get separate business and personal cards. If you have separate business and personal cards -- and use the business card only for legitimate business expenses -- then the answer is easy: You can claim a schedule C deduction for any service charges on the business card, and you cannot claim any deduction for any charges on the personal card. In general, though, if you have an expense that is partly business and partly personal, you are supposed to figure out what percentage is business, and that is deductible. In an admittedly brief search, I couldn't find anything specifically about credit cards, but I did find this similar idea on the IRS web site: Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part. For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you can deduct 70% of the interest as a business expense. The remaining 30% is personal interest and is not deductible. Refer to chapter 4 of Publication 535, Business Expenses, for information on deducting interest and the allocation rules. (https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses) So, PROBABLY, you could add up all the charges you made on the card, figure out how much was for business and how much for personal, calculate the business percentage, and then deduct this percentage of the service fees. If the amount involved is not trivial, you might want to talk to an accountant or a lawyer.", "topk_rank": 17 }, { "id": "378484", "score": 0.690318763256073, "text": "To quote the answer you linked to: Perhaps the simplest way to think about this is you can only deduct an expense that you actually incur. In other words, the expense should show up on a bank or CC statement. So, if your business purchased the $1000 gift card for $800, you should see a $800 charge appearing on a business CC or bank statement. You would therefore be able to deduct the $800, but not the full $1000 of items that you purchase with it. Side Notes:", "topk_rank": 18 }, { "id": "362069", "score": 0.688619077205658, "text": "\"The short answer is yes you can, but you have to make sure you do it correctly. If you are employed by a tech company that does contract work at a separate location and you don't get reimbursed by your employer for travel expenses, you can claim the mileage between your home and location B as a business expense, but there's a catch - you have to subtract the mileage between your home and location A (your employer). So if it's 20 miles from your house to your employer (location A), and 30 miles from your house to the business you're contracting at (location B), you can only claim 10 miles each way (so 20 miles total). Obviously if the distance to location B is closer than your employer (location A), you're out of luck. You will have to itemize to take this deduction, by filling out a Schedule A for itemized deductions and Form 2106 to calculate how much of a deduction for travel expenses you can take. Google \"\"should i itemize\"\", if you're unsure whether to take the Standard Deduction or Itemize. Sources:\"", "topk_rank": 19 } ]
4	Business Expense - Car Insurance Deductible For Accident That Occurred During a Business Trip	[ { "id": "196463", "score": 0.7190271019935608, "text": "As a general rule, you must choose between a mileage deduction or an actual expenses deduction. The idea is that the mileage deduction is supposed to cover all costs of using the car. Exceptions include parking fees and tolls, which can be deducted separately under either method. You explicitly cannot deduct insurance costs if you claim a mileage deduction. Separately, you probably won't be able to deduct the deductible for your car as a casualty loss. You first subtract $100 from the deductible and then divide it by your Adjusted Gross Income (AGI) from your tax return. If your deductible is over 10% of your AGI, you can deduct it. Note that even with a $1500 deductible, you won't be able to deduct anything if you made more than $14,000 for the year. For most people, the insurance deductible just isn't large enough relative to income to be tax deductible. Source" } ]	[ { "id": "40257", "score": 0.6829391717910767, "text": "\"The government thought of that a long time ago, and has any loophole there plugged. Like if you set up a company to buy a car and then allow you to use it ... You can use the car for company business, like driving to a customer's office to make a sales call or delivery, and the cost of the car is then tax deductible. But the company must either prohibit personal use of the car, or keep a log of personal versus business use and the personal use becomes taxable income to you. So at best you'd get to deduct an expense here and then you'd have to add it back there for a net change in taxable income of zero. In general the IRS is very careful about personal use of business property and makes it tough to get away with a free ride. I'm sure there are people who lie about it and get away with it because they're never audited, but even if that causes you no ethical qualms, it's very risky. I don't doubt that there are people with very smart lawyers who have found loopholes in the rules. But it's not as simple as, \"\"I call myself a business and now all my personal expenses become tax deductible business expenses.\"\" If you could do that, everybody would do it and no one would pay taxes. Which might be a good thing, but the IRS doesn't see it that way.\"", "topk_rank": 0 }, { "id": "417981", "score": 0.6829352974891663, "text": "\"While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do I quantify the travel expenses? Generally, \"\"necessary and ordinary\"\" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say \"\"no\"\" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000 miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (\"\"pleasure\"\") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is \"\"business\"\" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the property? Although, again, the \"\"necessary and ordinary\"\" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA).\"", "topk_rank": 1 }, { "id": "194308", "score": 0.6818512678146362, "text": "Well, if you were a business, and your food and rent and travel expenses were business expenses, and you paid out less money than you earned, you would get a refund. If you can prove that an expense is tax deductible, then that's just what it is. For businesses, a net operating loss is tax deductible.", "topk_rank": 2 }, { "id": "97719", "score": 0.6802712678909302, "text": "\"Disclaimer: This should go without saying, but this answer is definitely an opinion. (I'm pretty sure my current accountant would agree with this answer, and I'm also pretty sure that one of my past accountants would disagree.) When I started my own small business over 10 years ago I asked this very same question for pretty much every purchase I made that would be used by both the business and me personally. I was young(er) and naive then and I just assumed everything was deductible until my accountant could prove otherwise. At some point you need to come up with some rules of thumb to help make sense of it, or else you'll drive yourself and your accountant bonkers. Here is one of the rules I like to use in this scenario: If you never would have made the purchase for personal use, and if you must purchase it for business use, and if using it for personal use does not increase the expense to the business, it can be fully deducted by the business even if you sometimes use it personally too. Here are some example implementations of this rule: Note about partial expenses: I didn't mention partial deductions above because I don't feel it applies when the criteria of my \"\"rule of thumb\"\" is met. Note that the IRS states: Personal versus Business Expenses Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part. At first read that makes it sound like some of my examples above would need to be split into partial calulations, however, I think the key distinction is that you would never have made the purchase for personal use, and that the cost to the business does not increase because of allowing personal use. Partial deductions come into play when you have a shared car, or office, or something where the business cost is increased due to shared use. In general, I try to avoid anything that would be a partial expense, though I do allow my business to reimburse me for mileage when I lend it my personal car for business use.\"", "topk_rank": 3 }, { "id": "434846", "score": 0.6802667379379272, "text": "\"When I have a question about my income taxes, the first place I look is generally the Giant Book of Income Tax Information, Publication 17 (officially called \"\"Your Federal Income Tax\"\"). This looks to be covered in Chapter 26 on \"\"Car Expenses and Other Employee Business Expenses\"\". It's possible that there's something in there that applies to you if you need to temporarily commute to a place that isn't your normal workplace for a legitimate business reason or other business-related travel. But for your normal commute from your home to your normal workplace it has this to say: Commuting expenses. You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. These costs are personal commuting expenses. You cannot deduct commuting expenses no matter how far your home is from your regular place of work. You cannot deduct commuting expenses even if you work during the commuting trip.\"", "topk_rank": 4 }, { "id": "202645", "score": 0.6797001957893372, "text": "For stocks, bonds, ETF funds and so on - Taxed only on realised gain and losses are deductible from the gain and not from company's income. Corporate tax is calculated only after all expenses have been deducted. Not the other way around. Real estate expenses can be deducted because of repairs and maintenance. In general all expenses related to the operation of the business can be deducted. But you cannot use expenses as willy nilly, as you assume. You cannot deduct your subscription to Playboy as an expense. Doing it is illegal and if caught, the tours to church will increase exponentially. VAT is only paid if you claim VAT on your invoices. Your situation seems quite complicated. I would suggest, get an accountant pronto. There are nuances in your situation, which an accountant only can understand and help.", "topk_rank": 5 }, { "id": "383628", "score": 0.6788522601127625, "text": "You may not have considered this, and it will depend on your local laws, but if someone causes you damage, you can sue them for the damages. In your case, two drivers forced you to be involved in an accident, which made your premiums go up, which is a real damage for which they might be responsible.", "topk_rank": 6 }, { "id": "354716", "score": 0.6785402894020081, "text": "Credit card fees on a credit card used for personal expenses are not tax deductible. Credit card fees on a business credit card are deductible on schedule C (or whatever form you're using to report business income and expenses). If you are using the same card for both business and personal ... well, for starters, this is a very bad idea, because it creates exactly the question you're asking. If that's what you're doing, stop, and get separate business and personal cards. If you have separate business and personal cards -- and use the business card only for legitimate business expenses -- then the answer is easy: You can claim a schedule C deduction for any service charges on the business card, and you cannot claim any deduction for any charges on the personal card. In general, though, if you have an expense that is partly business and partly personal, you are supposed to figure out what percentage is business, and that is deductible. In an admittedly brief search, I couldn't find anything specifically about credit cards, but I did find this similar idea on the IRS web site: Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part. For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you can deduct 70% of the interest as a business expense. The remaining 30% is personal interest and is not deductible. Refer to chapter 4 of Publication 535, Business Expenses, for information on deducting interest and the allocation rules. (https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses) So, PROBABLY, you could add up all the charges you made on the card, figure out how much was for business and how much for personal, calculate the business percentage, and then deduct this percentage of the service fees. If the amount involved is not trivial, you might want to talk to an accountant or a lawyer.", "topk_rank": 7 }, { "id": "255969", "score": 0.6758981347084045, "text": "\"But you aren't driving between your two jobs, you're driving for your job. The better analogy would be \"\"If I didn't buy commercial insurance, but was hiring myself out to do deliveried then my personal insurance better cover me if I hit someone between deliveries\"\" It doesn't work that way. There is a reason commercial insurance costs a lot more - when your job is to drive, your risk profile increases significantly. There are specific clauses in personal insurance that they aren't going to cover you if something happens while you are using your car for commercial purposes.\"", "topk_rank": 8 }, { "id": "509218", "score": 0.6750746965408325, "text": "\"While COBRA premiums are not eligible to be a \"\"business\"\" expense they can be a medical expense for personal deduction purposes. If you're itemizing your deductions you may be able to deduct that way. However, you will only be able to deduct the portion of the premium that exceeds 10% of your AGI. Are you a full time employee now or are you a 1099 contractor? Do you have access to your employers health plan?\"", "topk_rank": 9 }, { "id": "201954", "score": 0.6745578050613403, "text": "If it's a legitimate cost of doing business, it's as deductible as any other cost of doing business. (Reminder: be careful about the distinctions between employee and contractor; the IRS gets annoyed if you don't handle this correctly.)", "topk_rank": 10 }, { "id": "531442", "score": 0.6741170883178711, "text": "\"According to this post on TurboTax forums, you could deduct it as an \"\"Unreimbursed Employee\"\" expense. This would seem consistent with the IRS Guidelines on such deductions: An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense does not have to be required to be considered necessary. Office rent is not listed explicitly among the examples of deductible unreimbursed employee expenses, but this doesn't mean it's not allowed. Of course you should check with a tax professional if you want to be sure.\"", "topk_rank": 11 }, { "id": "421301", "score": 0.6737032532691956, "text": "\"Worksheets/ Documentation: (From my experience filing my business deductions through several tax preparers.) Keep all your calculations, but only submit the calculations and worksheets requested by the tax form. Most travel deductions are just a category total. If the IRS wants more info, it will ask for it. Information from the book Home Business Tax Deductions (from Nolo) (2012): Traveling with kids: In chapter 9 (\"\"Leaving Town: Business Travel\"\"), in the section \"\"Taking People With You\"\", it specifically discusses your situation. Paraphrasing, it says that you can deduct the amount any eligible expenses would have cost you if you were traveling without your kids. So, you can deduct the cost the smaller hotel room that you and your wife would have normally rented if you were alone. How your side trips affect your business deductions: According to the book, since you spent 50% or more of your time on business activities while traveling in the U.S.: Deducting meals shared with your kids: You can deduct meals as either entertainment or travel expenses. I would recommend you buy one of Nolo's books on deductions, as it goes into much more detail than I do here.\"", "topk_rank": 12 }, { "id": "192843", "score": 0.6736151576042175, "text": "\"Reimbursements for business expenses are generally not taxable, but the commute from home to the job and back is not considered business travel and if they're paying for that it is taxable income. I don't think carpooling changes that, but I am not a tax lawyer or accountant. The rest of your questions seem to be company policy issues. There is no \"\"should\"\" here. You aren't required to pick up the other guys, but he isn't required to reimburse those miles (or employ you) so think carefully about your priorities before pushing back. Never invoke what thou canst not banish.\"", "topk_rank": 13 }, { "id": "236122", "score": 0.6726968884468079, "text": "The answer on the Canadian Government's website is pretty clear: Most employees cannot claim employment expenses. You cannot deduct the cost of travel to and from work, or other expenses, such as most tools and clothing. However, that is most likely related to a personal vehicle. There is a deduction related to Public Transportation: You can claim cost of monthly public transit passes or passes of longer duration such as an annual pass for travel within Canada on public transit for 2016. The second sleeping residence is hard to justify as the individual is choosing to work in this town and this individual is choosing to spent the night there - it is not currently a work requirement. As always, please consult a certified tax professional in your country for any final determinations on personal (and corporate) tax laws and filings.", "topk_rank": 14 }, { "id": "147837", "score": 0.6720904111862183, "text": "\"One way to look at insurance is that it replaces an unpredictable expenses with a predictable fees. That is, you pay a set monthly amount (\"\"premium\"\") instead of the sudden costs associated with a collision or other covered event. Insurance works as a business, which means they intend to make a substantial profit for providing that service. They put a lot of effort in to measuring probabilities, and carefully set the premiums to get make a steady profit. The odds are in their favor. You have to ask yourself: if X happened tomorrow, how would I feel about the financial impact? Also, how much will it cost me to buy insurance to cover X? If you have a lot of savings, plenty of available credit, a bright financial future, and you take the bus to work anyway, then totaling your car may not be a big deal, money wise. Skip the insurance. If you have no savings, plenty of debt, little prospects for that improving, and you depend on your car to get to work just so you can pay what you already owe, then totaling your car would probably be a big problem for you. Stick with insurance. There is a middle ground. You can adjust your deductible. Raise it as high as you can comfortably handle. You cover the small stuff out of pocket, and save the insurance for the big ticket items. Insurance companies also invest the money they take as premiums, until they pay out a claim. That's not relevant to this discussion, though.\"", "topk_rank": 15 }, { "id": "104464", "score": 0.6702097058296204, "text": "\"Disclaimer: My answer is based on US tax law, but I assume Australian situation would be similar. The IRS would not be likely to believe your statement that \"\"I wouldn't have gone to the country if it wasn't for the conference.\"\" A two-week vacation, with a two-day conference in there, certainly looks like you threw in the conference in order to deduct vacation expenses. At the very least, you would need a good reason why this conference is necessary to your business. If you can give that reason, it would then depend on the specifics of Australian law. The vacation is clearly not just incidental to the trip. The registration for the conference is always claimable as a business expense.\"", "topk_rank": 16 }, { "id": "47260", "score": 0.669135332107544, "text": "Typically you can only claim as business deductions those expenses which strictly relate to your business. In some cases, if you have a dedicated home office in your house, you can specify that expenses related to this space (furniture, etc.) are business expenses because it is a dedicated space. For example, I know of someone in sports broadcasting who claimed several TVs as a business expense, but these are for a room in his house that he uses only for watching games related to his work responsibilities, and never for entertaining, having friends over, etc. I think it will be difficult for you to count any portion of this type of installation as a business expense as it would relate to both your business as well as your residence. If you intend to try to get this deducted, I would strongly recommend consulting a CPA or tax attorney first. I think it will be difficult to prove that the only benefit is to your LLC if your electricity bills/credits are co-mingled with those for your residence. Best of luck!", "topk_rank": 17 }, { "id": "446984", "score": 0.6688699722290039, "text": "The relevant IRS publication is pub 463. Note that there are various conditions and exceptions, but it all starts with business necessity. Is it necessary for you to work from the UK? If you're working from the UK because you wanted to take a vacation, but still have to work, and would do the same work without being in the UK - then you cannot deduct travel expenses. It sounds to me like this is the case here.", "topk_rank": 18 }, { "id": "391619", "score": 0.6675308346748352, "text": "It would be unusual but it is possible that the expenses could be very high compared to your income. The IRS in pub 529 explains the deduction. You can deduct only unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary. The next part lists examples. I have cut the list down to highlight ones that could be large. You may be able to deduct the following items as unreimbursed employee expenses. Damages paid to a former employer for breach of an employment contract. Job search expenses in your present occupation. Legal fees related to your job. Licenses and regulatory fees. Malpractice insurance premiums. Research expenses of a college professor. Rural mail carriers' vehicle expenses. Tools and supplies used in your work. Work clothes and uniforms if required and not suitable for everyday use. Work-related education. If the term of employment was only part of the year, one or more of the these could dwarf your income for the year. Before deducting something that large be sure you can document it. I believe the IRS computers would flag the return and I wouldn't be surprised if they ask for additional proof.", "topk_rank": 19 } ]
5	Starting a new online business	[ { "id": "69306", "score": 0.661268413066864, "text": "Most US states have rules that go something like this: You will almost certainly have to pay some registration fees, as noted above. Depending on how you organize, you may or may not need to file a separate tax return for the business. (If you're sole proprietor for tax purposes, then you file on Schedule C on your personal Form 1040.) Whether or not you pay taxes depends on whether you have net income. It's possible that some losses might also be deductible. (Note that you may have to file a return even if you don't have net income - Filing and needing to pay are not the same since your return may indicate no tax due.) In addition, at the state level, you may have to pay additional fees or taxes beyond income tax depending on what you sell and how you sell it. (Sales tax, for example, might come into play as might franchise taxes.) You'll need to check your own state law for that. As always, it could be wise to get professional tax and accounting advice that's tailored to your situation and your state. This is just an outline of some things that you'll need to consider." } ]	[ { "id": "593671", "score": 0.6281862258911133, "text": "It seems too simple, but at the same time I feel that I'm over thinking/complicating things. My biggest fear is being sued or something. I feel like business ownership involves exposing yourself. It's like you're playing in the big leagues and every crooked person or competing business is out to get you. I'm not an expert on business law but I feel like that's something you largely acquire from business ownership and at the same time is something that you need to have an extremely firm grasp on or you'll get eaten alive. If I am over-complicating things and being overly cautious, what stops others from starting up small businesses? My second fear is getting busted for breaking some unknown law. In any case, I don't want to loose all of my hard-earned cash to anything accept a bad business plan.", "topk_rank": 0 }, { "id": "265397", "score": 0.6281777024269104, "text": "\"Get some professional accounting help. You're going to have to pay for everything out of the fee you charge: taxes, retirement, health care, etc. You'll be required to pay quarterly. I don't think you should base your fee on what \"\"this\"\" company will pay as a full-time employee, but what you can expect in your area. They're saving a lot of money not going through an established employment firm and essentially, making you create your own. There are costs to setting up and maintaining a company. They have less risk hiring you because there are no unemployment consequences for letting you go. Once you're hired, they'll probably put you on salary, so you can forget about making more money if you work over 40 hrs. IMHO - there have to be better jobs in your area than this one.\"", "topk_rank": 1 }, { "id": "231814", "score": 0.6280394792556763, "text": "It looks like your best option is to go with an online broker. There are many available. Some of them won't let you open an account online as a foreign national but will allow you to open one through the mail. See more about that http://finance.zacks.com/can-nonus-citizen-trade-us-stocks-9654.html Also keep in mind that you will need to pay taxes on any capital gains made through selling http://www.irs.gov/pub/irs-pdf/p519.pdf", "topk_rank": 2 }, { "id": "299147", "score": 0.6279084086418152, "text": "I really like your mindset about this. One strategy I'm going to implement with my job site, without giving too much away, is treating a job Seeker profile and a job provider very similarly and creating a hub for both. It also treats job postings like more of a commodity, and just focuses on other things that I'll get into in the company develops more.", "topk_rank": 3 }, { "id": "32057", "score": 0.6276856660842896, "text": "You need to first visit the website of whatever state you're looking to rent the property in and you're going to want to form the LLC in that particular state. Find the Department of Licensing link and inquire about forming a standard LLC to register as the owner of the property and you should easily see how much it costs. If the LLC has no income history, it would be difficult for the bank to allow this without requiring you to personally guarantee the loan. The obvious benefit of protecting yourself with the LLC is that you protect any other personal assets you have in your name. Your liability would stop at the loan. The LLC would file its own taxes and be able to record the income against the losses (i.e. interest payments and other operating expenses.). This is can be beneficial depening on your current tax situation. I would definitely recommend the use of a tax accountant at that point. You need to be sure you can really afford this property in the worst case scenario and think about market leasing assumption, property taxes, maintenance and management (especially if you've moved to another state.)", "topk_rank": 4 }, { "id": "320092", "score": 0.6274010539054871, "text": "Drop shipping is the term your looking for. Stay away from anything overseas, drop-shipping from anywhere other than where your primary market is located can be a nightmare. Research the company your going to use pretty heavily. Try to talk with someone on the phone and ask them questions. Ask them about pricing, billing terms, shipping procedures, returns/exchanges and things of that sort. Remember, even if your not physically handling the merchandise you are still responsible for the business. It doesn't need to be complicated but it does need to done responsibly. It is a business after all!", "topk_rank": 5 }, { "id": "166977", "score": 0.6272890567779541, "text": "If you sell through an intermediate who sets up the shop for you, odds are they collect and pay the sales tax for you. My experience is with publishing books through Amazon, where they definitely handle this for you. If you can find a retailer that will handle the tax implications, that might be a good reason to use them. It looks like Etsy uses a different model where you yourself are responsible for the sales tax, which requires you to register with your state (looks like this is the information for New York) and pay the taxes yourself on a regular basis; see this link for a simple guide. If you're doing this, you'll need to keep track of how much tax you owe from your sales each month, quarter, or year (depending on the state laws). You can usually be a sole proprietor, which is the easiest business structure to set up; if you want to limit your legal liability, or work with a partner, you may want to look into other forms of business structure, but for most craftspeople a sole proprietorship is fine to start out with. If you do a sole proprietorship, you can probably file the income on a 1040 Schedule C when you do your personal taxes each year.", "topk_rank": 6 }, { "id": "451207", "score": 0.627181351184845, "text": "What about web-hosting fees? Cost of Internet service? Cost of computer equipment to do the work? Amortized cost of development? Time for support calls/email? Phone service used for sales? Advertising/marketing expenses? Look hard--I bet there are some costs.", "topk_rank": 7 }, { "id": "390922", "score": 0.6270374655723572, "text": "My general rule of thumb with start-ups is don't quit your day job until you can afford to quit your day job. If you were a single man, or your wife also could provide income for the family, then you would have more flexibility but if you are the single income provider I suggest a more cautious route. It may be frustrating to deal with the drudgery of work, but if you really want to see that start up I would suggest getting started to work on it with what you can while working at your other job, until you have enough money saved and enough work done that you can fully launch the start-up full time. It will be a lot of work, (so would a start-up) but it is less risky, especially considering your family situation. If you really hate what you are doing, I would suggest looking for other opportunities in your field of work. Maybe there is something that you have overlooked, and don't hesitate to apply for jobs you are not sure if you are qualified for-- as long as it doesn't involve time away from your current job an application is fairly painless and the worst case is you keep doing what you are still doing.", "topk_rank": 8 }, { "id": "226646", "score": 0.6269677877426147, "text": "Most startup community would say don't even bother to secure it unless yours is never done before. If you really done a lot of research and no one has done it before. Maybe you're one of the lucky few in the world with some new idea. Some investors get turned off when you make them sign NDA, especially if you're a first time entrepreneur. But chances are you're probably not. Instead focus on validating the idea and get market traction.", "topk_rank": 9 }, { "id": "246547", "score": 0.6269268989562988, "text": "As far as the spam mail goes, I own a rental (in Connecticut) and live in Massachusetts, I get very little mail related to this property. I view this as a non-compelling reason. Your other reasons pick up quick in value. The protection from the rest of your assets is helpful, and the one con for most is the inability to get a loan with such a structure, but in your case, a cash purchase is mentioned. I don't know what the fees are to start an LLC, but overall, I believe the pros outweigh the cons. Yes, your Pro 4 looks good, an ongoing business with a track record will help the next purchase.", "topk_rank": 10 }, { "id": "519906", "score": 0.6268670558929443, "text": "I agree. I'd like to acquire as many assets as possible before making it official. Since we are currently in Ohio, which I think means that assets and debts are not combined. Once I get this one going, I want to start another one here, if I have the time to do it.", "topk_rank": 11 }, { "id": "58939", "score": 0.6268130540847778, "text": "The general advice seems to be to sell online. But my issue here is that, a large amount of stock would likely come from Etsy creators - Why would a customer choose my online store to buy an item when they could buy the exact same item directly from the creator for £x cheaper?", "topk_rank": 12 }, { "id": "403877", "score": 0.6265957355499268, "text": "You should not open a company unless and until you want to continue operating your company for the longer term. If it is only for a year so so, refrain from opening a company. I am an IT contractor and operate through a limited company. Believe me it isn't that difficult to operate through a limited company. If you are afraid of doing your books, get an accountant and he will do it for you. Should not cost you more than a £1000 - 1500 or so. Regarding what you can claim as an expense, it depends on how you can confirm that the expenses you incurred are for the company. Your accountant can help you out on that. If you claim false expenses and are caught, you have to forgo a lot to the HMRC. Google is the best option, there are loads of sites which can help you on that.", "topk_rank": 13 }, { "id": "251780", "score": 0.6265239715576172, "text": "\"When you have nothing and you need to build new, this is the best situation, but you need to partner with the Customer Support Manager, since it all come down to process management and reporting needs. First of all, what are you in the company, do you work in Customer Service, IT or just an office worker who randomly got picked do it? Secondly, do you have any budget? Do you have to code the whole thing, or can you licenses a platform or go open-source? Thirdly, what do \"\"they\"\" want from the system? Do they want to track sales leads, sales, budget, customer service issues, do they want to track trucks and payloads? Are there any business measurements, they want, like NPS, CSAT, TAT, AHT. Fourth: Are they willing to changed their working processes? If not, then all you really need is a system, where you can look up information and tie it to a account. Source: I do this for a living\"", "topk_rank": 14 }, { "id": "207766", "score": 0.6264991760253906, "text": "The importance of social proofing to any business both online and offline cannot be over emphasized. However, this post have just elaborated it all and i think even a newbie will be able to comprehend the benefit of social awareness after going through this article.", "topk_rank": 15 }, { "id": "165503", "score": 0.626401424407959, "text": "Just keep in mind that on Upwork, you basically have to be the cheapest person to get most of the gigs. It's great to get your feet wet, but I would strongly encourage you to use it to build a portfolio up and then start reaching out to people in your network to see if anyone needs your services.", "topk_rank": 16 }, { "id": "72984", "score": 0.6262978911399841, "text": "What you need to do is register as a sole trader. This will automatically register you for self assessment so you don't have to do that separately. For a simple business like you describe that's it. Completing your self assessment will take care of all your income tax and national insurance obligations (although as mentioned in your previous question there shouldn't be any NI to pay if you're only making £600 or so a year).", "topk_rank": 17 }, { "id": "534333", "score": 0.626087486743927, "text": "\"The notion that you can put product on the web and sit back and watch the money roll in is a myth, plain and simple. If you put content on the web and expect people to pay money for your products (t-shirts, etc), you have to do the work to get your stuff seen by people, and preferably the right kind of people who will buy your stuff. That means you need to know your market and provide something that they are eager to pay for. This doesn't necessarily mean buying advertising to direct traffic to your site - there are plenty of no-cost ways to bring people to your web site, but instead of costing $$ the cost is in effort and time that you have to put into it. Also keep in mind that the more participants you have in your production and fulfillment pipeline, the less you will make off every sale. Hands-off production services like Zazzle or Cafe Press do everything for you, all you have to do is provide the artwork. However, they also take all the income and pay you a rather piddling percentage of sales. You can get a larger percentage of sales if you do more of the work yourself - like handmade items sold on Etsy. But then, you're doing work. Maybe you'll get $1 for each T-Shirt you sell. If you just upload your artwork to the production service and type in some product description text into their web sales catalog, how many sales will you make in the first month? Most likely somewhere between zero and two. Why should anyone buy your shirt over the tens of thousands of other designs carried by the same production service? It's your responsibility to tell people about your stuff and send them to the site to buy it. And that means it's not a \"\"passive\"\" income. For truly passive income, invest in bank CD's, treasury bonds, or in stocks that pay dividends. The only problem with that is you have to have money to make money this way. :/\"", "topk_rank": 18 }, { "id": "287824", "score": 0.6259419322013855, "text": "you may pay less (and sometimes less) to your mouse clicks, and will be able to get guests quick having the bank. If you want to buy cheap targeted traffic for your business, then you can go with buy cheap targeted traffic - http://buysitestraffic.com", "topk_rank": 19 } ]
6	“Business day” and “due date” for bills	[ { "id": "560251", "score": 0.7532988786697388, "text": "I don't believe Saturday is a business day either. When I deposit a check at a bank's drive-in after 4pm Friday, the receipt tells me it will credit as if I deposited on Monday. If a business' computer doesn't adjust their billing to have a weekday due date, they are supposed to accept the payment on the next business day, else, as you discovered, a Sunday due date is really the prior Friday. In which case they may be running afoul of the rules that require X number of days from the time they mail a bill to the time it's due. The flip side to all of this, is to pick and choose your battles in life. Just pay the bill 2 days early. The interest on a few hundred dollars is a few cents per week. You save that by not using a stamp, just charge it on their site on the Friday. Keep in mind, you can be right, but their computer still dings you. So you call and spend your valuable time when ever the due date is over a weekend, getting an agent to reverse the late fee. The cost of 'right' is wasting ten minutes, which is worth far more than just avoiding the issue altogether. But - if you are in the US (you didn't give your country), we have regulations for everything. HR 627, aka The CARD act of 2009, offers - ‘‘(2) WEEKEND OR HOLIDAY DUE DATES.—If the payment due date for a credit card account under an open end consumer credit plan is a day on which the creditor does not receive or accept payments by mail (including weekends and holidays), the creditor may not treat a payment received on the next business day as late for any purpose.’’. So, if you really want to pursue this, you have the power of our illustrious congress on your side." }, { "id": "188530", "score": 0.7200562357902527, "text": "You definitely have an argument for getting them to reverse the late fee, especially if it hasn't happened very often. (If you are late every month they may be less likely to forgive.) As for why this happens, it's not actually about business days, but instead it's based on when they know that you paid. In general, there are 2 ways for a company to mark a bill as paid: Late Fees: Some systems automatically assign late fees at the start of the day after the due date if money has not been received. In your case, if your bill was due on the 24th, the late fee was probably assessed at midnight of the 25th, and the payment arrived after that during the day of the 25th. You may have been able to initiate the payment on the company's website at 11:59pm on the 24th and not have received a late fee (or whatever their cutoff time is). Suggestion: as a rule of thumb, for utility bills whose due date and amount can vary slightly from month to month, you're usually better off setting up your payments on the company website to pull from your bank account, instead of setting up your bank account to push the payment to the company. This will ensure that you always get the bill paid on time and for the correct amount. If you still would rather push the payment from your bank account, then consider setting up the payment to arrive about 5 days early, to account for holidays and weekends." }, { "id": "564488", "score": 0.7321335077285767, "text": "It's likely that your bill always shows the 24th as the due date. Their system is programmed to maintain that consistency regardless of the day of the week that falls on. When the 24th isn't a business day it is good to error on the side of caution and use the business day prior. It would have accepted using their system with a CC payment on the 24th because that goes through their automated system. I would hazard a guess that because your payment was submitted through your bank and arrived on the 23rd it wasn't credited because a live person would have needed to be there to do it and their live people probably don't work weekends. I do much of my bill paying online and have found it easiest to just build a couple days of fluff into the schedule to avoid problems like this. That said, if you call them and explain the situation it is likely that they will credit the late charge back to you." } ]	[ { "id": "108734", "score": 0.6965306997299194, "text": "\"We have a local bank that changed to a bill pay service. The money is held as \"\"processing\"\" when the check is supposed to be cut and shows as cleared on the date the check is supposed to be received. Because our business checking is with the same bank, we discovered recently that the although the check shows cleared from our account, the recipient has not received the paper check yet - and may not for 2-3 days. We discovered this because the payroll checks we write this way (to ourselves) never arrive on the due date but clear the business account. It appears to be a new way for banks to ride the \"\"float\"\" and draw interest on the money. It happens with every check processed through the bill pay system and not with electronic transfers.\"", "topk_rank": 0 }, { "id": "143368", "score": 0.6952111124992371, "text": "\"There is not one right way. It depends on the level of detail that you need. One way would be: Create the following accounts: When you pay the phone bill: When you are paid with the reimbursement: That is, when you pay the phone bill, you must debit BOTH phone expense to record the expense, and also reimbursements due to record the fact that someone now owes you money. If it's useful you could add another layer of complexity: When you receive the bill you have a liability, and when you pay it you discharge that liability. Whether that's worth keeping track of depends. I never do for month-to-month bills. Afterthought: I see another poster says that your method is incorrect because a reimbursement is not salary. Technically true, though that problem could be fixed by renaming the account to something like \"\"income from employer\"\". The more serious problem I see is that you are reversing the phone expense when you are reimbursed. So at the end of the year you will show total phone expense as $0. This is clearly not correct -- you did have phone expenses, they were just reimbursed. You really are treating the expense account as an asset account -- \"\"phone expenses due to be reimbursed by employer\"\".\"", "topk_rank": 1 }, { "id": "302209", "score": 0.6950076818466187, "text": "One's paycheck typically has a YTD (year to date) number that will end on the latest check of the year. I am paid bi-weekly, and my first 2012 check was for work 12/25 - 1/7. So, for my own balance sheet, brokerage statements and stock valuations end 12/31, but my pay ended 12/24. And then a new sheet starts.", "topk_rank": 2 }, { "id": "254431", "score": 0.6916214227676392, "text": "You can do this through a journal entry in Quickbooks. It can all be entered as one entry, there's no need to do separate ones for each bill. The journal entry should debit Accounts Payable and credit your equity account. In the line for Accounts Payable, make sure to choose your name in the 'Name' column. This, in effect, enters a credit to your account, which will offset the bills that were shown there previously. The last step is to apply those credits to the bills. Even though they offset each other, your name would still show up in any Payables reports and in the Pay Bills window. To do this, open the Pay Bills window and select one of the bills owed to you. There should be an option to choose 'Apply Credits' or something similar (depends on which version of Quickbooks you are running). Choose that option, and apply credits in the amount of the bill, so that it zeroes out. Do the same for all of the other bills. Once they are all checked off, click the button to Pay Bills. This won't actually 'pay' anything, but will instead just apply the credits to the bills as indicated.", "topk_rank": 3 }, { "id": "500813", "score": 0.6842026710510254, "text": "In the US there is no set date. If all goes well there are multiple dates of importance. If it doesn't go well the budget process also may include continuing resolutions, shutdowns, and sequestrations.", "topk_rank": 4 }, { "id": "44593", "score": 0.6798847913742065, "text": "Looking at your dates, I think I see a pattern. It appears that your statement closing date is always 17 business days before the last business day of the month. For example, if you start at May 31 and start counting backwards, skipping Saturdays, Sundays, and May 30 (Memorial Day), you'll see that May 5 is 17 business days before May 31. I cannot explain why Bank of America would do this. If you ask them, let us know what they say. If it bothers you, find another bank. I do most of my banking (checking, savings, etc.) with a local credit union. Their statements end on the last day of the month, every month without fail. (Very nice, in my opinion.) I have two credit cards with nationally known banks, and although those statements end in the middle of the month, they are consistently on the same date every month. (One of them is on the 13th; the other date I can't recall right now.) You are right, a computer does the work, and your statement date should be able to fall on a weekend without trouble. Even when these were assembled by hand, the statement date could still be on a weekend, and they just wouldn't write it up until the following Monday. You should be able to find another bank or credit union that does this.", "topk_rank": 5 }, { "id": "257841", "score": 0.6796833276748657, "text": "Using the bank's bill pay always seemed like a hassle to me. There are lots of mistakes to be made by me that can result in late payments and not too many benefits other than some convenience, and being able to pay bills online for accounts that require paper payment. (Although the banking systems often screw up those payments) Plus, there is usually a fee associated with bill pay, at least to some extent. I generally use the websites of my credit cards or other entities to pay bills. Then again, maybe I'm a bit of a weirdo here... I don't see mailing a check 3 days ahead of the due date as a particular hassle.", "topk_rank": 6 }, { "id": "23276", "score": 0.6792817115783691, "text": "I agree with mbhunter's suggestion of labeling your columns, 'income' and 'expenses'. However, to answer your question, money coming in (a paycheque, for example) is credited to your account. Money going out (a utility bill, for example) is debited from your account. There's no real 'why'... this is simply the definition of the words.", "topk_rank": 7 }, { "id": "522358", "score": 0.6789397597312927, "text": "Personally, I have a little checkbook program that I use to keep track of my spending and balance. Like you -- and I presume like most people -- I have certain recurring bills: the mortgage, insurance payments, car payment, etc. I simply enter these into the checkbook program about a month before the bill is due. Then I can run a transaction list that shows the date, amount, and remaining balance after each transaction. So if I want to know how much money I really have available to spend, I just look for the last transaction before my next payday, and see what the balance will be on that day. Personally, I always keep a certain amount of pad in my account so if I made a mistake and entered an incorrect amount for a check, or forgot to enter one completely, I don't overdraw the account. (I like to keep $1000 in such padding but that's way more than really necessary, it's very rare that I make a mistake of more than $100.) In my case, I don't enter electric bills or heating bills because I don't know the amount until I get the bill, and the amounts fall well within my padding, and for just two bills I can factor them in in my head. BTW I wrote this program myself but I'm sure there are similar products on the market. I used to use a spreadsheet and that worked pretty well. (Mainly I wrote the program because I have a tiny side business that I have to keep tax records for even though it makes almost no money.) You could in principle do it on paper, but the catch to that is that when you write payments on your paper ledger in advance of actually writing the check, you will often be writing down payments out of order, and so it becomes difficult to see what your balance is or was or will be on any given date. But a computer system can easily accept transactions out of order and then sort them and re-do the balance calculations in a fraction of a second.", "topk_rank": 8 }, { "id": "31603", "score": 0.6783155798912048, "text": "The balance is the amount due.", "topk_rank": 9 }, { "id": "29397", "score": 0.6776466369628906, "text": "\"But I have been having a little difficulty to include the expenditure in my monthly budget as the billing cycle is from the 16th to 15th of the next month and my income comes in at the end of the month. Many companies will let you change the statement date if you want, so one way to do this would be to request your bank to have statements due at the end of the month or first of month. You can call and ask, this might resolve your problem entirely. How can I efficiently add the credit card expenditure to my monthly budget? We do this using YNAB, which then means our monthly budget is separate from our actual bank accounts. When we spend, we enter the transaction into YNAB and it's \"\"spent.\"\" Additionally, we just pay whatever our credit card balance is a day before the end of the month so it is at $0 when we do our budget discussion at the end of each month.\"", "topk_rank": 10 }, { "id": "589505", "score": 0.67697674036026, "text": "When you submit for reimbursement, the cash you get should be FIFO (first in, first out) and a large bill should empty out 2011 first, automatically tapping 12 for remaining amount owed. I doubt you need to do anything.", "topk_rank": 11 }, { "id": "156162", "score": 0.6767333149909973, "text": "They call you because that is their business rules. They want their money, so their system calls you starting on the 5th. Now you have to decide what you should do to stop this. The most obvious is to move the payment date to before the 5th. Yes that does put you at risk if the tenant is late. But since it is only one of the 4 properties you own, it shouldn't be that big of a risk.", "topk_rank": 12 }, { "id": "300962", "score": 0.674829363822937, "text": "sorry, things got busy. active calendar management. Are you talking about having a dedicated receptionist manage say an exchange calendar? taking calls, making an appointment on your calendar and then saving the event and setting reminders? that kind of thing? outgoing calls to confirm appointments sounds interesting, but currently we only want to deal with inbound, process then transfer.", "topk_rank": 13 }, { "id": "112728", "score": 0.6742792725563049, "text": "Any accounting software should be able to handle this. When you invoice them, set the invoice date to the date of the event. Then receive a partial payment against that invoice. This will cause your accounting software to display the service income in the correct period as well. So if you sent them invoice for August 7, 2014 event on May 5th, 2014 and they gave you $500 due, you would see this Income in August ($500 on Cash basis, $1000 on Accrual basis. When you received the other $500 in August, you would see $1000 for both methods). You would not see any income in May, when you created the invoice. This is better for revenue matching with the correct period. When you send them same invoice (say 30 days before the event), Set the software to show payments already received (it seems that most online accounting software will do this by default). Here is an example in Freshbooks. Here is an example in Xero: Seems they both display information on when you can expect payment on the their respective dashboards. In the Desktop version of Quickbooks (which I use a lot), it will not show the balance of the customer by default on an invoice. You will have to modify the invoice template. There are more details on that here. In Desktop version of Quickbooks, you can look at Cash Flow Forecast report to see the expected amount coming in. I hope that helps and good luck.", "topk_rank": 14 }, { "id": "527231", "score": 0.6741176247596741, "text": "I suspect that the payments were originally due near the end of each quarter (March 15, June 15, September 15, and December 15) but then the December payment was extended to January 15 to allow for end-of-year totals to be calculated, and then the March payment was extended to April 15 to coincide with Income Tax Return filing.", "topk_rank": 15 }, { "id": "74688", "score": 0.6732869744300842, "text": "\"A.1 and B.1 are properly balanced, but \"\"Business Expense\"\" is an expense, not an asset. The T entries should be timestamped. The time should be equal to the time on the credit card receipts. This will make audit and balancing easier. A or B can be used, but if the the business is to be reimbursed for personal expenses, the accounts should be renamed to reflect that fact. More explicit account names could be \"\"Business expense - stationary\"\" and \"\"Personal expense - lunch\"\" or even better \"\"Personal expense - cammil - lunch\"\". With a consistent format, the account names can be computer parsed for higher resolution and organization, but when tallying these high resolution accounts, debits & credits should always be used. When it comes time to collect from employees, only accounts with \"\"Personal expense\"\" need be referenced. When it comes time to collect from \"\"cammil\"\", only net accounts of \"\"Personal expense - cammil\"\" need be referenced. An example of higher resolution, to determine what \"\"cammil\"\" owes, would be to copy the main books, reverse any account beginning with \"\"Personal expense - cammil\"\", and then take the balance. Using the entries in the question as an example, here's the account to determine \"\"cammil\"\"'s balance: Now, after all such balancing entries are performed, the net credit \"\"Personal expense - cammil\"\" is what \"\"cammil\"\" owes to the business. The scheme for account names should be from left to right, general to specific.\"", "topk_rank": 16 }, { "id": "338701", "score": 0.6725656986236572, "text": "I'm not familiar with Gnucash, but I can discuss double-entry bookkeeping in general. I think the typical solution to something like this is to create an Asset account for what this other person owes you. This represents the money that he owes you. It's an Accounts Receivable. Method 1: Do you have/need separate accounts for each company that you are paying for this person? Do you need to record where the money is going? If not, then all you need is: When you pay a bill, you credit (subtract from) Checking and debit (add to) Friend Account. When he pays you, you credit (subtract from) Friend Account and debit (add to) Checking. That is, when you pay a bill for your friend you are turning one asset, cash, into a different kind of asset, receivable. When he pays you, you are doing the reverse. There's no need to create a new account each time you pay a bill. Just keep a rolling balance on this My Friend account. It's like a credit card: you don't get a new card each time you make a purchase, you just add to the balance. When you make a payment, you subtract from the balance. Method 2: If you need to record where the money is going, then you'd have to create accounts for each of the companies that you pay bills to. These would be Expense accounts. Then you'd need to create two accounts for your friend: An Asset account for the money he owes you, and an Income account for the stream of money coming in. So when you pay a bill, you'd credit Checking, debit My Friend Owes Me, credit the company expense account, and debit the Money from My Friend income account. When he repays you, you'd credit My Friend Owes Me and debit Checking. You don't change the income or expense accounts. Method 3: You could enter bills when they're received as a liability and then eliminate the liability when you pay them. This is probably more work than you want to go to.", "topk_rank": 17 }, { "id": "416523", "score": 0.6719056963920593, "text": "\"I wrote a little program one time to try to do this. I think I wrote it in Python or something. The idea was to have a list of \"\"projected expenses\"\" where each one would have things like the amount, the date of the next transaction, the frequency of the transaction, and so on. The program would then simulate time, determining when the next transaction would be, updating balances, and so on. You can actually do a very similar thing with a spreadsheet where you basically have a list of expenses that you manually paste in for each month in advance. Simply keep a running balance of each row, and make sure you don't forget any transactions that should be happening. This works great for fixed expenses, or expenses that you know how much they are going to be for the next month. If you don't know, you can estimate, for instance you can make an educated guess at how much your electric bill will be the next month (if you haven't gotten the bill yet) and you can estimate how much you will spend on fuel based on reviewing previous months and some idea of whether your usage will differ in the next month. For variable expenses I would always err on the side of a larger amount than I expected to spend. It isn't going to be possible to budget to the exact penny unless you lead a very simple life, but the extra you allocate is important to cushion unexpected and unavoidable overruns. Once you have this done for expenses against your bank account, you can see what your \"\"low water mark\"\" is for the month, or whatever time period you project out to. If this is above your minimum, then you can see how much you can safely allocate to, e.g. paying off debt. Throwing a credit card into the mix can make things a bit more predictable in the current month, especially for unpredictable amounts, but it is a bit more complicated as now you have a second account that you have to track that has to get deducted from your first account when it becomes due in the following month. I am assuming a typical card where you have something like a 25 day grace period to pay without interest along with up to 30 days after the expense before the grace period starts, depending on the relationship between your cut-off date and when the actual expense occurs.\"", "topk_rank": 18 }, { "id": "318491", "score": 0.6717624068260193, "text": "\"In the US, you'd run the risk of being accused of fraud if this weren't set up properly. It would only be proper if your wife could show that she were involved, acting as your agent, bookkeeper, etc. Even so, to suggest that your time is billed at one rate but you are only paid a tiny fraction of that is still a high risk alert. I believe the expression \"\"if it quacks like a duck...\"\" is pretty universal. If not, I'll edit in a clarification. note -I know OP is in UK, but I imagine tax collection is pretty similar in this regard.\"", "topk_rank": 19 } ]
7	New business owner - How do taxes work for the business vs individual?	[ { "id": "411063", "score": 0.7072799205780029, "text": "Through your question and then clarification through the comments, it looks like you have a U.S. LLC with at least two members. If you did not elect some other tax treatment, your LLC will be treated as a partnership by the IRS. The partnership should file a tax return on Form 1065. Then each partner will get a Schedule K-1 from the partnership, which the partner should use to include their respective shares of the partnership income and expenses on their personal Forms 1040. You can also elect to be taxed as an S-Corp or a C-Corp instead of a partnership, but that requires you to file a form explicitly making such election. If you go S-Corp, then you will file a different form for the company, but the procedure is roughly the same - Income gets passed through to the owners via a Schedule K-1. If you go C-Corp, then the owners will pay no tax on their own Form 1040, but the C-Corp itself will pay income tax. As far as whether you should try to spend the money as business expense to avoid paying extra tax - That's highly dependent on your specific situation. I'd think you'd want to get tailored advice for that." } ]	[ { "id": "65095", "score": 0.6718419790267944, "text": "As an individual freelancer, you would need to maintain a book of accounts. This should show all the income you are getting, and should also list all the payments incurred. This can not only include the payments to other professionals, but also any hardware purchased, phone bills, any travel and entertainment bills directly related to the service you are offering. Once you arrive at a net profit figure, you would need to file this as your income. Consult a tax professional and he can help with how to keep the records of income and expenses. i.e. You would need to create invoices for payments, use checks or online transfers for most payments, segregate the accounts, one account used for this professional stuff, and another for your personal stuff, etc. In a normal course the Income Tax Department does not ask for these records, however whenever your tax returns get scrutinized on a random basis, they would ask for all the relevant documentations.", "topk_rank": 0 }, { "id": "541682", "score": 0.6717067360877991, "text": "If you are paid by foreigners then it is quite possible they don't file anything with the IRS. All of this income you are required to report as business income on schedule C. There are opportunities on schedule C to deduct expenses like your health insurance, travel, telephone calls, capital expenses like a new computer, etc... You will be charged both the employees and employers share of social security/medicare, around ~17% or so, and that will be added onto your 1040. You may still need a local business license to do the work locally, and may require a home business permit in some cities. In some places, cities subscribe to data services based on your IRS tax return.... and will find out a year or two later that someone is running an unlicensed business. This could result in a fine, or perhaps just a nice letter from the city attorneys office that it would be a good time to get the right licenses. Generally, tax treaties exist to avoid or limit double taxation. For instance, if you travel to Norway to give a report and are paid during this time, the treaty would explain whether that is taxable in Norway. You can usually get a credit for taxes paid to foreign countries against your US taxes, which helps avoid paying double taxes in the USA. If you were to go live in Norway for more than a year, the first $80,000/year or so is completely wiped off your US income. This does NOT apply if you live in the USA and are paid from Norway. If you have a bank account overseas with more than $10,000 of value in it at any time during the year, you owe the US Government a FinCEN Form 114 (FBAR). This is pretty important, there are some large fines for not doing it. It could occur if you needed an account to get paid in Norway and then send the money here... If the Norwegian company wires the money to you from their account or sends a check in US$, and you don't have a foreign bank account, then this would not apply.", "topk_rank": 1 }, { "id": "352760", "score": 0.6717026233673096, "text": "There are two methods of doing this Pulling out the money and paying the penalty if any, and going on your way. Having the Roth IRA own the business, and being an employee. If you go with the second choice, you should read more about it on this question.", "topk_rank": 2 }, { "id": "401832", "score": 0.6716132760047913, "text": "It actually depends on the services provided. If you're renting through AirBnB, you're likely to provide much more services to the tenants than a traditional rental. It may raise it to a level when it is no longer a passive activity. See here, for starters: Providing substantial services. If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Use Form 1065, U.S. Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. For information, see Publication 334, Tax Guide for Small Business. Also, you may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. For a discussion of “substantial services,” see Real Estate Rents in Publication 334, chapter 5", "topk_rank": 3 }, { "id": "515233", "score": 0.671588659286499, "text": "\"In the United States, with an S-Corp, you pay yourself a salary from company earnings. That portion is taxed at an individual rate. The rest of the company earnings are taxed as a corporation, which often have great tax benefits. If you are making over $80K/year, the difference can be substantial. A con is that there is more paperwork and you have to create a \"\"board\"\" of advisors.\"", "topk_rank": 4 }, { "id": "160313", "score": 0.6709689497947693, "text": "First, the SSN isn't an issue. She will need to apply for an ITIN together with tax filing, in order to file taxes as Married Filing Jointly anyway. I think you (or both of you in the joint case) probably qualify for the Foreign Earned Income Exclusion, if you've been outside the US for almost the whole year, in which cases both of you should have all of your income excluded anyway, so I'm not sure why you're getting that one is better. As for Self-Employment Tax, I suspect that she doesn't have to pay it in either case, because there is a sentence in your linked page for Nonresident Spouse Treated as a Resident that says However, you may still be treated as a nonresident alien for the purpose of withholding Social Security and Medicare tax. and since Self-Employment Tax is just Social Security and Medicare tax in another form, she shouldn't have to pay it if treated as resident, if she didn't have to pay it as nonresident. From the law, I believe Nonresident Spouse Treated as a Resident is described in IRC 6013(g), which says the person is treated as a resident for the purposes of chapters 1 and 24, but self-employment tax is from chapter 2, so I don't think self-employment tax is affected by this election.", "topk_rank": 5 }, { "id": "381753", "score": 0.6708824634552002, "text": "Disclaimer: I am not an attorney, and I have not 100% researched the law. Take any advise from an online forum with a grain of salt. Please consult an attorney, tax specialist, or the IRS directly for any concrete answers. AFAIK there isn't anything that would prevent you from starting a business. Simply owing back taxes shouldn't make a difference on how you make money, whether that is working for yourself or someone else. All the IRS is concerned about at this point is that you still owe them. When going through the process of forming an LLC a couple of years back, I don't recall any personal tax information being brought up except when we were discussing possible loan options. Regarding loan options, one important issue you may come into is if the IRS has filed a lien against you: A federal tax lien is the government’s legal claim against your property when you neglect or fail to pay a tax debt. The lien protects the government’s interest in all your property, including real estate, personal property and financial assets. A lien will exist on your credit report for 7 years after it is released: The IRS releases your lien within 30 days after you have paid your tax debt. With a lien, it will be very difficult to get a loan or other financing for your small business. If this ends up being the case, you can try to get a discharge or subordination on specific property that would allow lenders a claim on your property ahead of the IRS. Otherwise, you may find yourself relying solely on what money you currently have. A big point is the IRS's threshold on filing a lien is $10,000: The Fresh Start Initiative increased the IRS Notice of Federal Tax Lien filing threshold from $5,000 to $10,000; however, Notices of Federal Tax Liens may still be filed on amounts less than $10,000 when circumstances warrant. Since you currently owe ~$8,000 over the past 3 years, it is possible that adding another year in back taxes will cause the IRS to file a lien if they have not yet already done so. So it may be something to keep an eye on if you do plan on taking out a loan for your business.", "topk_rank": 6 }, { "id": "480512", "score": 0.6706569194793701, "text": "IRS Publication 529 is the go-to document. Without being a tax professional, I'd say if the dues and subscriptions help you in the running of your business, then they're deductible. You're on your own if you take my advice (or don't). ;)", "topk_rank": 7 }, { "id": "389516", "score": 0.6706277132034302, "text": "An LLC is a pass-through entity in the USA, so profits and losses flow through to the individual's taxes. Thus an LLC has a separate TIN but the pass-through property greatly simplifies tax filings, as compared to the complicated filings required by C-corps.", "topk_rank": 8 }, { "id": "369577", "score": 0.6706056594848633, "text": "If this is something you plan to continue doing it would make sense to create it as it's own business entity and then to get non-profit status eg: 501c3. Otherwise I'm pretty sure you have to think of it as YOU receiving the money as a sole proprietor - and file a couple more tax forms at the end of the year. I think it's a Schedule C. So essentially if you bring in $10,000, then you spend that $10,000 as legit business expenses for your venture your schedule C would show no profit and wouldn't pay taxes on it. BUT, you do have to file that form. Operating this way could have legal implications should something happen and you get sued. Having the proper business entity setup could help in that situation.", "topk_rank": 9 }, { "id": "300460", "score": 0.6705337762832642, "text": "\"I'm not 100% certain on boats, since they aren't typically sold for a gain, but the tax base of an asset is typically the cost of the asset plus the cost of any improvements, so your $15,000 gain looks right (check with a CPA to be certain, though, if you can). Your \"\"cost basis\"\" would be $50,000 + $25,000 = $75,000, and your net gain would be $90,000 - $75,000 = $15,000. The result is the same, but the arithmetic is organized a little differently. I am fairly confident you cannot include your time in the \"\"cost of improvements\"\". If you incorporated and \"\"paid yourself\"\" for the time, then the payment would be considered income (and taxed), if it was even allowed. Depending on your tax bracket that may be a WORSE option for you. You can look at it this way - you only pay the tax on the $15k gain versus paying someone else $15k to do the labor.\"", "topk_rank": 10 }, { "id": "313397", "score": 0.6705222725868225, "text": "Get answers from your equivalent of the IRS, or a local lawyer or accountant who specializes in taxes. Any other answer you get here would be anectdotal at best. Never good to rely on legal or medical advice from internet strangers.", "topk_rank": 11 }, { "id": "377547", "score": 0.6704255938529968, "text": "\"As a minor you certainly can pay tax, the government wants its cut from you just like everyone else :-) However you do get the personal allowance like everyone else, so you won't have to pay income tax until your net income reaches £10,800 (that's the figure for the tax year from April 2015 to April 2016, it'll probably change in future years). Once you're 16, you will also have to pay national insurance, which is basically another tax, at a lower threshold. The current rates are £2.80/week if you are making £5,965 a year or more, and also 9% on any income above £8,060 (up to £42,385). Your \"\"net income\"\" or \"\"profits\"\" are the income you receive minus the expenses you have to support that income. Note that the expenses must be entirely for the \"\"business\"\", they can't be for personal things. The most important thing to do immediately is to start keeping accurate records. Keep a list of the income you receive and also the expenses you pay for hardware etc. Make sure you keep receipts (perhaps just electronic ones) for the expenses so you can prove they existed later. Keep track of that net income as the year goes on and if it starts collecting at the rate you'd have to pay tax and national insurance, then make sure you also put aside enough money to pay for those when the bill comes. There's some good general advice on the Government's website here: https://www.gov.uk/working-for-yourself/what-you-need-to-do In short, as well as keeping records, you should register with the tax office, HMRC, as a \"\"sole trader\"\". This should be something that anyone can do whatever their age, but it's worth calling them up as soon as you can to check and find out if there are any other issues. They'll probably want you to send in tax returns containing the details of your income and expenses. If you're making enough money it may be worth paying an accountant to do this for you.\"", "topk_rank": 12 }, { "id": "210889", "score": 0.6704121828079224, "text": "Another person, not a shareholder or director, will be treated as when a bank loans you money. You are loaning out money and you are sort of getting interest income out of it or some other benefit, which needs to be put down in you company's annual return. Full source on the HMRC website. But for a shareholder or director is different matter. Check the HMRC source for sure and check with your accountant, if you have one. If you owe your company money You or your company may have to pay tax if you take a director’s loan. Your personal and company tax responsibilities depend on how the loan is settled. You also need to check if you have extra tax responsibilities if: If the loan was more than £10,000 (£5,000 in 2013-14) If you’re a shareholder and director and you owe your company more than £10,000 (£5,000 in 2013 to 2014) at any time in the year, your company must: You must report the loan on your personal Self Assessment tax return. You may have to pay tax on the loan at the official rate of interest. If you paid interest below the official rate If you’re a shareholder and director, your company must: You must report the interest on your personal Self Assessment tax return. You may have to pay tax on the difference between the official rate and the rate you paid.", "topk_rank": 13 }, { "id": "419319", "score": 0.6701555848121643, "text": "My understanding (I am not a lawyer or tax expert) is that you are not allowed to work for free, but you can pay yourself minimum wage for the hours worked. There are probably National Insurance implications as well but I don't know. The main thing is, though, that if HMRC think that you've set up this system as a tax avoidance scheme then they're allowed to tax you as though all the income had been yours in the first place. If you are considering such a setup I would strongly advise you to hire a qualified small business accountant who will be familiar with the rules and will be able to advise you on what is and is not possible / sensible. Falling outside the rules (even inadvertently) leaves you liable to a lot of hassle and potentially fines etc.", "topk_rank": 14 }, { "id": "120649", "score": 0.6701547503471375, "text": "The company will have to pay 20% tax on its profits. Doesn't matter how these profits are earned. Profits = Income minus all money you spend to get the income. However, you can't just take the profits out of the company. The company can pay you a salary, on which income tax, national insurance, and employer's national insurance have to be paid at the usual rate. The company can pay you a dividend, on which tax has to be paid. And the company can pay money into the director's pension fund, which is tax free. Since the amount of company revenue can be of interest, I'd be curious myself what the revenue of such a company would be. And if the company makes losses, I'm sure HMRC won't allow you to get any tax advantages from such losses.", "topk_rank": 15 }, { "id": "257303", "score": 0.6701151132583618, "text": "\"You will need to see a tax expert. Your edited question includes the line For the short term, we will be \"\"renting\"\" it to my wife's grandmother at a deep discount. According to the instructions for schedule E If you rented out a dwelling unit that you also used for personal purposes during the year, you may not be able to deduct all the expenses for the rental part. “Dwelling unit” (unit) means a house, apartment, condominium, or similar property. For each property listed on line 1a, report the number of days in the year each property was rented at fair rental value and the number of days of personal use. A day of personal use is any day, or part of a day, that the unit was used by: I have no idea how this will work for Schedule C.\"", "topk_rank": 16 }, { "id": "564453", "score": 0.6700435876846313, "text": "It will depend on how much you expect to earn this way, and whether you expect the company to become profitable soon. Has the company just not made a profit yet, or has it actually made a significant loss that your invoices would just be offsetting? If you're earning over £10,000 per year then invoicing through the company is preferable. Above that level, you'd be taking money from the company as dividends after paying 20% corporation tax with no other tax to pay on your personal tax return. As a sole trader you'd be paying 20% income tax and 9% NI. (Note however that the company can only pay dividends from profits, which is a problem if there are significant losses to offset.) Below £10,000, there's little difference. Through the company, you can take a salary of £7956 per year without paying any income tax or NI. With the new £2000 discount on employers' NI you could then take salary up to £10,000 and just pay 12% employee's NI. As a sole trader, you pay 9% Class 4 NI over £7956 and a fixed £143 per year for Class 2 NI. Paying 9% rather than 12% saves you £60, but then you add the £143. In practice the company would work out more expensive at this level because you'll probably want to pay an accountant to deal with the payroll for you. Having the company repay your £2000 from the invoices doesn't really save any tax if the company will become profitable in the future. You don't pay any tax now since the money you receive isn't income, and the company doesn't pay any tax if the extra £2000 of revenue doesn't put it back in profit. However, if the company is profitable next year then it will have an extra £2000 of profit that would otherwise have been offset against this year's loss, and you do end up paying 20% corporation tax on the £2000. You could still have the company repay the loan in order to delay the tax liability, but it's not really tax free money. Loaning additional money to the company has no tax benefit, you just give the company £1000 and get your original £1000 back later. You pay no tax and neither does the company, but it was your money in the first place.", "topk_rank": 17 }, { "id": "258439", "score": 0.6699747443199158, "text": "My experience (two purchases, Ontario, Canada) is that the property taxes are paid by whomever is the owner on the date the tax bill comes due. The bill might be due before the owners even decide to sell. However: A part of the closing process is a Statement of Adjustments, in which various costs that span the tenure of two owners are split on a per-diem basis. In your case, there would have been a charge against you of 2/365 of the tax bill on this statement at the time of closing (if you hadn't paid any 2014 taxes) The statement also includes things like flat-rate water bills, monthly cable bills, security system monitoring... All paid by one owner or the other, but split fairly on a per diem basis at the time of closing...", "topk_rank": 18 }, { "id": "121393", "score": 0.6699633002281189, "text": "\"I work in the legal services industry, selling these products for a competitor of theirs who shall remain nameless. The LLC filing itself in most cases is a simple fill in the blank form. You can likely file yourself either online or through the mail, depending on the state. Only a handful require an original document. You can apply for the EIN for free on the IRS website and usually have it within a few minutes. If you already have someone assisting with your annual LLC taxes you wouldn't need their services for that either. If their compliance kit involves any business licensing research, it may be worthwhile - but you can also order those services a la carte from vendors like LLX and BusinessLicenses.com. What you're really paying for is the registered agent service - the address for public record with the state so they know where to send any service of process - and you're paying for the convenience of a \"\"one stop shop\"\" instead of handling all the legwork yourself.\"", "topk_rank": 19 } ]
9	Hobby vs. Business	[ { "id": "509122", "score": 0.6842485070228577, "text": "Miscellaneous income -- same category used for hobbies." }, { "id": "184698", "score": null, "text": "\"You can list it as other income reported on line 21 of form 1040. In TurboTax, enter at: - Federal Taxes tab (Personal in Home & Business) - Wages & Income -“I’ll choose what I work on” Button Scroll down to: -Less Common Income -Misc Income, 1099-A, 1099-C. -The next screen will give you several choices. Choose \"\"Other reportable Income\"\". You will reach a screen where you can type a description of the income and the amount. Type in the amount of income and categorize as Tutoring.\"" } ]	[ { "id": "76120", "score": 0.649917721748352, "text": "Well first problem is usually that you are trying to do too much, you end up micro managing, once a company becomes large enough this is impossible to keep doing at the same level. If you find that you don't have enough time maybe it's time to either hire someone new, or promote/transfer someone. You need to trust and give freedom to your employees to do their job in their own way which may or may not be better than yours. (Communicate with each at intervals.) A lot of business owners struggle with this because it costs them money, and that is wrong it's cost your company money which is a separate entity than you. A piece of property that makes you less money than the week before is still making you money you are not losing money. So get that out of your head, it's not your money until you take it out of the business until then that money including profits are the property of the business (this is how the law see it by the way.) Marginally an understaffed store will make a larger percentage of profits from revenue, a well staffed store will make more actual profits from more actual revenue because it can handle the business coming into the store better, which in turns should lead to more business. On a particular day you may see more money in profit from an understaffed store, someone calls out let's say, but trust me when I say that will not continue for very long. On of the biggest challenges new business owners face is they are fugal, as in they don't spend the money they need to. This means buying new equipment, and hiring and giving raises and promotions, so you can handle new business as well. Let say you are making T-Shirts, or really adding new designs to pre-made plain shirts, you can only press one at a time which for a while is enough, but eventually you are going to need another press so you can do 2 at a time, but a lot business owners will somehow expect an employee to produce more with what he has, now orders aren't being filed and you are in a panic and possibly angry but guess what you are angry at the employee not the fact you were to stupid to realize that he needs 2 presses to do the job correctly that's your own fault and you're blind to it, because you feel as if you are working twice as hard than them because of the problem you created! And let's say the problem is different now the press isn't getting hot enough and it take 20% per shirt to get it to stay on correctly and you decide to never fix it, then a light goes out then blank then blank and suddenly you realize finally all of this needs to be replaced at the same time. I've seen things like this happen, in new and old businesses things work fine for the first 5 years then normal maintenance is forgotten, have a depreciation fund ready so it doesn't feel like you are spending any money, that's what that fund is for and you put into it from the beginning, need a $2k equipment, ohh I have $4k saved for this already, it was money intended to be spent on this. But of course some of this is going to depend on the type of business you are running! And since you have provided us no details I can't give an answer for you because all businesses are different, but I feel that these things, refusing to give freedom and authority to other employees, and refusing to spend money when needed are the biggest pitfalls most business owners fall into.", "topk_rank": 0 }, { "id": "452683", "score": 0.6498680114746094, "text": "I don't know. I like his attitude. Why not try weird stuff? I went to a Star Trek convention just for fun to see what it was like. Not my thing but I loved the experience. Same with a convention for restaurant supplies. Travel whenever I can and try to stay in the weird hotels. I'd probably try this service too, just to say I did.", "topk_rank": 1 }, { "id": "573677", "score": 0.6498247981071472, "text": "Quite often the local university has decent gym facilities with super-competitive rates, even if you are not a student there, and you can usually join for a single term and pay by cash. They lack some of the fancier things and might be not as shiny, but I want my membership fees to pay for equipment, not interior design.", "topk_rank": 2 }, { "id": "525292", "score": 0.6497852206230164, "text": "You are absolutely correct, incorporation and the fiduciary responsibility that comes with it almost always leads to a sacrifice in product quality and long-term business principles. I always think of the difference between McDonalds and In-n-Out hamburgers as examples of where each road leads.", "topk_rank": 3 }, { "id": "315083", "score": 0.6495679020881653, "text": "Yea that's all fine and dandy if you have the resources to afford not having a reliable income while you take the risk of being entrepreneurial. One of my good friends just sold his company to yelp for $9mil. Good for him, I wish him the best. But it's easy to justify taking the risk of starting your own company if your parents are worth $200mil and bought you a $3mil house. In that situation, you aren't actually taking a risk.", "topk_rank": 4 }, { "id": "121744", "score": 0.6495062112808228, "text": "Dude, pitch deck is a hygiene factor. You need it. They're really hard to do right. It's hard to get the op to 'sell' without the deck in the first place. You might not get meetings. Yes, if you have the connections and massive energy then you 'can' hustle through... but you need to follow the rules of the game if you want to win. Front's deck is one of the best. I've the largest public collection online (~90). It's easily the most common one I recommend to people (yes, it can be better). Linkedin with Reid's commentary is of course the most informative. Do you know what the search volume is on pitch decks? Mine get literally millions of views a year according to slideshare and I've never marketed them. Founders want to see these decks", "topk_rank": 5 }, { "id": "56747", "score": 0.649398148059845, "text": "If youre fifteen... Id actually recommend starting with some economics, just to understand the business decision making process. Mystery of Capital by Hernando de Soto is excellent. An online course from anywhere would be cool too. Then, case studies are excellent as well. It depends on what you want to use ths for. Sales? Yeah, how to win friends and influence people, totally. A macro scale understanding, take the route I took.", "topk_rank": 6 }, { "id": "385929", "score": 0.6492617726325989, "text": "An expense is an expense. You can deduct your lease payment subject to some limitations, but you don't make out by having more expenses. Higher expenses mean lower profit. Is leasing better than owning? It depends on the car you'd buy. If your business doesn't benefit from flashiness of your car, then buying a quality used car (a few years old at most) would probably be a wiser decision financially. I'd think hard about whether you really need an up-to-date car.", "topk_rank": 7 }, { "id": "97018", "score": 0.6491967439651489, "text": "Theres loads of information on the costs of regulation to smaller businesses and larger corporations and the adverse affects its had on their ability to either go public or stay private. We learned boat loads about it this past year in my undergraduate course so I'm sure you could find quite a bit.", "topk_rank": 8 }, { "id": "5058", "score": 0.6490894556045532, "text": "The most important thing, IMO is to love the business itself. Love what you are doing. Some people in a family business have aptitudes/attitudes better suited for somewhere else, they are just there because they want to help the family. That is a noble mindset but it may translate into sub-par work because you are not doing what you love. So love it, or at least like it a lot.", "topk_rank": 9 }, { "id": "377537", "score": 0.6490829586982727, "text": "Well I was trying to describe it very generally because I think if other people heard the idea especially on an business thread the idea would be taken easily. And the idea came to me about a month ago and I guess I didn't explain well but I was wondering what kind of homework I need to research. My intention was for people to give me an idea of where to start. I've already started to write out a business plan I just didn't know if there were places to go to find people to invest into it or not. And I'm totally fine with criticism and what not but the way he came out was actually humorous to me, to call someone's idea bad when you don't know what it is is just silly. Snapchat seemed like a stupid idea in my opinion. Why would I only want to see someone's picture for 10 seconds and it goes away forever? But hey that turned into gold. So you never know what can be successful and not these days and how are you supposed to find out without taking the risks and going for it. So I guess a specific question is, if I write a business plan, what is my next step, who do I show it to?", "topk_rank": 10 }, { "id": "32503", "score": 0.6488229632377625, "text": "\"My company makes books. It is a start-up going through hard times right now. It is too soon to say if we are ultimately going to be successful, so we might not be the best example of triumph following adversity. We certainly can fulfill the \"\"hard times\"\" part, though. Let me know if I can be of any help.\"", "topk_rank": 11 }, { "id": "484437", "score": 0.6487665772438049, "text": "My personal experience tells me that nearly 100% of people who approach you have their own interests in mind. Things you searched yourself will be more beneficial.", "topk_rank": 12 }, { "id": "573789", "score": 0.6486003398895264, "text": "Just because you think it is healthy to get away from the computer and physically go to a bookstore does not make it good business. By that rationale, you should be paying all of your bills at the post office with a stamp.", "topk_rank": 13 }, { "id": "474962", "score": 0.6485956907272339, "text": "I'm hearing that I should maybe wait and see how things go at first as it is only a very small operation. But if I moved into a side of the trade where I require staff, vehicles, and the likes then I would need to registed as a limited company.", "topk_rank": 14 }, { "id": "370976", "score": 0.648565411567688, "text": "Everything in life is a combination of luck and skill. Startups are no different. The risks are higher and most sensible people know and understand that. You know why we worship the successes? Because against all odds, those startups stood up to your salaried buddies who work for faceless large corporations and have tons of people and kicked their asses. At some point, they deserve it. You see startups as gambling, others see it as betting on yourself. Especially founding or joining an early stage startup. It's also taking on huge responsibility. In a mega-corp your failures and shortcomings will be covered and almost certainly won't tank the company. Your creativity probably won't flourish and their is an incentive to do just well enough. Why should you work your ass off for a company that you're not invested in other than a paycheck? Startups aren't for everyone. Hell, startups probably aren't for most people. But there are some people, those select few, who simply can't imagine not working for themselves, creating things, tinkering, trying to change the world. It's not even gambling to them, it's a way of life.", "topk_rank": 15 }, { "id": "280099", "score": 0.6483824849128723, "text": "Well said. To put it shortly I think both can be a viable source of some side income when proper risk management is in place. It is likely not going to work when you are trading/betting with money that is important to you. Paper trade/bet until you find a viable strategy. Then use proper bankroll management and some expendable income to pick up some extra bucks on the side. Sports betting is nice because the initial investment is much lower than day trading.", "topk_rank": 16 }, { "id": "351405", "score": 0.6483240723609924, "text": "\"Online courses in one resource, although I've always found reading targeted books to be far more effective when it comes to business. My best advice on starting companies is learn how to think like those who have started the craziest/biggest/best companies. I've always gotten far more out of reading Steve Jobs' biography, Sam Walton's autobiography, John Rockefeller's biography \"\"Titan\"\", Warren Buffett's biography \"\"Snowball\"\", Howard Schulz's books on starbucks, etc. than just about any business course I've taken. These also far surpass your 'start a business with these steps' books. Although you do need to read some of those too. I'd encourage picking out a few business heroes and learning from them. Elon Musk is mine today. Check out his life story. For more targeted skills, such as learning accounting or management skills, amazon is pretty easy to navigate. tl;dr: Learn to think like the greats before learning the skills you need\"", "topk_rank": 17 }, { "id": "466460", "score": 0.648186981678009, "text": "Have a business plan. Even if this is just a piece of paper that you and your friend scratched on, you want a document that describes what you're going to do and how you're going to do it. Also have some note of how profits will be shared (most likely, this will be 50/50 but write it down!) Plan ahead and have some cash onhand. Not every one of your expenses will be something you will know about in advance. Plan your expenses so that you have money to cover them, but also have an emergency fund (you can build this with the profits you get in the beginning) in case your rake breaks and you don't have a backup. Also, if you use your emergency fund, REPLACE IT. Trust each other and communicate. All businesses should run on trust. You and your friend should trust that the other person is going to work hard and put in the work. If you don't trust that he will show up on time, the burden falls to you and you will need to work harder. If you're having problems with him, trust that you'll be able to approach him (be tactful and respectful though) and work it out. Have fun. Ultimately, starting a business like this should be fun. Yes, the work may seem like a drag, but if you and your friend are able to have fun while working you'll enjoy it more and it won't seem so bad. Also, don't be afraid to spend your profits on yourselves. I'm not saying blow every dollar you make, but going to dinner or going to see a movie together with your hard earned profits from that day's work can make it all worth it. These are just some ideas that I came up with at my desk at work. If you have any other questions, feel free to PM me. I'm happy to help out. Good luck!", "topk_rank": 18 }, { "id": "278629", "score": 0.6481479406356812, "text": "Question (which you need to ask yourself): How well are your friends paid for their work? What would happen if you just took your money and bought a garage, and hired two car mechanics? How would that be different from what you are doing? The money that you put into the company, is that paid in capital, or is it a loan to the company that will be repaid?", "topk_rank": 19 } ]
11	Personal checks instead of business ones	[ { "id": "596427", "score": 0.7653040289878845, "text": "I'll assume you are asking about a check for some kind of work or service that you provided them, that they hired your company to do. No large business will do that. In their records they have a contract with your company to provide services. If they write you a personal check it won't match with the contract, and when the auditors see that they will scream blue murder. Whoever wrote the check will have to prove that you are legitimately the same thing as the company (that doesn't mean taking your word for it). They may also have to show they weren't conspiring with you to commit tax fraud ( that wasn't your intention of course, was it?) ." } ]	[ { "id": "181187", "score": 0.7265689373016357, "text": "They sure can. They are two different legal entities, so why not? You can even write a check to yourself, and then deposit it back into your own account. (Not very useful, but you can). The tax implications are a very different question, as this might constitute taking money out of the company. Edit: In some countries, when the business hires someone to work for them, it is forbidden by law to do that, unless he/she is explicitly allowed to do it in his contract. The business owner himself however, can always 'allow' himself to do that.", "topk_rank": 0 }, { "id": "229546", "score": 0.7222591638565063, "text": "\"Legally, a check just needs to have a certain list of things (be an instruction to one's bank to pay a specific amount of money to bearer or to a specific entity, have a date, have a signature, etc.) There are anecdotes around of a guy depositing a junk mail check and it accidentally qualifying as a real check (which he turned into a live show), or of writing a check on a door, cow, or \"\"the shirt off your back\"\". What kind of checks your bank will process is technically up to them. Generally, if you get your blank checks printed up by any reputable firm, they'll have similar information in similar places, as well as the MICR line (the account and routing number in magnetic ink on the bottom) to allow for bank to process the checks with automated equipment. As long as it's a standard size, has the MICR line, and has the information that a check needs, your bank is likely to be fine with it. So, there are some standards, but details like where exactly the name of the bank is, or what font is used, or the like, are up to whoever is printing the check. For details on what standards your bank requires in order to process your checks, you'd have to check with your bank directly. Though, it wouldn't surprise me if they just directed you to their preferred check printer provider, as they know that they accept their check format fine. Though as I said, any reputable check printer makes sure that they meet the standards to get processed by banks without trouble. Unless you're a business that's going to be writing a lot of checks and pay a lot of fees for the privilege, a bank is not likely to want to make exceptions for you for your own custom-printed octagonal checks written in ancient Vulcan.\"", "topk_rank": 1 }, { "id": "431637", "score": 0.7219842076301575, "text": "US Bank just introduced this feature, but they want $.50 per deposit! No way man. Schwab has an Android App I have used a dozen times. Very easy and pretty consistent. It worked on folded checks, pictures on a reflective background (kitchen table top), big company issued checks and of course personal checks. Very positive feeling from this app and the ability to deposit.", "topk_rank": 2 }, { "id": "188167", "score": 0.7209585309028625, "text": "\"Do not use a shared bank account. One of you can cash/deposit the check in your personal account and then either pay the others in the group cash or write them a check. You open yourself up to many, many problems sharing a bank account and/or money. Treat it like a business as far as income goes, but I would not recommend any type of formal business, LLC, partnership, sole proprietorship, etc. For federal taxes, you just keep track of how much \"\"you\"\" personally are paid and report that at the end of the year as income, most likely on a 1040EZ 1040SE, along with any other income you have.\"", "topk_rank": 3 }, { "id": "224377", "score": 0.7205337882041931, "text": "In a nutshell, throwing your taxable income in the trash does not remove it from your taxable income; you still have to report in your tax filing, and pay taxes as needed. Especially as you could at any time request your employer to write you a replacement check. I would expect them to start charging a fee for reprinting if you really annoy them by doing it dozens of times. If you want to avoid taxes on it, donate it to a deductible 501(c)3 organization; then it becomes neutral to your taxes.", "topk_rank": 4 }, { "id": "438975", "score": 0.7201874852180481, "text": "Goddady.com will gladly accept payment from your personal account. They don't really care, as long as you approve the charge, whose name the account is in. I'm not sure PayPal even check the names on the invoice and the account to match, they just want you to login. However, depending on your local laws, you may be required to have a separate business account. In the US, for example, corporations must have their own accounts. For other entities with limited liability (like LLC or LLP) it is advised to have a separate account to avoid piercing corporate veil. Also, if your business name is not your personal name - clients may want to verify that the checks/transfers are deposited under your business name. In some countries checks written out to X cannot be endorsed by X to be transferred to Y. That may affect your decision as well. You'll have to get a proper legal advice valid in your jurisdiction to know the answer to your question.", "topk_rank": 5 }, { "id": "346537", "score": 0.7201076149940491, "text": "Deposit check and send a personal check (resulting in tax and IRS reporting issues) That's a bad idea, unless maybe the check you're receiving is a certified bank draft. Suppose the insurance company are crooks and the check is fraudulent. It could take weeks or months for some investigation to catch up to that, long after your own personal check was cashed by the pharmacy. The bank will then put you on hook for the 20 grand by reversing the check, even though the funds had been deposited into your account. Do not put yourself into the position of a money handler; you don't have the cash base, insurance, government protection and whatever else that a bank has. And, of course, you're being a free money handler if you do that. (You're not even compensated for postage, time and whatnot). If you're handling money between two parties, you should collect a percentage, or else refuse. That percentage has to be in proportion to the risk, since cashing a check for someone carries a risk similar to (and is effectively a form of) making a loan.", "topk_rank": 6 }, { "id": "802", "score": 0.7196232080459595, "text": "It probably doesn't matter since your credit and your checking are at the same institution, but I don't like to let my credit auto draft my checking. I always do it the other way around (and keep them at different places) I feel like there is more control when my money is gone that way.", "topk_rank": 7 }, { "id": "192726", "score": 0.7184244990348816, "text": "\"Basically, yes. Don't use your business account for personal spending because it may invalidate your limited liability protection. Transfer a chunk of money to your personal account, write it down in your books as \"\"distribution\"\" (or something similar), and use it in whatever way you want from your personal account. The IRS doesn't care per se, but mixing personal and business expenses will cause troubles if you're audited because you'll have problems distinguishing one from another. You should be using some accounting software to make sure you track your expenses and distributions correctly. It will make it easier for you to prepare reports for yourself and your tax preparer, and also track distributions and expenses. I suggest GnuCash, I find it highly effective for a small business with not so many transactions (if you have a lot of transactions, then maybe QuickBooks would be more appropriate).\"", "topk_rank": 8 }, { "id": "389953", "score": 0.7178848385810852, "text": "I have seen this happen with IRS checks, the bank told me that the IRS imposes the requirement. Otherwise, though, I have frequently deposited checks made out to my wife into a joint checking account without her signature, they have never cared one bit.", "topk_rank": 9 }, { "id": "191925", "score": 0.7176311612129211, "text": "Several things to do: Change your bank. $2 for a check? Why?? When shopping for a new bank: ask for a free checking account. College students can get free checking in almost any bank. At least the first box of checks will be free, which will give you enough checks for the next several years (I'm still not half done with the box I got from WaMu 5 years ago). Check out your neighborhood credit union. Most of them have free checking and free checks for students as well. If still no luck - check online check printing services, they'll send you a box for less than $25, that's for sure. Walmart for example (1 box - $7). Also, you can use banks' bill-pay service for any check you write, if you know the address of the person, the amount and the sum a couple of days ahead of time. That should cover rent, and probably most of your other checks.", "topk_rank": 10 }, { "id": "285317", "score": 0.7174670100212097, "text": "I have no choice but to write a few checks a month. That's the only way the recipient will allow me to pay them. It's annoying af but I have no alternative. I suspect that's the same for many people. It's not us who wants to retain checks, it's stupid corporations and government agencies who will only accept checks or who charge extra for paying with a debit or credit card.", "topk_rank": 11 }, { "id": "494783", "score": 0.7174420952796936, "text": "Typically your paychecks are direct deposited into your bank account and you receive a paycheck stub telling you how much of your money went where (taxes, insurance, 401k, etc.). Most people use debit or credit cards for purchases. I personally only use checks to transfer money to another person (family, friend, etc.) than a business. And even then, there's PayPal.", "topk_rank": 12 }, { "id": "297965", "score": 0.7173794507980347, "text": "\"Some benefits of having a business checking account (versus a personal checking account) are: The first 3 should be pretty easy to determine if they are important to you. #4 is a little more abstract, though I see you have an LLC taxed as a sole proprietorship, and so I'm guessing protecting your personal assets may have been one of the driving reasons you formed the LLC in the first place. If so, \"\"following through\"\" with the business account is advised.\"", "topk_rank": 13 }, { "id": "252097", "score": 0.7170022130012512, "text": "\"If you wish to lend them the money, make the check payable to the order of \"\"loan\"\", not directly to your son or daughter.\"", "topk_rank": 14 }, { "id": "524034", "score": 0.7169567942619324, "text": "If it were me, I would get a new checking account at potentially a new bank, but certainly with a new account number. As Nathan said, there is no need for you to cross her name off the check, but potentially, she could use those checks, or have new checks printed to use. Having her name on the check makes it seem like she is a legitimate signer on the account. In the end you can fight and possibly win with your bank that they should not have accepted a check signed by her as payment, but why bother? Also you will potentially alienate any merchant that accepts a check by her. It is a total mess that can be relatively easily solved with very little money ($25-$40 for check reprinting) proactively. Close the account, shred any existing checks, and move on. Heck you can actually make money by doing this and receiving a bonus. Check Nerd Wallet for current bank promotions.", "topk_rank": 15 }, { "id": "473274", "score": 0.7169300317764282, "text": "No, most check deposits are processed that way. Banks transmit the pictures of the checks between themselves, and allow business customers to deposit scans for quite some time now. I see no reason for you to be concerned of a check being in a dusty drawer, it's been deposited, cannot be deposited again. If you're concerned of forgery - well, nothing new there.", "topk_rank": 16 }, { "id": "272807", "score": 0.7165055274963379, "text": "While you can print that on the check, it isn't considered legally binding. If you are concerned about a check not being deposited in a timely manner, consider purchasing a cashier's check instead. This doesn't solve the problem per se, but it transfers responsibility of tracking that check from you to the bank.", "topk_rank": 17 }, { "id": "502283", "score": 0.7164689898490906, "text": "\"They are basically asking for the name of the legal entity that they should write on the check. You, as a person, are a legal entity, and so you can have them pay you directly, by name. This is in effect a \"\"sole proprietorship\"\" arrangement and it is the situation of most independent contractors; you're working for yourself, and you get all the money, but you also have all the responsibility. You can also set up a legal alias, or a \"\"Doing Business As\"\" (DBA) name. The only thing that changes versus using your own name is... well... that you aren't using your own name, to be honest. You pay some trivial fee for the paperwork to the county clerk or other office of record, and you're now not only John Doe, you're \"\"Zolani Enterprises\"\", and your business checks can be written out to that name and the bank (who will want a copy of the DBA paperwork to file when you set the name up as a payable entity on the account) will cash them for you. An LLC, since it was mentioned, is a \"\"Limited Liability Company\"\". It is a legal entity, incorporeal, that is your \"\"avatar\"\" in the business world. It, not you, is the entity that primarily faces anyone else in that world. You become, for legal purposes, an agent of that company, authorized to make decisions on its behalf. You can do all the same things, make all the same money, but if things go pear-shaped, the company is the one liable, not you. Sounds great, right? Well, there's a downside, and that's taxes and the increased complexity thereof. Depending on the exact structure of the company, the IRS will treat the LLC either as a corporation, a partnership, or as a \"\"disregarded entity\"\". Most one-man LLCs are typically \"\"disregarded\"\", meaning that for tax purposes, all the money the company makes is treated as if it were made by you as a sole proprietor, as in the above cases (and with the associated increased FICA and lack of tax deductions that an \"\"employee\"\" would get). Nothing can be \"\"retained\"\" by the company, because as far as the IRS is concerned it doesn't exist, so whether the money from the profits of the company actually made it into your personal checking account or not, it has to be reported by you on the Schedule C. You can elect, if you wish, to have the LLC treated as a corporation; this allows the corporation to retain earnings (and thus to \"\"own\"\" liquid assets like cash, as opposed to only fixed assets like land, cars etc). It also allows you to be an \"\"employee\"\" of your own company, and pay yourself a true \"\"salary\"\", with all the applicable tax rules including pre-tax healthcare, employer-paid FICA, etc. However, the downside here is that some money is subject to double taxation; any monies \"\"retained\"\" by the company, or paid out to members as \"\"dividends\"\", is \"\"profit\"\" of the company for which the company is taxed at the corporate rate. Then, the money from that dividend you receive from the company is taxed again at the capital gains rate on your own 1040 return. This also means that you have to file taxes twice; once for the corporation, once for you as the individual. You can't, of course, have it both ways with an LLC; you can't pay yourself a true \"\"salary\"\" and get the associated tax breaks, then receive leftover profits as a \"\"distribution\"\" and avoid double taxation. It takes multiple \"\"members\"\" (owners) to have the LLC treated like a partnership, and there are specific types of LLCs set up to handle investments, where some of what I've said above doesn't apply. I won't get into that because the question inferred a single-owner situation, but the tax rules in these additional situations are again different.\"", "topk_rank": 18 }, { "id": "151514", "score": 0.716442883014679, "text": "You can't cash the check silly. How can you go off on a rant when you can't even tell the difference between a real check and a promotional tool. If you don't want to call in an get info throw it away....simple. This thread made me laugh. Thanks for that. Good day.", "topk_rank": 19 } ]
12	Does U.S. tax code call for small business owners to count business purchases as personal income?	[ { "id": "192516", "score": 0.7557467222213745, "text": "\"I am going to keep things very simple and explain the common-sense reason why the accountant is right: Also, my sister in law owns a small restaurant, where they claim their accountant informed them of the same thing, where a portion of their business purchases had to be counted as taxable personal income. In this case, they said their actual income for the year (through their paychecks) was around 40-50K, but because of this detail, their taxable income came out to be around 180K, causing them to owe a huge amount of tax (30K ish). Consider them and a similarly situated couple that didn't make these purchases. Your sister in law is better off in that she has the benefit of these purchases (increasing the value of her business and her expected future income), but she's worse off because she got less pay. Presumably, she thought this was a fair trade, otherwise she wouldn't have made those purchases. So why should she pay any less in taxes? There's no reason making fair trades should reduce anyone's tax burden. Now, as the items she purchased lose value, that will be a business loss called \"\"depreciation\"\". That will be deductible. But the purchases themselves are not, and the income that generated the money to make those purchases is taxable. Generally speaking, business gains are taxable, regardless of what you do with the money (whether you pay yourself, invest it, leave it in the business, or whatever). Generally speaking, only business losses or expenses are deductible. A purchase is an even exchange of income for valuable property -- even exchanges are not deductions because the gain of the thing purchased already fairly compensates you for the cost. You don't specify the exact tax status of the business, but there are really only two types of possibilities. It can be separately taxed as a corporation or it can be treated essentially as if it didn't exist. In the former case, corporate income tax would be due on the revenue that was used to pay for the purchases. There would be no personal income tax due. But it's very unlikely this situation applies as it means all profits taken out of the business are taxed twice and so small businesses are rarely organized this way. In the latter case, which is almost certainly the one that applies, business income is treated as self-employment income. In this case, the income that paid for the purchases is taxable, self-employment income. Since a purchase is not a deductible expense, there is no deduction to offset this income. So, again, the key points are: How much she paid herself doesn't matter. Business income is taxable regardless of what you do with it. When a business pays an expense, it has a loss that is deductible against profits. But when a business makes a purchase, it has neither a gain nor a loss. If a restaurant buys a new stove, it trades some money for a stove, presumably a fair trade. It has had no profit and no loss, so this transaction has no immediate effect on the taxes. (There are some exceptions, but presumably the accountant determined that those don't apply.) When the property of a business loses value, that is usually a deductible loss. So over time, a newly-purchased stove will lose value. That is a loss that is deductible. The important thing to understand is that as far as the IRS is concerned, whether you pay yourself the money or not doesn't matter, business income is taxable and only business losses or expenses are deductible. Investments or purchases of capital assets are neither losses nor expenses. There are ways you can opt to have the business taxed separately so only what you pay yourself shows up on your personal taxes. But unless the business is losing money or needs to hold large profits against future expenses, this is generally a worse deal because money you take out of the business is taxed twice -- once as business income and again as personal income. Update: Does the business eventually, over the course of the depreciation schedule, end up getting all of the original $2,000 tax burden back? Possibly. Ultimately, the entire cost of the item is deductible. That won't necessarily translate into getting the taxes back. But that's really not the right way to think about it. The tax burden was on the income earned. Upon immediate replacement, hypothetically with the exact same model, same cost, same 'value', isn't it correct that the \"\"value\"\" of the business only went up by the amount the original item had depreciated? Yes. If you dispose of or sell a capital asset, you will have a gain or loss based on the difference between your remaining basis in the asset and whatever you got for the asset. Wouldn't the tax burden then only be $400? Approximately, yes. The disposal of the original asset would cause a loss of the difference between your remaining basis in the asset and what you got for it (which might be zero). The new asset would then begin depreciating. You are making things a bit more difficult to understand though by focusing on the amount of taxes due rather than the amount of taxable gain or loss you have. They don't always correlate directly (because tax rates can vary).\"" }, { "id": "338700", "score": 0.7655667662620544, "text": "It sounds like something is getting lost in translation here. A business owner should not have to pay personal income tax on business expenses, with the caveat that they are truly business expenses. Here's an example where what you described could happen: Suppose a business has $200K in revenue, and $150K in legitimate business expenses (wages and owner salaries, taxes, services, products/goods, etc.) The profit for this example business is $50K. Depending on how the business is structured (sole proprietor, llc, s-corp, etc), the business owner(s) may have to pay personal income tax on the $50K in profit. If the owner then decided to have the business purchase a new vehicle solely for personal use with, say, $25K of that profit, then the owner may think he could avoid paying income tax on $25K of the $50K. However, this would not be considered a legitimate business expense, and therefore would have to be reclassified as personal income and would be taxed as if the $25K was paid to the owner. If the vehicle truly was used for legitimate business purposes then the business expenses would end up being $175K, with $25K left as profit which is taxable to the owners. Note: this is an oversimplification as it's oftentimes the case that vehicles are partially used for business instead of all or nothing. In fact, large items such as vehicles are typically depreciated so the full purchase price could not be deducted in a single year. If many of the purchases are depreciated items instead of deductions, then this could explain why it appears that the business expenses are being taxed. It's not a tax on the expense, but on the income that hasn't been reduced by expenses, since only a portion of the big ticket item can be treated as an expense in a single year." }, { "id": "158738", "score": 0.7311459183692932, "text": "Expenses are where the catch is found. Not all expenditures are considered expenses for tax purposes. Good CPAs make a comfortable living untangling this sort of thing. Advice for both of your family members' businesses...consult with a CPA before making big purchases. They may need to adjust the way they buy, or the timing of it, or simply to set aside capital to pay the taxes for the profit used to purchase those items. CPA can help find the best path. That 10k in unallocated income can be used to redecorate your office, but there's still 3k in taxes due on it. Bottom Line: Can't label business income as profit until the taxes have been paid." } ]	[ { "id": "112793", "score": 0.7126777768135071, "text": "In many cases yes. In the case of an employer handing employees a credit card to use, that is clearly income if the card is used for something other than a business expense. Generally speaking, if you're receiving something with a significant value without strings attached, it is likely taxable. Google no doubt has an army of tax attorneys, so perhaps they are able to exploit loopholes of some sort.", "topk_rank": 0 }, { "id": "462184", "score": 0.7124838829040527, "text": "In no ways. Both will be reported to the members on their K1 in the respective categories (or if it is a single member LLC - directly to the individual tax return). The capital gains will flow to your personal Schedule D, and the business loss to your personal Schedule C. On your individual tax return you can deduct up to 3K of capital losses from any other income. Business loss is included in the income if it is active business, for passive businesses (like rental) there are limitations.", "topk_rank": 1 }, { "id": "185626", "score": 0.7120428085327148, "text": "If thinking about it like a business you normally only pay taxes on Net income, not gross. So Gross being all the money that comes in. People giving you cash, checks, whatever get deposited into your account. You then pay that out to other people for services, advertisement. At the end of the day what is left would be your 'profit' and you would be expected to pay income tax on that. If you are just an individual and don't have an LLC set up or any business structure you would usually just have an extra page to fill out on your taxes with this info. I think it's a schedule C but not 100%", "topk_rank": 2 }, { "id": "47260", "score": 0.7115983366966248, "text": "Typically you can only claim as business deductions those expenses which strictly relate to your business. In some cases, if you have a dedicated home office in your house, you can specify that expenses related to this space (furniture, etc.) are business expenses because it is a dedicated space. For example, I know of someone in sports broadcasting who claimed several TVs as a business expense, but these are for a room in his house that he uses only for watching games related to his work responsibilities, and never for entertaining, having friends over, etc. I think it will be difficult for you to count any portion of this type of installation as a business expense as it would relate to both your business as well as your residence. If you intend to try to get this deducted, I would strongly recommend consulting a CPA or tax attorney first. I think it will be difficult to prove that the only benefit is to your LLC if your electricity bills/credits are co-mingled with those for your residence. Best of luck!", "topk_rank": 3 }, { "id": "166977", "score": 0.7109034657478333, "text": "If you sell through an intermediate who sets up the shop for you, odds are they collect and pay the sales tax for you. My experience is with publishing books through Amazon, where they definitely handle this for you. If you can find a retailer that will handle the tax implications, that might be a good reason to use them. It looks like Etsy uses a different model where you yourself are responsible for the sales tax, which requires you to register with your state (looks like this is the information for New York) and pay the taxes yourself on a regular basis; see this link for a simple guide. If you're doing this, you'll need to keep track of how much tax you owe from your sales each month, quarter, or year (depending on the state laws). You can usually be a sole proprietor, which is the easiest business structure to set up; if you want to limit your legal liability, or work with a partner, you may want to look into other forms of business structure, but for most craftspeople a sole proprietorship is fine to start out with. If you do a sole proprietorship, you can probably file the income on a 1040 Schedule C when you do your personal taxes each year.", "topk_rank": 4 }, { "id": "307779", "score": 0.7106534242630005, "text": "It looks like fair-market value when you receive your virtual currency is counted as income. And you're also subject to self-employment tax on that income. Here's an FAQ from the IRS: Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities? A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.Q-9: Is an individual who “mines” virtual currency as a trade or business subject to self-employment tax on the income derived from those activities? A-9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities constitute selfemployment income and are subject to the self-employment tax. See Chapter 10 of Publication 334, Tax Guide for Small Business, for more information on selfemployment tax and Publication 535, Business Expenses, for more information on determining whether expenses are from a business activity carried on to make a profit. You'd of course be able to offset that income with the expense of mining the virtual currency, depreciation of dedicated mining equipment, electricity, not sure what else. Edit: Here's a good resource on filing taxes with Bitcoin: Filling in the 1040 Income from Bitcoins and all crypto-currencies is declared as either capital gains income or ordinary income, for example from mining. Income Ordinary income will be declared on either your 1040 (line 21 - Other Income) for an individual, or within your Schedule C, if you are self-employed or have sole-proprietor business. Capital Gains Capital gains income, or losses, are declared on Schedule D. Since there are no reported 1099 forms from Bitcoin exchanges, you will need to include your totals with Box C checked for short-term gains, and with Box F checked for long-term gains. Interesting notes from that article, your first example could actually be trickier than expected if you started mining before there was a Monero to USD exchange. Also, there can also be capital gains implications from using your virtual currency to buy goods, which sounds like a pain to keep track of.", "topk_rank": 5 }, { "id": "536849", "score": 0.7103473544120789, "text": "\"I've done various side work over the years -- computer consulting, writing, and I briefly had a video game company -- so I've gone through most of this. Disclaimer: I have never been audited, which may mean that everything I put on my tax forms looked plausible to the IRS and so is probably at least generally right, but it also means that the IRS has never put their stamp of approval on my tax forms. So that said ... 1: You do not need to form an LLC to be able to claim business expenses. Whether you have any expenses or not, you will have to complete a schedule C. On this form are places for expenses in various categories. Note that the categories are the most common type of expenses, there's an \"\"other\"\" space if you have something different. If you have any property that is used both for the business and also for personal use, you must calculate a business use percentage. For example if you bought a new printer and 60% of the time you use it for the business and 40% of the time you use it for personal stuff, then 60% of the cost is tax deductible. In general the IRS expects you to calculate the percentage based on amount of time used for business versus personal, though you are allowed to use other allocation formulas. Like for a printer I think you'd get away with number of pages printed for each. But if the business use is not 100%, you must keep records to justify the percentage. You can't just say, \"\"Oh, I think business use must have been about 3/4 of the time.\"\" You have to have a log where you write down every time you use it and whether it was business or personal. Also, the IRS is very suspicious of business use of cars and computers, because these are things that are readily used for personal purposes. If you own a copper mine and you buy a mine-boring machine, odds are you aren't going to take that home to dig shafts in your backyard. But a computer can easily be used to play video games or send emails to friends and relatives and lots of things that have nothing to do with a business. So if you're going to claim a computer or a car, be prepared to justify it. You can claim office use of your home if you have one or more rooms or designated parts of a room that are used \"\"regularly and exclusively\"\" for business purposes. That is, if you turn the family room into an office, you can claim home office expenses. But if, like me, you sit on the couch to work but at other times you sit on the couch to watch TV, then the space is not used \"\"exclusively\"\" for business purposes. Also, the IRS is very suspicious of home office deductions. I've never tried to claim it. It's legal, just make sure you have all your ducks in a row if you claim it. Skip 2 for the moment. 3: Yes, you must pay taxes on your business income. If you have not created an LLC or a corporation, then your business income is added to your wage income to calculate your taxes. That is, if you made, say, $50,000 salary working for somebody else and $10,000 on your side business, then your total income is $60,000 and that's what you pay taxes on. The total amount you pay in income taxes will be the same regardless of whether 90% came from salary and 10% from the side business or the other way around. The rates are the same, it's just one total number. If the withholding on your regular paycheck is not enough to cover the total taxes that you will have to pay, then you are required by law to pay estimated taxes quarterly to make up the difference. If you don't, you will be required to pay penalties, so you don't want to skip on this. Basically you are supposed to be withholding from yourself and sending this in to the government. It's POSSIBLE that this won't be an issue. If you're used to getting a big refund, and the refund is more than what the tax on your side business will come to, then you might end up still getting a refund, just a smaller one. But you don't want to guess about this. Get the tax forms and figure out the numbers. I think -- and please don't rely on this, check on it -- that the law says that you don't pay a penalty if the total tax that was withheld from your paycheck plus the amount you paid in estimated payments is more than the tax you owed last year. So like lets say that this year -- just to make up some numbers -- your employer withheld $4,000 from your paychecks. At the end of the year you did your taxes and they came to $3,000, so you got a $1,000 refund. This year your employer again withholds $4,000 and you paid $0 in estimated payments. Your total tax on your salary plus your side business comes to $4,500. You owe $500, but you won't have to pay a penalty, because the $4,000 withheld is more than the $3,000 that you owed last year. But if next year you again don't make estimated payment, so you again have $4,000 withheld plus $0 estimated and then you owe $5,000 in taxes, you will have to pay a penalty, because your withholding was less than what you owed last year. To you had paid $500 in estimated payments, you'd be okay. You'd still owe $500, but you wouldn't owe a penalty, because your total payments were more than the previous year's liability. Clear as mud? Don't forget that you probably will also owe state income tax. If you have a local income tax, you'll owe that too. Scott-McP mentioned self-employment tax. You'll owe that, too. Note that self-employment tax is different from income tax. Self employment tax is just social security tax on self-employed people. You're probably used to seeing the 7-whatever-percent it is these days withheld from your paycheck. That's really only half your social security tax, the other half is not shown on your pay stub because it is not subtracted from your salary. If you're self-employed, you have to pay both halves, or about 15%. You file a form SE with your income taxes to declare it. 4: If you pay your quarterly estimated taxes, well the point of \"\"estimated\"\" taxes is that it's supposed to be close to the amount that you will actually owe next April 15. So if you get it at least close, then you shouldn't owe a lot of money in April. (I usually try to arrange my taxes so that I get a modest refund -- don't loan the government a lot of money, but don't owe anything April 15 either.) Once you take care of any business expenses and taxes, what you do with the rest of the money is up to you, right? Though if you're unsure of how to spend it, let me know and I'll send you the address of my kids' colleges and you can donate it to their tuition fund. I think this would be a very worthy and productive use of your money. :-) Back to #2. I just recently acquired a financial advisor. I can't say what a good process for finding one is. This guy is someone who goes to my church and who hijacked me after Bible study one day to make his sales pitch. But I did talk to him about his fees, and what he told me was this: If I have enough money in an investment account, then he gets a commission from the investment company for bringing the business to them, and that's the total compensation he gets from me. That commission comes out of the management fees they charge, and those management fees are in the same ballpark as the fees I was paying for private investment accounts, so basically he is not costing me anything. He's getting his money from the kickbacks. He said that if I had not had enough accumulated assets, he would have had to charge me an hourly fee. I didn't ask how much that was. Whew, hadn't meant to write such a long answer!\"", "topk_rank": 6 }, { "id": "208989", "score": 0.7096715569496155, "text": "\"It's not possible to determine whether you can \"\"expect a refund\"\" or whether you are claiming the right number of exemptions from the information given. If your wife were not working and you did not do independent contracting, then the answer would be much simpler. However, in this case, we must also factor in how much your contracting brings in (since you must pay income tax on that, as well as Medicare and, probably, Social Security), whether you are filing jointly or separately, and your wife's income from her business. There are also other factors such as whether you'll be claiming certain child care expenses, and certain tax credits which may phase out depending on your income. If you can accurately estimate your total household income for the year, and separate that into income from wages, contracting, and your wife's business, as well as your expenses for things like state and local income and property taxes, then you can make a very reasonable estimate about your total tax burden (including the self-employment taxes on your non-wage income) and then determine whether you are having enough tax withheld from your paycheck. Some people may find that they should have additional tax withheld to compensate for these expenses (see IRS W-4 Line #6).\"", "topk_rank": 7 }, { "id": "540634", "score": 0.7096298933029175, "text": "IRS has it spelled out Business or Hobby?", "topk_rank": 8 }, { "id": "177946", "score": 0.7096224427223206, "text": "\"I think the \"\"right\"\" way to approach this is for your personal books and your business's books to be completely separate. You would need to really think of them as separate things, such that rather than being disappointed that there's no \"\"cross transactions\"\" between files, you think of it as \"\"In my personal account I invested in a new business like any other investment\"\" with a transfer from your personal account to a Stock or other investment account in your company, and \"\"This business received some additional capital\"\" which one handles with a transfer (probably from Equity) to its checking account or the like. Yes, you don't get the built-in checks that you entered the same dollar amount in each, but (1) you need to reconcile your books against reality anyway occasionally, so errors should get caught, and (2) the transactions really are separate things from each entity's perspective. The main way to \"\"hack it\"\" would be to have separate top-level placeholder accounts for the business's Equity, Income, Expenses, and Assets/Liabilities. That is, your top-level accounts would be \"\"Personal Equity\"\", \"\"Business Equity\"\", \"\"Personal Income\"\", \"\"Business Income\"\", and so on. You can combine Assets and Liabilities within a single top-level account if you want, which may help you with that \"\"outlook of my business value\"\" you're looking for. (In fact, in my personal books, I have in the \"\"Current Assets\"\" account both normal things like my Checking account, but also my credit cards, because once I spend the money on my credit card I want to think of the money as being gone, since it is. Obviously this isn't \"\"standard accounting\"\" in any way, but it works well for what I use it for.) You could also just have within each \"\"normal\"\" top-level placeholder account, a placeholder account for both \"\"Personal\"\" and \"\"My Business\"\", to at least have a consistent structure. Depending on how your business is getting taxed in your jurisdiction, this may even be closer to how your taxing authorities treat things (if, for instance, the business income all goes on your personal tax return, but on a separate form). Regardless of how you set up the accounts, you can then create reports and filter them to include just that set of business accounts. I can see how just looking at the account list and transaction registers can be useful for many things, but the reporting does let you look at everything you need and handles much better when you want to look through a filter to just part of your financial picture. Once you set up the reporting (and you can report on lists of account balances, as well as transaction lists, and lots of other things), you can save them as Custom Reports, and then open them up whenever you want. You can even just leave a report tab (or several) open, and switch to it (refreshing it if needed) just like you might switch to the main Account List tab. I suspect once you got it set up and tried it for a while you'd find it quite satisfactory.\"", "topk_rank": 9 }, { "id": "59317", "score": 0.7089001536369324, "text": "This depends on the nature of the income. Please consult a professional CPA for specific advise.", "topk_rank": 10 }, { "id": "577703", "score": 0.7080234885215759, "text": "No, it will show on the LLC tax return (form 1065), in the capital accounts (schedules K-1, L and M-2), attributed to your partner.", "topk_rank": 11 }, { "id": "350839", "score": 0.7078747749328613, "text": "A computer is a special case because the IRS thinks that you might be using it for personal applications. You may need to keep a log, or be able to state that you also have another computer for non-business use. That said, if your schedule C shows a small profit then you don't need to itemize expenses, just state the total.", "topk_rank": 12 }, { "id": "445548", "score": 0.7066878080368042, "text": "\"Income is income... it depends how it's structured.. personal or corporate.. but still you need to pay taxes... if you get audited, the tax man could look at your bank statements and ask, \"\"where is this money coming from\"\"\"", "topk_rank": 13 }, { "id": "381151", "score": 0.7063124179840088, "text": "Chris, since you own your own company, nobody can stop you from charging your personal expenses to your business account. IRS is not a huge fan of mixing business and personal expenses and this practice might indicate to them that you are not treating your business seriously, and it should classify your business as a hobby. IRS defines deductible business expense as being both: ordinary AND necessary. Meditation is not an ordinary expense (other S-corps do not incur such expense.) It is not a necessary expense either. Therefore, you cannot deduct this expense. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses", "topk_rank": 14 }, { "id": "178697", "score": 0.7061655521392822, "text": "\"This seems to depend on what kind of corporation you have set up. If you're set up as a sole proprietor, then the Solo 401k contributions, whether employee or employer, will be deducted from your gross income. Thus they don't reduce it. If you're set up as an S-Corp, then the employer contributions, similar to large employer contributions, will be deducted from wages, and won't show up in Box 1 on your W-2, so they would reduce your gross income. (Note, employee contributions also would go away from Box 1, but would still be in Box 3 and 5 for FICA/payroll tax purposes). This is nicely discussed in detail here. The IRS page that discusses this in more (harder to understand) detail is here. Separately, I think a discussion of \"\"Gross Income\"\" is merited, as it has a special definition for sole proprietorships. The IRS defines it in publication 501 as: Gross income. Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. For a list of community property states, see Community property states under Married Filing Separately, later. Self-employed persons. If you are self-employed in a business that provides services (where products are not a factor), your gross income from that business is the gross receipts. If you are self-employed in a business involving manufacturing, merchandising, or mining, your gross income from that business is the total sales minus the cost of goods sold. In either case, you must add any income from investments and from incidental or outside operations or sources. So I think that regardless of 401(k) contributions, your gross income is your gross receipts (if you're a contractor, it's probably the total listed on your 1099(s)).\"", "topk_rank": 15 }, { "id": "397920", "score": 0.7058888673782349, "text": "I heard that a C-Corp being a one person shop (no other employees but the owner) can pay for the full amount 100% of personal rent if the residence is being used as a home office. Sure. Especially if you don't mind being audited. Technically, it doesn't matter how the money gets where it goes as long as the income tax filings accurately describe the tax situation. But the IRS hates it when you make personal expenses from a business account, even if you've paid the required personal income tax (because their computers simply aren't smart enough to keep up with that level of chaos). Also, on a non-tax level, commingling of business and personal funds can reduce the effectiveness of your company's liability protection and you could more easily become personally liable if the company goes bankrupt. From what I understand the 30% would be the expense, and the 70% profit distribution. I recommend you just pay yourself and pay the rent from your personal account and claim the allowed deductions properly like everyone else. Why & when it would make sense to do this? Are there any tax benefits? Never, because, no. You would still have to pay personal income tax on your 70% share of the rent (the 30% you may be able to get deductions for but the rules are quite complicated and you should never just estimate). The only way to get money out of a corporation without paying personal income tax is by having a qualified dividend. That's quite complicated - your accounting has to be clear that the money being issued as a qualified dividend came from an economic profit, not from a paper profit resulting from the fact that you worked hard without paying yourself market value.", "topk_rank": 16 }, { "id": "540395", "score": 0.7057217955589294, "text": "Alright, IRS Publication 463: Travel, Entertainment, Gift, and Car Expenses Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose. Example. You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense Obviously nothing helpful in the code. So I would use option 1, weight the maintenance-related mileage by the proportion of business use. Although if you use your car for business a lot (and perhaps have a spouse with a car), an argument could be made for 3. So I would consider my odds of being audited (even lower this year due to IRS budget cuts) and choose 1 or 3. And of course never throw anything away until you're room temperature.", "topk_rank": 17 }, { "id": "334603", "score": 0.7056828141212463, "text": "\"If you have a single member LLC there is no need to separate expenses in this way since it is simply treated as part of the owner's normal tax returns. This is the way I've been operating. Owner of Single-Member LLC If a single-member LLC does not elect to be treated as a corporation, the LLC is a \"\"disregarded entity,\"\" and the LLC's activities should be reflected on its owner's federal tax return. If the owner is an individual, the activities of the LLC will generally be reflected on: Form 1040 Schedule C, Profit or Loss from Business (Sole Proprietorship) (PDF) Form 1040 Schedule E, Supplemental Income or Loss (PDF) Form 1040 Schedule F, Profit or Loss from Farming (PDF) An individual owner of a single-member LLC that operates a trade or business is subject to the tax on net earnings from self employment in the same manner as a sole proprietorship. If the single-member LLC is owned by a corporation or partnership, the LLC should be reflected on its owner's federal tax return as a division of the corporation or partnership. https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies\"", "topk_rank": 18 }, { "id": "507107", "score": 0.7053336501121521, "text": "A non-resident alien is only allowed for deductions connected to producing a US-sourced income (See IRC Sec. 873). Thus you can only deduct things that qualify as business expenses, and State taxes on your wages. In addition you can deduct a bunch of stuff explicitly allowed (like tax preparation, charitable contributions, casualty losses, etc) but sales tax is not in that list.", "topk_rank": 19 } ]
13	How can I register a UK business without providing a business address?	[ { "id": "503678", "score": 0.7053155303001404, "text": "You don't have to provide your personal home address per se. You can provide a legal address where Companies house can send across paper correspondence to. Companies house legally requires an address because directors are liable to their shareholders(even if you are the only shareholder) and to stop them from disappearing just like that with shareholder's money. Moreover your birth date will also be visible on websites which provide comapnies information. You can ask these websites to stop sharing your personal information. Every company must have a registered office within the UK which is the official legal address of the company. It must be a physical address (i.e. not a PO Box without a physical location) as Companies House will use this address to send correspondence to. To incorporate a private limited company you need at least one director, who has to be over 16 years of age. You may also have a secretary, but this is optional. The information you will need to supply for each officer includes: You may also have officers that are companies or firms, and for these you will need to supply the company or firm name, its registered office address, details of the legal form of the company, where it is registered and if applicable its registration number." } ]	[ { "id": "545990", "score": 0.6697972416877747, "text": "I have just established a limited company (three directors spread around the UK) and I am in the process of setting up a business account. We will be able to arrange everything over the phone and each of us will have to appear in one of the branches with original documents: passport, bank statement. We are EU citizens and have UK bank accounts for over 5 years. That would probably be a problem for you. But still, you can try to call around and see if you can find a company to help you. You can also setup an account on one of the online currency exchange websites and then provide your customers with the website's bank account details with appropriate reference. You would have to check the legal side of this solution.", "topk_rank": 0 }, { "id": "30996", "score": 0.6678887605667114, "text": "There are no legal restrictions on doing this. If you're living in the UK, just open an account like any other resident of the UK would.", "topk_rank": 1 }, { "id": "549645", "score": 0.6670496463775635, "text": "You don't have to register for corporation tax until you start doing business: After you’ve registered your company with Companies House, you’ll need to register it for Corporation Tax. You’ll need to do this within 3 months of starting to do business. Since you haven't needed to do that yet, there also shouldn't be any need to tell HMRC you've stopped trading. So it should just be a question of telling Companies House - I guess it's possible they'll first want you to provide the missing accounts.", "topk_rank": 2 }, { "id": "72984", "score": 0.6640486717224121, "text": "What you need to do is register as a sole trader. This will automatically register you for self assessment so you don't have to do that separately. For a simple business like you describe that's it. Completing your self assessment will take care of all your income tax and national insurance obligations (although as mentioned in your previous question there shouldn't be any NI to pay if you're only making £600 or so a year).", "topk_rank": 3 }, { "id": "194090", "score": 0.6622394919395447, "text": "You can find a lot of information at the HRMC website at http://hmrc.gov.uk. If you don't want to work as an employee, you can register as self-employed (basically a one-man band), which is quite simple, you can start your own company, which is more work but can have tax advantages, or you can find umbrella companies which will officially employ you while in reality you are a freelancer and only do your billing through them. Umbrella companies can be anywhere from totally legal to extremely dodgy. If they promise you that you pay only five percent tax on your income through ingenious tricks, that's only until the tax office finds out and they will make you pay. Between self-employed and your own company, the big difference is whether you are actually working independently or not. If you work like an employee (take someone else's orders) and claim you are a company, the tax office doesn't like that. And if you pay very little taxes, they don't like that either. So self-employed is the safer choice but you will pay more taxes, close to what a normal employee would pay. Obviously you will have to pay tax on your income and NHS insurance. Obviously you are required to tell the government (actually HMRC) about your income. Not doing so would be tax evasion and get you into deep trouble when you are caught. I don't think you have to tell them the source of your income, but not telling them might look very suspicious and might get your accounts checked carefully. And unless you design a website for the mafia, why wouldn't you tell them? The bill payer will try to deduct your bill from their profits anyway, so it's no secret. Most important to remember: When you send out a bill and receive payment, you'll have to pay tax on it. When self employed, as a rule of thumb put one third away into a savings account for your tax bill. Don't spend it all or you will find yourself in deep trouble when your taxes need paying. Plus put some more away for times when you can't find work.", "topk_rank": 4 }, { "id": "431230", "score": 0.6579515337944031, "text": "You don't need a Visa to create or own US property. Your registered agent will be able to take care of most of this, and your new entity will use the registered agent's address where applicable, but you may need your own separate address which can be your office in the UK. If you want privacy then you'll want a separate address, which can also be a PO Box or an address the registered agent also provides. US corporations, especially in Delaware, have a lot more compliance issues than the LLC product. Delaware has a lot more costs for formation and annual reports than most other united states. There are definitely a lot of states to choose from, but more people will have information for Delaware.", "topk_rank": 5 }, { "id": "248624", "score": 0.6573680639266968, "text": "\"Depending on where you are, you may be able to get away with filing a \"\"Doing Business As\"\" document with your local government, and then having the bank call the county seat to verify this. There is generally a fee for processing/recording/filing the DBA form, of course. But it's useful for more purposes than just this one. (I still need to file a DBA for my hobby work-for-pay, for exactly this reason.)\"", "topk_rank": 6 }, { "id": "318266", "score": 0.6564093828201294, "text": "It looks like businesses selling services (like software downloads) from outside the EU to the UK have to register for VAT if the amount of such sales goes over the UK VAT registration threshold: [If] the value of the taxable supplies you make is over a specified threshold [then] you must register for VAT So it seems plausible that this business does have some requirement to charge VAT on its sales, but clearly it should have done so at the time of sale, not months later. As you say, UK and EU law require that prices are displayed including relevant taxes. Since this business is in the US, they might be able to claim that those rules don't apply to them. But I'm not aware of even US businesses being able to claim sales tax from a US customer months after originally making a sale, and it goes against all reasonable principles of law if they would be able to do it. So the business should really just accept that they screwed up and they'll now have to take the hit and pay the tax themselves. They can work as if the pre-tax price was $12.99/1.2 = $10.825, leaving $2.165 they need to hand over to HMRC. I don't think there's any legal way they can demand money from you now, and certainly for such a low sum of money there's no practical way they could. I can't find anything definitive one way or the other, but I suppose it's possible that HMRC would consider you the importer under these circumstances and so liable for the VAT yourself. But I don't know of any practial way to actually report this to HMRC or pay them the money, and again given the amount there's no realistic chance they'd want to chase you for it. In your shoes I would either ignore the email, or write back and politely tell them that they should have advertised the cost at the time and you're not willing to pay extra now. And you might want to keep an eye on the card you used to pay them to make sure they don't try to just charge it anyway. EDIT: as pointed out in a comment, the company behind this (or at least one with a very similar problem and wording in their emails!) did end up acknowledging that they can't actually do this and that they'll need to pay the tax out of the money they already collected, as I described above. It seems they didn't contact the people they originally emailed to let them know this, though. There's some more discussion here.", "topk_rank": 7 }, { "id": "261856", "score": 0.6501476764678955, "text": "Banks has to complete KYC. In case you want to open a bank account, most will ask for proof of address. I also feel it is difficult for bank to encash a cheque payable to a business in your account. Opening a bank account in the name of your business or alternatively obtaining a cheque payable to your personal name seems the only alternatives to me.", "topk_rank": 8 }, { "id": "545039", "score": 0.6499940752983093, "text": "Firstly, check your visa conditions (if you're not from the EU): http://www.ukcisa.org.uk/Information--Advice/Working/How-many-hours-can-you-work You do need to register for NI, but that's apparently streamlined into registering as self-employed: How to pay N.I contributions when both employed and self-employed? (Realistically, you can almost certainly get away with doing <£50 month in cash-in-hand jobs with no paperwork whatsoever, but in the very unlikely event of being caught it could result in being deported)", "topk_rank": 9 }, { "id": "237514", "score": 0.6499097347259521, "text": "\"There are very few circumstances where forming an out of state entity is beneficial, but a website is within these circumstances in certain instances. Businesses with no physical operations do not need to care what jurisdiction they are registered in: your home state, a better united state or non-united state. The \"\"limited liability\"\" does it's job. If you are storing inventory or purchasing offices to compliment your online business, you need to register in the state those are located in. An online business is an example of a business with no physical presence. All states want you to register your LLC in the state that you live in, but this is where you need to read that state's laws. What are the consequences of not registering? There might be none, there might be many. In New York, for example, there are no consequences for not registering (and registering in new york - especially the city - is likely the most expensive in the USA). If your LLC needs to represent itself in court, New York provides retroactive foreign registrations and business licenses. So basically, despite saying that you need to pay over $1000 to form your LLC \"\"or else\"\", the reality is that you get the local limited liability protection in courts whenever you actually need it. Check your local state laws, but more times than not it is analogous to asking a barber if you need a haircut, the representative is always going to say \"\"yes, you do\"\" while the law, and associated case law, reveals that you don't. The federal government doesn't care what state your form an LLC or partnership in. Banks don't care what state you form an LLC or partnership in. The United States post office doesn't care. Making an app? The Apple iTunes store doesn't care. So that covers all the applicable authorities you need to consider. Now just go with the cheapest. In the US alone there are 50 states and several territories, all with their own fee structures, so you just have to do your research. Despite conflicting with another answer, Wyoming is still relevant, because it is cheap and has a mature system and laws around business entity formation. http://www.incorp.com has agents in every state, but there are registered agents everywhere, you can even call the Secretary of State in each state for a list of registered agents. Get an employer ID number yourself after the business entity is formed, it takes less than 5 minutes. All of this is also contingent on how your LLC or partnership distributes funds. If your LLC is not acting like a pass through entity to you and your partner,but instead holding its own profits like a corporation, then again none of this matters. You need to form it within the state you live and do foreign registrations in states where it has any physical presence, as it has becomes its own tax person in those states. This is relevant because you said you were trying to do something with a friend.\"", "topk_rank": 10 }, { "id": "200023", "score": 0.6487951278686523, "text": "If you do business under your name, you don't need to register your business. Your business will be treated as a sole proprietorship. If your revenue exceeds 30,000 (or wish to collect GST for the government) then you will have to register with the CRA for a GST account, but that is free.", "topk_rank": 11 }, { "id": "528361", "score": 0.6478428840637207, "text": "You will be categorized as self employed. Will I have to register myself as a company or can go on unregistered and work You can register a company or can use an umbrella company or work as a sole trader. Remember as a sole trader you are legally responsible for you company's activities, an if a company sues you for your work he can take compensation from your personal assets. As a company your liability ends with the company, if your company is sued. Your personal assets are outside the purview of the lawsuit, but the court can attach that also but those are rare. This doesn't matter if you use an umbrella company. If you intend to be doing this for a short time(maybe a year or so), go for an umbrella company. Else register a company. will take you 5 minutes to form one. Depending on your earning you might need to register for VAT too. A comprehensive guide for self employed on HMRC. what would i need to be sound in uk and to be fit to work online as a freelancer? The same as above. Will it include paying any tax or paying any insurance Yes you have register for National Insurance(NI), before you can pay yourself a salary. The benefit of a company is you pay yourself a minimum salary, below the limit above which you have to contribute for NI, and take the rest as dividends. And pay no tax on it, till you don't exceed the limits. When the money comes in my account, will i be accountable to government of uk, to tell the source of income? If you are operating through a company, yes you would need to show your income(including source) and expenditure when you do your annual returns. What should i be knowing, like health insurance and things that are necessities in uk for a freelancer ? No health insurance as NHS exists. You can take out health insurance if you don't want to get into queues in NHS.", "topk_rank": 12 }, { "id": "192083", "score": 0.6469986438751221, "text": "It's not just the US based mailing address for registration or US based credit-card or bank account: even if you had all these, like I do, you will find that these online filing companies do not have the infrastructure to handle non-resident taxes. The reason why the popular online filing companies do not handle non-resident taxes is because: Non-residents require a different set of forms to fill out - usually postfixed NR - like the 1040-NR. These forms have different rules and templates that do not follow the usual resident forms. This would require non-trivial programming done by these vendors All the NR forms have detailed instructions and separate set of non-resident guides that has enough information for a smart person to figure out what needs to be done. For example, check out Publication 519 (2011), U.S. Tax Guide for Aliens. As a result, by reading these most non-residents (or their accountants) seem to figure out how the taxes need to be filed. For the remaining others, the numbers perhaps are not significant enough to justify the non-trivial programming that need to be done by these vendors to incorporate the non-resident forms. This was my understanding when I did research into tax filing software. However, if you or anyone else do end up finding tax filing software that does allow non-resident forms, I wil be extremely happy to learn about them. To answer your question: you need to do it yourself or get it done by someone who knows non-resident taxes. Some people on this forum, including me for gratis, would be glad to check your work once you are done with it as long as you relieve us of any liability.", "topk_rank": 13 }, { "id": "42924", "score": 0.6468200087547302, "text": "If you mostly do work for businesses/individuals who are VAT registered it's a no-brainer to become VAT registered yourself... Although you will have to charge your customers VAT (and pass this on to HMRC) because they are VAT-registered they will reclaim the amount so it won't actually 'cost' them anything. At the same time, you can reclaim all the VAT you're currently being charged on your business expenditure (business equipment, tickets to business events, business software, accountancy/other business services you pay for, web hosting etc etc etc) However, if most of your clients are not VAT-registered it's not worth you registering. You would have to charge your customers an extra 20% (and they wouldn't be able to claim it back!) and you would have to pass this on to HMRC. Although you could still claim for goods and services you purchase for business use, essentially you'd just be another tax collector for HMRC. That said, at the end of the day it's up to you! VAT returns are quarterly and dead simple. Just keep a spreadsheet with your invoices (output tax) and receipts (input tax) and then do some basic maths to submit the final numbers to HMRC. No accountant required!", "topk_rank": 14 }, { "id": "229913", "score": 0.6465837359428406, "text": "You havent signed a contract, so you are only an authorised contact so you have nothing to worry about at all. Your credit reference can only be affected if you are a signed party on the contract. I would imagine that they wont remove your details as you may assist them by contacting your emplorer, and effectively chase the debt for them especially if you seem to be family member or a friend of the business owner. How did you find out about the debt, did they phone you? If you really want peace of mind, you could write to them and confirm that you are not authorised to be contacted by phone or in writing regarding the debt, and that you are not in anyway liable for the debt and that your contact details must be put beyond use, and as you are concerned, say that if they take any further action against you such as affect your credit ref etc then you will take them to 'your' local magistrates court to seek compensation. Use strong terms and insist they must do what you ask rather than just say that you would like something done etc. Say that you 'Will' take further action which is generic, and that you 'May' do specific things so that it sounds strong but you haven't have committed to any thing in particular. This would most likely be more than enough to stop further contact.", "topk_rank": 15 }, { "id": "364891", "score": 0.6441793441772461, "text": "For this type of business a sole tradership would seem appropriate. You might then want to register as a limited company at a later date if you were growing significantly, taking on premises, seeking debt etc, as that would then shield you from liability.", "topk_rank": 16 }, { "id": "573498", "score": 0.6428073048591614, "text": "You need a proof of address and also they ask you for a letter from employer. But usually you dont need any of that... there are always correct answers to all the questions, but you still need an address where they will send you your papers along with debit card etc. So need to rent a place or have some mail forwarding service would help. Here is what people usually do in London: Go to a branch of lets say Lloyds TSB that is not in the center of London, use some far away branch, Like Morden or so. Say that you arrived a month/week ago and looking for a job.(not laborer) Say that need your account to send money from abroad to support your living during the Job search. hand in your passport and your account will be ready the same day, while you can wait for your card 1week. Your pin number for the card +2/3days Hope that helps.", "topk_rank": 17 }, { "id": "21416", "score": 0.6426330208778381, "text": "The simplest way to handle this would be to buy money orders, make them out to the charities, and leave your name off them. Money orders don't require you to put your name on them, just the name of whoever they're being paid to. You can mail them with no return address as well if you're sure you have the charity's proper mailing address. This way you can still feel good about giving and leave no trace of who you are for anyone to use for future marketing. I hope this helps. Good luck!", "topk_rank": 18 }, { "id": "78486", "score": 0.6424782276153564, "text": "Given your clarifying points, it sounds like you are running both businesses as one combined business. As such, you should be able to get just a single HST number and use that. However, let me please urge you to contact a professional accountant and possibly a lawyer, as it is very unusual to be performing these services without a business license, and you may be exposing yourself to civil penalties and placing your personal assets (e.g. your house) at risk. Additionally, it may be beneficial for you to run these as businesses as you can likely write off (more of) your expenses.", "topk_rank": 19 } ]
14	What are 'business fundamentals'?	[ { "id": "398960", "score": 0.7842450737953186, "text": "From http://financial-dictionary.thefreedictionary.com/Business+Fundamentals The facts that affect a company's underlying value. Examples of business fundamentals include debt, cash flow, supply of and demand for the company's products, and so forth. For instance, if a company does not have a sufficient supply of products, it will fail. Likewise, demand for the product must remain at a certain level in order for it to be successful. Strong business fundamentals are considered essential for long-term success and stability. See also: Value Investing, Fundamental Analysis. For a stock the basic fundamentals are the second column of numbers you see on the google finance summary page, P/E ratio, div/yeild, EPS, shares, beta. For the company itself it's generally the stuff on the 'financials' link (e.g. things in the quarterly and annual report, debt, liabilities, assets, earnings, profit etc." } ]	[ { "id": "96910", "score": 0.6436957120895386, "text": "\"Definition: Fundamental analysis involves analyzing financial statements and health, management and competitive advantages, and competitors and markets. Books are a great way to learn fundamental analysis but can be time consuming for something that really isn't very difficult. So the internet might be a better way to get started. When using fundamental analysis all you are doing is trying to figure out how much a company is worth. The vocabulary and huge range of acronyms can be intimidating but really its a fairly simple task. You can use (investopedia) for definitions and simple examples when you do not fully understand something. IE: (PEG) You can search for definitions using the search bar on the top right (google also is a good source to look for additional definitions). I recommend starting out by doing an independent analysis on a well known name such as Proctor & Gamble or Mcdonald's. Then you can compare your analysis to a professionals and see how they stack up. Books and Resources: Getting Started in Fundamental Analysis Fundamental Analysis For Dummies Fundamental analysis Wiki What Is Fundamental Analysis? - Video tut from Investopedia Fundamental Analysis: Introduction Step by Step example of fundamental analysis - It's a pretty in depth forum post. Side Notes: Personally when I first began using fundamental analysis I found it difficult to understand why something is considered undervalued or overvalued. I couldn't figure out who was the \"\"authority\"\" on saying this. Well in short the \"\"authority\"\" basically is the market. You can say you believe XYZ is undervalued but you are only proven correct if the market agrees with you over long period of time. Some key facts you should know: Many times a stock can be \"\"broken\"\" for many reasons. The price can go far beyond what would be considered a \"\"normal valuation\"\" (this is considered a bubble, e.g. the tech bubble of 1999-2000). It can also go far below a \"\"normal valuation\"\". In most cases these types of valuations are short lived and in the end a stock should return to \"\"normal valuation\"\" or at least this is the theory behind fundamental analysis.\"", "topk_rank": 0 }, { "id": "342844", "score": 0.6184923648834229, "text": "This is a great response, thanks. I appreciate Dale Carnegie, Sun Tzu etc, but after reading them I felt they didn't offer anything really specific towards running a business. I've just ordered the personal MBA after reading a bit more on it so thanks for that too. Prince2 methodology looks pretty in depth so that's going on the the 'later' pile for now!", "topk_rank": 1 }, { "id": "513658", "score": 0.6132286190986633, "text": "\"Check out Professor Damodaran's website: http://pages.stern.nyu.edu/~adamodar/ . Tons of good stuff there to get you started. If you want more depth, he's written what is widely considered the bible on the subject of valuation: \"\"Investment Valuation\"\". DCF is very well suited to stock analysis. One doesn't need to know, or forecast the future stock price to use it. In fact, it's the opposite. Business fundamentals are forecasted to estimate the sum total of future cash flows from the company, discounted back to the present. Divide that by shares outstanding, and you have the value of the stock. The key is to remember that DCF calculations are very sensitive to inputs. Be conservative in your estimates of future revenue growth, earnings margins, and capital investment. I usually develop three forecasts: pessimistic, neutral, optimistic. This delivers a range of value instead of a false-precision single number. This may seem odd: I find the DCF invaluable, but for the process, not so much the result. The input sensitivity requires careful work, and while a range of value is useful, the real benefit comes from being required to answer the questions to build the forecast. It provides a framework to analyze a business. You're just trying to properly fill in the boxes, estimate the unguessable. To do so, you pore through the financials. Skimming, reading with a purpose. In the end you come away with a fairly deep understanding of the business, how they make money, why they'll continue to make money, etc.\"", "topk_rank": 2 }, { "id": "64984", "score": 0.61198890209198, "text": "We invest heavily in skills and we expect you to contribute to our goal of becoming West Palm Beach, FL best advisory company. Within business consulting, it means that you have basic knowledge in all three main areas, business management, business development, NQ consulting and financial management, as well as developing deeper skills in one or more areas. We work with individual development plans and you have the opportunity to greatly influence your future work situation and role in the market.", "topk_rank": 3 }, { "id": "385949", "score": 0.6117247939109802, "text": "All you have to do is ask Warren Buffet that question and you'll have your answer! (grin) He is the very definition of someone who relies on the fundamentals as a major part of his investment decisions. Investors who rely on analysis of fundamentals tend to be more long-term strategic planners than most other investors, who seem more focused on momentum-based thinking. There are some industries which have historically low P/E ratios, such as utilities, but I don't think that implies poor growth prospects. How often does a utility go out of business? I think oftentimes if you really look into the numbers, there are companies reporting higher earnings and earnings growth, but is that top-line growth, or is it the result of cost-cutting and other measures which artificially imply a healthy and growing company? A healthy company is one which shows year-over-year organic growth in revenues and earnings from sales, not one which has to continually make new acquisitions or use accounting tricks to dress up the bottom line. Is it possible to do well by investing in companies with solid fundamentals? Absolutely. You may not realize the same rate of short-term returns as others who use momentum-based trading strategies, but over the long haul I'm willing to bet you'll see a better overall average return than they do.", "topk_rank": 4 }, { "id": "273906", "score": 0.6086704134941101, "text": "Those are the three books that were considered fundamental at my university: Investments - Zvi Bodie (Author), Alex Kane (Author), Alan Marcus (Author), Stylianos Perrakis (Author), Peter Ryan (Author) This book covers the basics of financial markets. It explains how markets work, general investing principles, basic risk notions, various types of financial instruments and their characteristics and portfolio management principles. Futures and Options markets - John C. Hull This book goes more in depth into derivatives valuation and the less common / more complex instruments. The Handbook of Fixed Income Securities This books covers fixed income securities. In all cases, they are not specifically math-oriented but they do not shy away from it when it is called for. I have read the first and the other two were recommended by professors / friends now working in financial markets.", "topk_rank": 5 }, { "id": "56747", "score": 0.6043117046356201, "text": "If youre fifteen... Id actually recommend starting with some economics, just to understand the business decision making process. Mystery of Capital by Hernando de Soto is excellent. An online course from anywhere would be cool too. Then, case studies are excellent as well. It depends on what you want to use ths for. Sales? Yeah, how to win friends and influence people, totally. A macro scale understanding, take the route I took.", "topk_rank": 6 }, { "id": "471950", "score": 0.6018929481506348, "text": "Start with Economics, macro and micro. You don't need to go deep enough to understand heavy math stuff like isoquants, but supply and demand curves and market theory in general is the foundation of business (at least capitalism). Plenty of online videos can provide overviews on this stuff. From there, management theories and practices will get the most bang for your buck since it can be applied to every aspect of business. Strategic Management tools like SWOT analysis or SMART criteria may not exactly be cutting edge management tools, but they provide a good overview of what is important to managers. On the financial side of things, look into financial management, however I kind of feel like the main important takeaway for non-finance people to know is that a dollar today is worth more than a dollar tomorrow. IMO, these are the core theory stuff for business majors. After that, the specialization is up to you. Marketing, finance, accounting, operations, decision sciences, etc.", "topk_rank": 7 }, { "id": "400122", "score": 0.6009408235549927, "text": "Can't say I agree with most of the replies here I'm afraid - I found the insights from books such as Who Moved My Cheese, How to win friends..., Sun Tzu, Jim Collins to be highly limited. If you need to pick up business basics there simply isn't a better book than The Personal MBA - read it cover to cover and as you come across concepts that are interesting/relevant to what you're doing, research them further. Personal MBA won't give you the depth but gives you great breadth. You asked specifically about Project Management - I found that an appreciation of the PRINCE2 methodology really helps when planning and managing projects. http://www.prince2.com/what-is-prince2 The official textbooks on Prince2 are overpriced and not as good as others available such as: http://www.amazon.co.uk/Prince2-Study-Guide-David-Hinde/dp/1119970784/ref=sr_1_1?ie=UTF8&qid=1407186842&sr=8-1&keywords=prince2+study+guide You asked specifically about marketing - but not sure exactly what marketing you're looking at. Personal MBA will give you a great grounding - I particularly like the concept of Permission Marketing explored by Seth Godin. Research how analytics is used in marketing to gain insights about and target customers (the whole growth hacking movement borrows a lot from this) and research the psychology behind marketing (I really liked Thinking Fast and Slow by Kahneman although it isn't specifically about this). This will give you a great grounding in the 'hard' and 'soft' sides of marketing. Apologies for rambling response - how it was helpful!", "topk_rank": 8 }, { "id": "281664", "score": 0.6004069447517395, "text": "Sorry for the late reply - it's the authors distilling of his top business books covering all of the topics you'd expect in an MBA course. I think it's a good starting point in that it'll give you a pretty good overview, you could then go in depth on topics you feel you need to. Here's the good reads link [Goodreads: Personal MBA](https://www.goodreads.com/book/show/9512985-the-personal-mba)", "topk_rank": 9 }, { "id": "543340", "score": 0.5990756750106812, "text": "A good fundamental test book, besides Damodaran already mentioned in the comments, is: Valuation - Measuring and Managing the Value of Companies by Tim Koller, Marc Goedhart and David Wessels. It gives a very good breakdown of the DCF method for Valuation.", "topk_rank": 10 }, { "id": "527120", "score": 0.5978586673736572, "text": "Yea read a few books or watch some videos on YouTube on fundamental analysis and try it using excel. It's probably not what you'll be doing if you get a degree in finance, and you might even end up in accounting like I did, but its a good place to start to see if you like it or not. It also exposes you to accounting, business, the politics of business, taxation, financial statements, EDGAR and all the other interesting and important stuff. You might want to pick up a study guide for the CPA exam BEC. Lots of very interesting stuff in there about business in general including how the board of directors works, and taxation. It's an awesome read.", "topk_rank": 11 }, { "id": "509659", "score": 0.5965063571929932, "text": "As JB hints, it is likely due to superior or improving, fundamentals. If the fundamentals of a company improve then its ability to repay loans improves. If its ability to repay improves then more sources of cash become willing to lend to the company. Also if fundamentals are improving then more sources are willing to buy and/or hold the stock.", "topk_rank": 12 }, { "id": "346018", "score": 0.5924878716468811, "text": "Process of registering business helps to structure about your firm to be different that range in several states. The most essential thing for incorporating business is to create extra tax burden and keep record of the business with administrative details. How to incorporate business are explained in below content. It will make ideal reason for vehicle and not contains any liability of shareholders.", "topk_rank": 13 }, { "id": "403501", "score": 0.5909484624862671, "text": "It gives you a strong fundamental understanding of the operations of a business and can be leveraged into various areas within a business. It also gives you a wide range of opportunities from auditing, investment banking, consulting, and finance based on your drive and interests. It also has strong future job growth and good career progression.", "topk_rank": 14 }, { "id": "21344", "score": 0.5900558233261108, "text": "Businesses have since quite a while ago utilized some type of a conventional chain of importance structure to work. This framework includes representatives answering to director's Business Business administrations who at that point have their own particular managers et cetera. Most representatives are acclimated to this structure. Given the quick pace and aggressive nature of the business world, organizations are exceedingly intrigued by advancements that will separate them.", "topk_rank": 15 }, { "id": "67813", "score": 0.5895097851753235, "text": "This letter sets out the general purpose of the business together with the market, technical, financial and organizational studies. Items such as marketing channels, price, distribution, business model, engineering, location, organizational chart, capital structure, financial assessment, sources of funding, buy a business in florida is generally considered that a business plan is a living document, In the sense that it must be constantly updated to reflect the unforeseen that necessarily arise in the process of creation and consolidation. With your selection method, company philosophy, legal aspects, and your exit plan.", "topk_rank": 16 }, { "id": "580777", "score": 0.589364230632782, "text": "So what you’re saying is that the undergrad level text (fundamentals of blablabla) is good enough to get a decent understanding of the concepts? I’m a bit confused of the two bcs for e.g. take Hull, the grad level book is more widely recommended. I’ll graduate very soon, enter the workforce, and plan to go to a grad school several years down the line. Now, being in a sort of break point, I’m not sure which one I should go for. I do have an exposure to read some finance texts, but not a lot—introductory chapters here & there—and would prefer texts that are not super dry. What do you think?", "topk_rank": 17 }, { "id": "35093", "score": 0.5888665318489075, "text": "\"I'm a senior majoring in accounting and management information systems. Here is a question I answered a while back about financial statements and employee retention. In the answer that I provided at the bottom it was to assess a company's ability to pay by use of ratios. Likewise, similar accounting methods need to be understood and implemented when assessing stocks(which is where I believe Mr. Buffet was going with this). As we can see the severity of the questions decreases, but if you can not answer question 3 then you should study accounting principles. So how much is enough just to get started? You will never have enough knowledge to start, period. You will have to continuously be learning, so start sooner than later. However you need neither economics or accounting knowledge if you were to learn technical analysis, many doubt the workings of this technique, but in my experience it is easier to learn and practise. A comment on @Veronica's post. Understanding economics and accounting are fundamental. Analysis, seeing trends, and copying are instinctual human traits that helped us evolve (we are very good at pattern recognition). Taking an intro economic and accounting course at a local community college is an excellent place to start when breaking the mold of pattern-thinking. You have to be critical in understanding what elements move a company's A/R in the statement of cash flows. Read. Literally, don't stop reading. Latest edition of of Kesio's accounting principles? Read it. Cover to cover. Tax policies on Section 874, 222, 534? Read it. Take a class, read a book, ask questions! Good Luck, \"\"Welcome to [the] Science [of Business], you're gonna like it here\"\" - Phil Plait\"", "topk_rank": 18 }, { "id": "424756", "score": 0.5872889757156372, "text": "\"Synergy is when a relationship makes its members stronger. \"\"Relationships\"\" doesn't cut it. Results and [ROI](http://www.investopedia.com/terms/r/returnoninvestment.asp) are very different. If a subordinate brings an insignificant problem to their manager, \"\"be realistic\"\" doesn't have quite the kick that \"\"deal with it\"\" does, IMO, but I'll give it to you. I'm not sure what you're getting at with \"\"Expectations? Goals?\"\", but managing expectations is conveyed in neither. Your terms do not suffice, and your lack of understanding leads me to believe that you're either really junior or not in business at all.\"", "topk_rank": 19 } ]
16	Business Investment Loss from prior year	[ { "id": "60590", "score": 0.7092598676681519, "text": "You need to give specific dates! In the United States, you have three years to file an amended tax return. https://www.irs.gov/uac/Newsroom/Ten-Facts-about-Amended-Tax-Returns Did the restaurant fail in 2012? If so, that's probably the year to take the loss. If you need to amend your 2012 return, which you filed in 2013, you should have until 2016 to file this. The exact date may be based on when you filed 2012 taxes!" } ]	[ { "id": "543898", "score": 0.6736928820610046, "text": "The sentence you quoted does not apply in the case where you sell the stock at a loss. In that case, you recognize zero ordinary income, and a capital loss (opposite of a gain) for the loss. Reference: http://efs.fidelity.com/support/sps/article/article2.html", "topk_rank": 0 }, { "id": "159880", "score": 0.6736568808555603, "text": "\"The refund may offset your liability for the next year, especially if you are a Schedule \"\"C\"\" filer. By having your refund applied to the coming year's taxes you are building a 'protection' against a potentially high liability if you were planning to sell a building that was a commercial building and would have Capital Gains. Or you sold stock at a profit that would also put you in the Capital Gain area. You won a large sum in a lottery, the refund could cushion a bit of the tax. In short, if you think you will have a tax liability in the current year then on the tax return you are filing for the year that just past, it may be to your benefit to apply the refund. If you owe money from a prior year, the refund will not be sent to you so you will not be able to roll it forward. One specific example is you did qualify in the prior year for the ACA. If in the year you are currently in- before you file your taxes-- you realize that you will have to pay at the end of the current year, then assigning your refund will pay part or all of the liability. Keep in mind that the 'tax' imposed due to ACA is only collected from your refunds. If you keep having a liability to pay or have no refunds due to you, the liability is not collected from you.\"", "topk_rank": 1 }, { "id": "14768", "score": 0.6736342906951904, "text": "No. The gain on RSU is not a capital gain, it is considered wages and treated as part of your salary, for tax purposes. You cannot offset it with capital losses in excess of $3000 a year. If you have RSUs left after they vest, and you then sell them at gain, the gain (between the vesting price and the sale price) is capital gain and can be offset by your prior years' capital losses.", "topk_rank": 2 }, { "id": "177798", "score": 0.6735720038414001, "text": "\"Edited: Pub 550 says 30 days before or after so the example is ok - but still a gain by average share basis. On sale your basis is likely defaulted to \"\"average price\"\" (in the example 9.67 so there was a gain selling at 10), but can be named shares at your election to your brokerage, and supported by record keeping. A Pub 550 wash might be buy 2000 @ 10 with basis 20000, sell 1000 @9 (nominally a loss of 1000 for now and remaining basis 10000), buy 1000 @ 8 within 30 days. Because of the wash sale rule the basis is 10000+8000 paid + 1000 disallowed loss from wash sale with a final position of 2000 shares at 19000 basis. I think I have the link at the example: http://www.irs.gov/publications/p550/ch04.html#en_US_2014_publink100010601\"", "topk_rank": 3 }, { "id": "163199", "score": 0.67350172996521, "text": "\"Can I write off the $56,000 based on demand letters? Or do I need to finish suing him to write-off the loss? No and no. You didn't pay taxes on the money (since you didn't file tax returns...), so what are you writing off? If you didn't get the income - you didn't get the income. Nothing to write off. Individuals in the US are usually cash-based, so you don't write off income \"\"accrued but never received\"\" since you don't pay taxes on accrued income, only income you've actually received. Should I file the 2012 taxes now? Or wait until the lawsuit finishes? You should have filed by April 2013, more than a year ago. You might have asked for an extension till October 2013, more than half a year ago. Now - you're very very late, and should file your tax return ASAP. If you have some tax due - you're going to get hit with high penalties for underpaying and late filing. If the lawsuit finishes in 2014, does it apply to the 2012 taxes? Probably not, but talk to your lawyer. In any case - it is irrelevant to the question whether to file the tax return or not. If because of the lawsuit results something changes - you file an amended return.\"", "topk_rank": 4 }, { "id": "342903", "score": 0.6734637022018433, "text": "Here is the technical guidance from the accounting standard FRS 23 (IAS 21) 'The Effects of Changes in Foreign Exchange Rates' which states: Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements shall be recognised in profit or loss in the period in which they arise. An example: You agree to sell a product for $100 to a customer at a certain date. You would record the sale of this product on that date at $100, converted at the current FX rate (lets say £1:$1 for ease) in your profit loss account as £100. The customer then pays you several $100 days later, at which point the FX rate has fallen to £0.5:$1 and you only receive £50. You would then have a realised loss of £50 due to exchange differences, and this is charged to your profit and loss account as a cost. Due to double entry bookkeeping the profit/loss on the FX difference is needed to balance the journals of the transaction. I think there is a little confusion as to what constitutes a (realised) profit/loss on exchange difference. In the example in your question, you are not making any loss when you convert the bitcoins to dollars, as there is no difference in the exchange rate between the point you convert them. Therefore you have not made either a profit or a loss. In terms of how this effects your tax position; you only pay tax on your profit and loss account. The example I give above is an instance where an exchange difference is recorded to the P&L. In your example, the value of your cash held is reflected in your balance sheet, as an asset, whatever its value is at the balance sheet date. Unfortunately, the value of the asset can rise/fall, but the only time where you will record a profit/loss on this (and therefore have an impact on tax) is if you sell the asset.", "topk_rank": 5 }, { "id": "330533", "score": 0.6734459400177002, "text": "There is a positive not being mentioned above: the depreciation vs your regular earned income. Disclaimer: I am not a tax attorney or an accountant, nor do I play one on the internet. I am however a landlord. With that important caveat out of the way: Rental properties (and improvements to them) depreciate in value on a well-defined schedule. You can claim that depreciation as a phantom loss to lower the amount of your taxable regular income. If you make a substantial amount of the latter, it can be a huge boon in the first few years you own the property. You can claim the depreciation as if the property were new. So take the advice of a random stranger on the internet to your accountant/attorney and see how much it helps you.", "topk_rank": 6 }, { "id": "317895", "score": 0.6734360456466675, "text": "Your strategy is well thought out. Others use it same as you, to fund an IRA in the prior tax year with that year's refund. Gotcha? Forgetting to send in the money on time. Or not correctly identifying the tax year for the deposit. I know st*f happens, but I'd try to not get such a large refund in the future, better the money be in your pocket/account than Uncle Sam's. But your question implied an unusual event, so this advice may be moot. Per Brick's comment below - be sure your MAGI isn't above the level where you can deduct the IRA deposit. That would create an odd situation, but since you are doing the return first, it's a matter of just confirming this on the return.", "topk_rank": 7 }, { "id": "142433", "score": 0.673417866230011, "text": "I think you should consult a professional with experience in 83(b) election and dealing with the problems associated with that. The cost of the mistake can be huge, and you better make sure everything is done properly. For starters, I would look at the copy of the letter you sent to verify that you didn't write the year wrong. I know you checked it twice, but check again. Tax advisers can call a dedicated IRS help line for practitioners where someone may be able to provide more information (with your power of attorney on file), and they can also request the copy of the original letter you've sent to verify it is correct. In any case, you must attach the copy of the letter you sent to your 2014 tax return (as this is a requirement for the election to be valid).", "topk_rank": 8 }, { "id": "218460", "score": 0.6733771562576294, "text": "\"This may be closed as not quite PF, but really \"\"startup\"\" as it's a business question. In general, you should talk to a professional if you have this type of question, specifics like this regarding your tax code. I would expect that as a business, you will use a proper paper trail to show that money, say 1000 units of currency, came in and 900 went out. This is a service, no goods involved. The transaction nets you 100, and you track all of this. In the end you have the gross profit, and then business expenses. The gross amount, 1000, should not be the amount taxed, only the final profit.\"", "topk_rank": 9 }, { "id": "132111", "score": 0.673200786113739, "text": "\"Yes- you do not realize gains or losses until you actually sell the stock. After you sell the initial stocks/bonds you have realized the gain. When you buy the new, different stocks you haven't realized anything until you then sell those. There is one exception to this, called the \"\"Wash-Sale Rule\"\". From Investopedia.com: With the wash-sale rule, the IRS disallows a loss deduction from the sale of a security if a ‘substantially identical security' was purchased within 30 days before or after the sale. The wash-sale period is actually 61 days, consisting of the 30 days before and the 30 days after the date of the sale. For example, if you bought 100 shares of IBM on December 1 and then sold 100 shares of IBM on December 15 at a loss, the loss deduction would not be allowed. Similarly, selling IBM on December 15 and then buying it back on January 10 of the following year does not permit a deduction. The wash-sale rule is designed to prevent investors from making trades for the sole purpose of avoiding taxes.\"", "topk_rank": 10 }, { "id": "43964", "score": 0.6731822490692139, "text": "Basically you need to use a time-value-of-money equation to discount the cashflows back to today. The Wikipedia formula will likely work fine for you, then you just need to pick an effective interest rate to use in the calculation. Run each of your amounts and dates though the formula (there are various on-line calculators to pick from, and sum up the values. You did not mention your location or jurisdiction, but a useful proxy for the interest rate would be the average between the same duration mortgage rate and fixed-deposit rate at your bank; it should be close enough for your purposes - although if an actual lawsuit is involved and the sums high enough to have lawyers, it might be worth engaging an accountant as well to defend the veracity of both the calculation and the interest rates chosen.", "topk_rank": 11 }, { "id": "207704", "score": 0.6731079816818237, "text": "Generally, to be able to write off worthless securities, you need to show that they're indeed worthless. It's not necessarily easy, as you need to prove that there's no way they will regain any value in the future. What is usually done, instead, is very simple: you sell them. Many brokers are aware of this problem and will assist by buying these securities from you at a nominal price (ETrade, for example, for $0.01, ScotTrade for $0.00), and providing a proper trade confirmation. This is a bona fide sale, so if the stock does regain value - it will be a profit for the broker. In this case - you just report it as a sale at loss. Check with your broker if they support such a solution.", "topk_rank": 12 }, { "id": "146388", "score": 0.6728285551071167, "text": "You've got two options. Deduct the business portion of the depreciation and actual expenses for operating the car. Use the IRS standard mileage rate of $.575/mile in 2015. Multiply your business miles by the rate to calculate your deduction. Assuming you're a sole proprietor you'll include a Schedule C to your return and claim the deduction on that form.", "topk_rank": 13 }, { "id": "352013", "score": 0.6727040410041809, "text": "It helps to put the numbers in terms of an asset. Say a bottle of wine costs 10 dollars, but the price rises to 20 dollars a year later. The price has risen 100%, and your dollars have lost value. Whereas your ten used to be worth 100% of the price of bottle of wine, they now are worth 50% of the risen price of a bottle of wine so they've lost around 50% of their value. Divide the old price by the new inflated price to measure proportionally how much the old price is of the new price. 10 divided by 20 is 1/2 or .50 or 50%. You can then subtract the old price from the new in proportional terms to find how much value you've lost. 1 minus 1/2 or 1.00 minus .50 or 100% minus 50%.", "topk_rank": 14 }, { "id": "556248", "score": 0.672608494758606, "text": "\"The short answer is that the IRS knows this is an issue, so they are prepared to deal with the \"\"discrepancies.\"\" The filer does not need to something special to call it to their attention. Keep good records and consistently report according to your accounting processes. Exactly how the IRS resolves / flags this, I don't know. Maybe someone else can answer, but you can imagine that if they track you for multiple years they should have some idea of how many dollars are rolling over and whether you might have \"\"forgotten\"\" to report something from a few years ago that happened at a year-end break.\"", "topk_rank": 15 }, { "id": "85478", "score": 0.6724995374679565, "text": "\"You didn't have a situation of \"\"excess contribution\"\". If you have proof that someone in Fidelity actually told you what you said, you might try to recover some of your losses through a lawsuit. However, their first (and main) defense would be that they're not in the business of providing tax advice, and it is your problem that you asked random person a tax question, and then acted on an incorrect answer. By the way, that only goes to say that anything you might read here you should, as well, take with a grain of salt. The only one who can give you a tax advice is a licensed tax professional. I explained it in details in my blog post, but in short - it is either an EA (Enrolled Agent, with the IRS credentials), or a CPA (Certified Public Accountant) or Attorney licensed in your State. Back to your question - \"\"Excess Contribution\"\" to a IRA is when you contribute in excess to the limits imposed. For Traditional IRA in 2012 the limit was $5000. You contributed $4000 - this means that you were not in excess. There's nothing they can \"\"correct\"\", the 1099-R you got seems to be correct and in order. What you did have was a case of non-deductible contribution. Non-deductible contribution to your IRA should have been reported to the IRS on form 8606. Non-deductible contribution creates basis in your IRA. Withdrawals from your IRA are prorated to the relation of your basis to your total value, and the taxable amount is determined based on that rate. It is, also, calculated using form 8606. So in short - you should have filed a form 8606 with your 2012 tax return declaring non-deductible IRA and creating $4000 basis, and then form 8606 with your 2013 tax return calculating which portion of the $4000 you withdrew is non-taxable. If your total IRA (in all accounts) was that $4000 - then nothing would be taxable. Talk to a tax adviser, you might need to amend your 2012 return (or send the 2012 form separately, if possible), and then do some math on your 2013 return. If 60 days haven't passed, you might want to consider depositing the $4000 in a Roth IRA and perform what is called \"\"Conversion\"\".\"", "topk_rank": 16 }, { "id": "221281", "score": 0.6724531054496765, "text": "I've actually had the same problem several years running, and it's solved by filing my corporate taxes, then taking those schedules, and applying them to my 1040, along with a Schedule C You'll want to work with an accountant on this, but basically you're going to take the total set of business expenses as 1 chunk, then write them off your income (as one chunk). I always recommend an accountant for this, but that's the general idea that I've used, and for the last 10 years, it's worked great.", "topk_rank": 17 }, { "id": "537698", "score": 0.6723988056182861, "text": "Judging by your question, you seem to be a non-accredited investor. Under certain circumstances in some states, you may be able to sue the officers, directors, and other parties in control of the company for full rescission of your investment plus interest and attorneys' fees. You should consult with a locally licensed securities attorney to discuss your options.", "topk_rank": 18 }, { "id": "282115", "score": 0.6723977327346802, "text": "I suggest that you use your own judgement on this. You can assign a reasonable percentage since it is impossible to monitor the hours using those assets. Example: 40 personal and 60 for business. It's really your call. I also suggest that you should be conservative on valuing the assets. Record the assets at it's lowest value. This is one of the most difficult scenarios in making your own financial statements. You can also use this approach, i will record the assets at its original cost then use a higher depreciation rate or double declining method of depreciation. If the assets have a depreciation rate of 20% per year (useful life of 5 years), i will make it 30%. the other 10% will add more expense and helps you not to overstate your Financial Statement. You can also use the residual value of the asset, but if you do this, you should figure out the reliable amount. I understand that this is not for tax reporting purposes. Therefore, there's no harm if you overstate your Financial statement. And even if you overstate, you can still adjust the cost of the asset. Along the way (in the middle of the year or year end), you will figure out the cost of the asset if it's over valued once the financial statement is done.", "topk_rank": 19 } ]
19	How can I estimate business taxes / filing fees for a business that has $0 income?	[ { "id": "315086", "score": 0.7095314264297485, "text": "Is the business an S-Corp, LLC or Sole Prop? I am going to guess based on the question that it is an LLC that you never closed with the state and you live in a state (NY) that charges a fee for having an LLC in the state in which case you owe those fees to the state. I am not aware of any taxes on the mere existence of a business by the IRS. I think you are going to find out that the are no taxes owed to the IRS for this nonexistent activity." }, { "id": "142623", "score": 0.7610308527946472, "text": "\"You need to hire a tax professional and have them sort it out for you properly and advise you on how to proceed next. Don't do it yourself, you're way past the stage when you could. You're out of compliance, and you're right - there are penalties that a professional might know how to mitigate, and maybe even negotiate a waiver with the IRS, depending on the circumstances of the case. Be careful of answers like \"\"you don't need to pay anything\"\" that are based on nothing of facts. Based on what you said in the question and in the comments, it actually sounds like you do have to pay something, and you're in trouble with the IRS already. It might be that you misunderstood something in the past (e.g.: you said the business had filed taxes before, but in fact that might never happened and you're confusing \"\"business filed taxes\"\" with \"\"I filed schedule C\"\") or it might be the actual factual representation of things (you did in fact filed a tax return for your business with the IRS, either form 1120 of some kind or 1065). In any case a good licensed (CPA or EA) professional will help you sort it out and educate you on what you need to do in the future.\"" } ]	[ { "id": "331384", "score": 0.698402464389801, "text": "I agree with Joe, having the money deposited to the US bank account may land you in trouble. Technically, a US business paying a foreigner must withhold 30% of the payment, unless a tax treaty says otherwise. The US business should do that based on your W8-BEN/W8-ECI form that you should have given to the business before being paid. I'm guessing, that by paying to your US bank account, you (and your American counterpart) are trying to avoid this withholding. That may cause trouble for both of you. I would suggest you talking to a professional (EA/CPA licensed in the State where the business is located) and having the situation resolved ASAP. You may not be liable for the US taxes at all, but because of incorrectly reporting the income/expense - you and the US business may end up paying way more than the $0 you otherwise would have, in penalties.", "topk_rank": 0 }, { "id": "248629", "score": 0.6983125805854797, "text": "If you have no net income or loss, you can usually get away without filing a tax return. In Illinois, the standard is: Filing Requirements You must file Form IL-1120 if you are a corporation that has net income or loss as defined under the IITA; or is qualified to do business in the state of Illinois and is required to file a federal income tax return (regardless of net income or loss). http://tax.illinois.gov/Businesses/TaxInformation/Income/corporate.htm Just keep your filing fee and any business licenses up to date, paying those fees personally and not out of business money (that would make for a net loss and trigger needing a tax return). Frankly, with how easy it is to register a new corp, especially an LLC which has many simplicity advantages from an S-corp in certain cases, you might still be better off shutting it down until that time.", "topk_rank": 1 }, { "id": "179144", "score": 0.6982102990150452, "text": "There might be a problem. Some reporting paperwork will have to be done for the IRS, obviously, but technically it will be business income zeroed out by business expense. Withholding requirements will shift to your friend, which is a mess. Talk to a licensed tax adviser (EA/CPA) about these. But the immigration may consider this arrangement as employment, which is in violation of the visa conditions. You need to talk to an immigration attorney.", "topk_rank": 2 }, { "id": "248651", "score": 0.6981332898139954, "text": "Many states have a simple method for assessing income tax on nonresidents. If you have $X income in State A where you claim nonresident status and $Y income overall, then you owe State A a fraction (X/Y) of the income tax that would have been due on $Y income had you been a resident of State A. In other words, compute the state income tax on $Y as per State A rules, and send us (X/Y) of that amount. If you are a resident of State B, then State B will tax you on $Y but give you some credit for taxes paid to State A. Thus, you might be required to file a State A income tax return regardless of how small $X is. As a practical matter, many commercial real-estate investments are set up as limited partnerships in which most of the annual taxable income is a small amount of portfolio income (usually interest income that you report on Schedule B of Form 1040), and the annual bottom line is lots of passive losses which the limited partners report (but do not get to deduct) on the Federal return. As a result, State A is unlikely to come after you for the tax on, say, $100 of interest income each year because it will cost them more to go after you than they will recover from you. But, when the real estate is sold, there will (hopefully) be a big capital gain, most of which will be sheltered from Federal tax since the passive losses finally get to be deducted. At this point, State A is not only owed a lot of money (it knows nothing of your passive losses etc) but, after it processes the income tax return that you filed for that year, it will likely demand that you file income tax returns for previous years as well.", "topk_rank": 3 }, { "id": "55250", "score": 0.6976962089538574, "text": "Washington State doesn't have a state income tax for individuals, so unless you've got a business there's nothing to file. Find out more on their website.", "topk_rank": 4 }, { "id": "528564", "score": 0.6975888609886169, "text": "I think you might be missing something important here. If you are running a business, then any expenses that your business incurs are deductible. Yes, Kickstarter would report the full amount. The IRS requires them to report everything that you raised. However, the Kickstarter and Amazon fees would be a business expense. Your cost on the backer rewards are deductible business expenses as well. Legal fees, accounting fees: deductible. Money that you spend on equipment may not be deductible all in one year; you may have to depreciate it over multiple years. This is where the accountant that you are paying accounting fees to will come in handy. People who do an iOS app Kickstarter campaign for $5000 might have a few things going on that you don't:", "topk_rank": 5 }, { "id": "344340", "score": 0.6973831057548523, "text": "\"(I'm assuming USA tax code as this is untagged) As the comments above suggest there is no \"\"right\"\" answer or easy formula. The main issue is that you likely got into business to make money and if you make money consistently you will pay taxes. Reinvesting generally should be a business decision where the main concern is revenue growth and taxes are an important but secondary concern. Taxes can be complicated, but for a small LLC shouldn't be that bad. I highly recommend that you take some time closely analyze your business and personal taxes for the previous year. Once you understand the problem better, you can optimize around it. If it is a big concern, some companies buy software so they can estimate their taxes periodically through the year and make better decisions.\"", "topk_rank": 6 }, { "id": "313012", "score": 0.6969507336616516, "text": "\"You are not the only one with this problem. When Intuit changed their pricing and services structure in 2015 a lot of people got angry, facing larger fees and having to go through an annoying upgrade just to get the same functionality (such as Schedule D, capital gains). You have several options: (1) Forget Turbo Tax and just use paper forms. That is what I do. Paper is reliable. (2) Use forms mode in Turbo Tax. Of course, that may be even more complicated than simply filing out paper forms. (3) Use a different service. If your income is below $64,000 the IRS has a free electronic filing service. Other online vendors have full taxes services for less than Turbo Tax. (4) Add the amount to ordinary income. Technically, as long as you report the income, you cannot be penalized, so if you add the capital gain to your ordinary income, then you have paid taxes on the income. Even if they send you a letter, you can send an answer that you added it to ordinary income and that will satisfy them. Of course you pay a higher rate on your $26 if you do that. (5) If you are in the 15% or below income bracket you are exempt from capital gains, and you can omit it. Don't believe the nervous Nellies who say the IRS will burn your house down if you don't report $26 in capital gains. Penalties are assessed on the percentage of TAXES you did not pay (0.5% penalty per month). Since 0.5% of $0 is $0 your penalty is $0. The IRS knows this. The IRS does not send out assessment letters for $0. (6) Even if you are above the 15% bracket, there is likelihood it is still a no-tax situation (see 5 above). (7) Worst case scenario: you are making a million dollars per year and you omit your $26 capital gains from your return. The IRS will send you an assessment letter for about $10. You can then send them a separate check or money order to pay it. In all honesty I have omitted documented tax items, like taxable interest, that the IRS knows about many times and never gotten an assessment letter. Once I made a serious math error on my return and they sent me an assessment letter, which I just paid, end of story. And that was for a lot more than $26. The technical verbiage for something like this in IRS lingo is CP-2000, underreported income. As you can see from this official IRS web page, basically what they do is guess how much they think you owe and send you a bill. Then you pay it. If you do so in time, you don't even get a 0.5% interest penalty on your $6.75 owed or whatever it is. (8) Go hog wild. As long as you are risking an assessment on your $26, why not go hog wild and just let the IRS compute all your taxes for you? Make a copy of your income statements, then mail them to the IRS with a letter that says, \"\"Hi, I am Mr. Odinson, my SSN is XXX-XX-XXXX. My address is XYZ. I am unable to compute my taxes due to a confused state of mind. I am hereby requesting a tax assessment for the 2016 tax year.\"\" Make sure you sign and date the letter. In all probability they will compute the full assessment and send you a bill (or refund).\"", "topk_rank": 7 }, { "id": "234510", "score": 0.696931004524231, "text": "\"TL;DR: Get a tax adviser (EA/CPA licensed in your State) for tax issues, and a lawyer for the Operating Agreement, labor law and contract related issues. Some things are not suitable for DIY unless you know exactly what you're doing. We both do freelance work currently just through our personal names. What kind of taxes are we looking into paying into the business (besides setup of everything) compared to being a self proprietor? (I'm seeing that the general answer is no, as long as income is <200k, but not certain). Unless you decide to have your LLC taxed as a corporation, there's no change in taxes. LLC, by default, is a pass-through entity and all income will flow to your respective tax returns. From tax perspective, the LLC will be treated as a partnership. It will file form 1065 to report its income, and allocate the income to the members/partners on schedules K-1 which will be given to you. You'll use the numbers on the K-1 to transfer income allocated to you to your tax returns and pay taxes on that. Being out of state, will she incur more taxes from the money being now filtered through the business? Your employee couldn't care less about your tax problems. She will continue receiving the same salary whether you are a sole proprietor or a LLC, or Corporatoin. What kind of forms are we looking into needing/providing when switching to a LLC from freelance work? Normally we just get 1099's, what would that be now? Your contract counterparts couldn't care less about your tax problems. Unless you are a corporation, people who pay you more than $600 a year must file a 1099. Since you'll be a partnership, you'll need to provide the partnership EIN instead of your own SSN, but that's the only difference. Are LLC's required to pay taxes 4 times per year? We would definitely get an accountant for things, but being as this is side work, there will be times where we choose to not take on clients, which could cause multiple months of no income. Obviously we would save for when we need to pay taxes, but is there a magic number that says \"\"you must now pay four times per year\"\". Unless you choose to tax your LLC as a corporation, LLC will pay no taxes. You will need to make sure you have enough withholding to cover for the additional income, or pay the quarterly estimates. The magic number is $1000. If your withholding+estimates is $1000 less than what your tax liability is, you'll be penalized, unless the total withholding+estimates is more than 100% of your prior year tax liability (or 110%, depending on the amounts). The LLC would be 50% 50%, but that work would not always be that. We will be taking on smaller project through the company, so there will be times where one of us could potentially be making more money. Are we setting ourselves up for disaster if one is payed more than the other while still having equal ownership? Partnerships can be very flexible, and equity split doesn't have to be the same as income, loss or assets split. But, you'll need to have a lawyer draft your operational agreement which will define all these splits and who gets how much in what case. Make sure to cover as much as possible in that agreement in order to avoid problems later.\"", "topk_rank": 8 }, { "id": "231947", "score": 0.6969166994094849, "text": "\"Don't worry about it. The State doesn't care about rounding error. All you need to do is say \"\"We charge our prices with tax included\"\" - you know, like carnivals and movie theaters. Then follow the procedures your state specifies for computing reportable tax. Quite likely it wants your pre-tax sales total for the reporting period. To get that, total up your gross sales that you collected, and divide by (1 + tax rate). Just like DJClayworth says, except do it on total sales instead of per-item. If you need to do the split per-transaction for Quickbooks or something, that's annoying. What Quickbooks says will be pennies off the method I describe above. The state don't care as long as it's just pennies, or in their favor.\"", "topk_rank": 9 }, { "id": "460325", "score": 0.6967132091522217, "text": "Recommend using quickbooks for account management. If you use the manufacturing and wholesale you can track POs from vendors, estimates, bill payment quotes and invoicing (there's an editor to customize your set up)Also, most accountants are very familiar with this platform so come tax time they'll be able to give you a hand no problem. For accepting payments I highly suggest asking for checks. If you do accept credit cards keep in mind most payment processors charge a percent (1.5-3%) depending on transaction amounts and quantities of transactions. So you'll want to mark up your products by at least that amount. Another area is sales tax. Since you are not the end user you should be able to avoid sales tax on the items you will be selling to customers. You then charge the customer this sales tax. Not sure about NJ but in Texas we are 8.25%. I then pay the state of Texas the taxes collected quarterly. Edit: also make sure you have separate finances for the LLC. Separate checking, separate credit card, separate everything! If you end up using an account that is tied to you personally then you run into the risk of losing the protective nature of an LLC from a legal standpoint. Edit2: by separate I mean using your IRS issued EIN number to open accounts with the LLC name. When you sign anything on behalf of the company make sure to add the name of the company next to it to show the company is making the signature not you. For instance u/sexlessnights Company name, LLC", "topk_rank": 10 }, { "id": "599874", "score": 0.6953000426292419, "text": "Looks like it's $500 to start (certificate of organization) and $500 per year after that (for an annual report). Start here: http://1.usa.gov/haxLUB And that's just for the state to recognize you as an LLC.", "topk_rank": 11 }, { "id": "520922", "score": 0.694945752620697, "text": "You actually don't need an accountant. They'll be expensive and at this early a stage unnecessary - what you need is a good bookkeeper who can keep track of what comes in and what goes out. You'll need that to know if you're making money or not and to show the government at the end of the year. Get a copy of QuickBooks and pick up Bookkeeping for Dummies to at least get a sense for what's going on. Have you registered as a sole proprietorship? Make sure you have a vendor's permit so you can legally sell your services in Ontario. You may need to collect HST, in which case you'll need to register for an HST # and submit it on a quarterly basis. Whatever you do, don't fuck with the government - they can freeze your bank accounts to get money they're owed. You need to keep money on hand to pay for any taxes you might owe on the business, ESPECIALLY if it's a sole proprietorship where you'll be tempted to treat profit as income. You don't want to end up with nothing in the bank at the end of the year and $40k owing to the CRA. Get a separate bank account - don't mix personal and business, it's messy. Expense everything you reasonably can.", "topk_rank": 12 }, { "id": "256833", "score": 0.6944175958633423, "text": "\"You can make a custom category for \"\"Website expenses\"\" under Other Expenses as well. If the domain name only costs a very small amount, like $10, I think expensing it would be reasonable. Mariette IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law.\"", "topk_rank": 13 }, { "id": "243855", "score": 0.6940488219261169, "text": "You will not necessarily incur a penalty. You can potentially use the Annualized Income Installment method, which allows you to compute the tax due for each quarter based on income actually earned up to that point in the year. See Publication 505, in particular Worksheet 2-9. Form 2210 is also relevant as that is the form you will use when actually calculating whether you owe a penalty after the year is over. On my reading of Form 2210, if you had literally zero income during the first quarter, you won't be expected to make an estimated tax payment for that quarter (as long as you properly follow the Annualized Income Installment method for future quarters). However, you should go through the calculations yourself to see what the situation is with your actual numbers.", "topk_rank": 14 }, { "id": "109546", "score": 0.6940003633499146, "text": "I'm not sure I am fully understanding the nuance of your question, but based on your answer in the comments you and your business are not separate legal entities. So your income is the full $70K, there is no distinct business to have income. If you clarify your question to include why you want to know this I might be able to give a more meaningful answer for your situation.", "topk_rank": 15 }, { "id": "2020", "score": 0.6938091516494751, "text": "\"The founders almost certainly owe tax on the \"\"income\"\" represented by the rent they aren't being charged. It isn't clear whether the corporation also owes income tax on the rent it is not receiving back from them. You definitely want advice from a paid tax accountant, not least because that helps protect everyone should this arrangement be challenged.\"", "topk_rank": 16 }, { "id": "440506", "score": 0.6936734318733215, "text": "I have researched this question extensively in previous years as we have notoriously high taxes in California, while neighboring a state that has zero corporate income tax and personal income tax. Many have attempted pull a fast one on the California taxation authorities, the Franchise Tax Board, by incorporating in Nevada or attempting to declare full-year residence in the Silver State. This is basically just asking for an audit, however. California religiously examines taxpayers with any evidence of having presence in California. If they deem you to be a resident in California, and they likely will based on the fact that you live in California (physical presence), you will be subject to taxation on your worldwide income. You could incorporate in Nevada or Bangladesh, and California will still levy its taxation on any business income (Single Member LLCs are disregarded as separate corporate entities, but still taxed at ordinary income rates on the personal income tax basis). To make things worse, if California examines your Single Member LLC and finds that it is doing business in California, based on the fact that its sole owner is based in California all year long, you could feasibly end up with additional penalties for having neglected to file your LLC in California (California LLCs are considered domestic, and only file in California unless they wish to do business in other states; Nevada LLCs are considered foreign to California, requiring the owner to file a domestic LLC organization in Nevada and then a foreign LLC organization in California, which still gets hit with the minimum $800 franchise fee because it is a foreign LLC doing business in California). Evading any filing responsibility in California is not advisable. FTB consistently researches LLCs, S-Corporations and the like to determine whether they've been organized out-of-state but still principally operated in California, thus having a tax nexus with California and the subsequent requirement to be filed in California and taxed by California. No one likes paying taxes, and no one wants to get hit with franchise fees, especially when one is starting a new venture and that minimum $800 assessment seems excessive (in other words, you could have a company that earns nothing, zero, zip, nada, and still has to pay the $800 minimum fee), but the consequences of shirking tax laws and filing requirements will make the franchise fee seem trivial in comparison. If you're committed to living in California and desire to organize an LLC or S-Corp, you must file with the state of California, either as a domestic corporation/LLC or foreign corporation/LLC doing business in California. The only alternatives are being a sole proprietor (unincorporated), or leaving the state of California altogether. Not what you wanted to hear I'm sure, but that's the law.", "topk_rank": 17 }, { "id": "160301", "score": 0.6936556696891785, "text": "It's going to depend entirely on your tax situation, its complexity, and your willingness/interest in dealing with tax filings. Personally I find that not only do I not enjoy dealing with figuring out my taxes, but I don't know even a fraction of the possible deductions available and all the clever ways to leverage them. Plus the tax code is changing constantly and staying on top of that is not something I'm ever going to attempt. I am of the philosophy that it is my duty to pay only the absolute minimum tax legally required, and to utilize every possible exemption, deduction, credit, etc. that is available to me. Plus my business activities are a bit on the non-traditional side so it requires some unorthodox thinking at times. For me, a trained professional is the only way to go. What it costs me, I way more than make up in savings on my tax bill. I also go out of my way to never get a refund because if I get one, it just means I gave the government a free loan. The last time I computed my own taxes (used TurboTax if memory serves) was I think in the late 90s.", "topk_rank": 18 }, { "id": "2718", "score": 0.6934200525283813, "text": "The Canada Revenue Agency does indeed put out just the guide you want. It's at http://www.cra-arc.gc.ca/E/pub/tg/rc4070/rc4070-e.html - you should always take a good look at URLs to make sure they're really from the government and not from some for-profit firm that will charge you to fill out forms for free services. It covers ways to structure your business (probably a sole proprietor in your case), collecting and submitting GST or HST, sending in payroll remittances (if you pay yourself a T4 salary), and income tax including what you can deduct. It's a great place to start and you can use it as a source of keywords if you want to search for more details.", "topk_rank": 19 } ]
20	Would the purchase of a car for a business through the use of a business loan be considered a business expense?	[ { "id": "447231", "score": 0.763289749622345, "text": "You don't say what country you live in. If it's the U.S., the IRS has very specific rules for business use of a car. See, for starters at least, http://www.irs.gov/publications/p463/ch04.html. The gist of it is: If you use the car 100% for business purposes, you NEVER use it to drive to the grocery store or to your friend's house, etc, then it is a deductible business expense. If you use a car party for business use and partly for personal use, than you can deduct the portion of the expense of the car that is for business use, but not the portion that is for personal use. So basically, if you use the car 75% for business purposes and 25% for personal use, you can deduct 75% of the cost and expenses. You can calculate the business use by, (a) Keeping careful records of how much you spent on gas, oil, repairs, etc, tracking the percentage of business use versus percentage of personal use, and then multiplying the cost by the percentage business use and that is the amount you can deduct; or (b) Use the standard mileage allowance, so many cents per mile, which changes every year. Note that the fact that you paid for the car from a business account has absolutely nothing to do with it. (If it did, then everyone could create a small business, open a business account, pay all their bills from there, and all their personal expenses would magically become business expenses.) Just by the way: If you are going to try to stretch the rules on your taxes, business use of a car or personal computer or expenses for a home office are the worst place to do it. The IRS knows that cars and computers are things that can easily be used for either personal or business purposes and so they keep a special eye out on these." } ]	[ { "id": "562802", "score": 0.7244126200675964, "text": "If it is a business loan, the borrower would be able to claim a deduction for any interest paid on the loan and the lender would include the interest earned as part of their taxable income. You need to be careful on what you do and don't include as income. If the repayments made to you by the borrower in a year is $10,000 but only $8,000 of that is interest and the other $2,000 is part of the principal being returned to the lender, then you would only claim $8,000 as your income and the borrower would only claim $8,000 as a business deduction. Of course if it is interest only, then you and the borrower would use the full $10,000.", "topk_rank": 0 }, { "id": "97719", "score": 0.7237966060638428, "text": "\"Disclaimer: This should go without saying, but this answer is definitely an opinion. (I'm pretty sure my current accountant would agree with this answer, and I'm also pretty sure that one of my past accountants would disagree.) When I started my own small business over 10 years ago I asked this very same question for pretty much every purchase I made that would be used by both the business and me personally. I was young(er) and naive then and I just assumed everything was deductible until my accountant could prove otherwise. At some point you need to come up with some rules of thumb to help make sense of it, or else you'll drive yourself and your accountant bonkers. Here is one of the rules I like to use in this scenario: If you never would have made the purchase for personal use, and if you must purchase it for business use, and if using it for personal use does not increase the expense to the business, it can be fully deducted by the business even if you sometimes use it personally too. Here are some example implementations of this rule: Note about partial expenses: I didn't mention partial deductions above because I don't feel it applies when the criteria of my \"\"rule of thumb\"\" is met. Note that the IRS states: Personal versus Business Expenses Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part. At first read that makes it sound like some of my examples above would need to be split into partial calulations, however, I think the key distinction is that you would never have made the purchase for personal use, and that the cost to the business does not increase because of allowing personal use. Partial deductions come into play when you have a shared car, or office, or something where the business cost is increased due to shared use. In general, I try to avoid anything that would be a partial expense, though I do allow my business to reimburse me for mileage when I lend it my personal car for business use.\"", "topk_rank": 1 }, { "id": "562777", "score": 0.7206486463546753, "text": "There is no law that requires you to have a separate bank account for your business, or to pay all expenses from a business bank account. It is a GOOD IDEA to have a separate bank account and pay all business expenses from that account and all personal expenses from your personal account, because that makes sorting out what is what much simpler, both in case of an audit and for your own accounting. Whether a particular expenditure is a deductible business expense has nothing to do with what account you pay it from. If you pay advertising expenses for your business from your personal account, that's still (almost certainly) a deductible business expense. If you buy groceries from your business account, that's almost certainly not a deductible business expense. In your case, there are all kinds of rules about when and how much travel is deductible.", "topk_rank": 2 }, { "id": "540395", "score": 0.7189656496047974, "text": "Alright, IRS Publication 463: Travel, Entertainment, Gift, and Car Expenses Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose. Example. You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense Obviously nothing helpful in the code. So I would use option 1, weight the maintenance-related mileage by the proportion of business use. Although if you use your car for business a lot (and perhaps have a spouse with a car), an argument could be made for 3. So I would consider my odds of being audited (even lower this year due to IRS budget cuts) and choose 1 or 3. And of course never throw anything away until you're room temperature.", "topk_rank": 3 }, { "id": "175522", "score": 0.7173467874526978, "text": "I have gotten a letter of credit from my credit union stating the maximum amount I can finance. Of course I don't show the dealer the letter until after we have finalized the deal. I Then return in 3 business days with a cashiers check for the purchase price. In one case since the letter was for an amount greater then the purchase price I was able drive the car off the lot without having to make a deposit. In another case they insisted on a $100 deposit before I drove the car off the lot. I have also had them insist on me applying for their in-house loan, which was cancelled when I returned with the cashiers check. The procedure was similar regardless If I was getting a loan from the credit union, or paying for the car without the use of a loan. The letter didn't say how much was loan, and how much was my money. Unless you know the exact amount, including all taxes and fees,in advance you can't get a check in advance. If you are using a loan the bank/credit Union will want the car title in their name.", "topk_rank": 4 }, { "id": "88967", "score": 0.715442419052124, "text": "Unless you own a business and the car is used in that business you can't write off your auto repairs. If you start a sole-proprietorship in your own name there are all sorts of things you can write off as long as there is a reasonable expectation of profit. This includes a portion of your car repairs, a portion of your home expenses (assuming it's a home-based business), any tools used in the business, all kinds of stuff. The portion of your auto is based on total miles driven in the year vs. total miles driven for business purposes. Eligible auto expenses include repairs, gas/oil, insurance, parking, and interest on the auto loan. There are some things to remember: I'm no expert on California business law. Talk to a lawyer and an accountant if you wish to go this way. Many offer a half-hour free session for new clients.", "topk_rank": 5 }, { "id": "209997", "score": 0.7126876711845398, "text": "For the purpose of personal finance, treating $500 as Interest Expense is sufficient. For business accounting, it involves making the $500 a contra-liability and amortizing it as interest expense over the course of life of the loan.", "topk_rank": 6 }, { "id": "201122", "score": 0.710832417011261, "text": "Yes, but then either of you will need the other's permission to sell the car. I strongly recommend you get an agreement on that point, in writing, and possibly reviewed by a lawyer, before entering into this kind of relationship. (See past discussions of car titles and loan cosigners for some examples of how and why this can go wrong.) When doung business with friends, treating it as a serious business transaction is the best way to avoid ruining the friendship.", "topk_rank": 7 }, { "id": "560325", "score": 0.7106715440750122, "text": "Not sure if it is the same in the States as it is here in the UK (or possibly even depends on the lender) but if you have any amount outstanding on the loan then you wouldn't own the vehicle, the loan company would. This often offers extra protection if something goes wrong with the vehicle - a loan company talking to the manufacturer to get it resolved carries more weight than an individual. The laon company will have an army of lawyers (should it get that far) and a lot more resources to deal with anything, they may also throw in a courtesy car etc.", "topk_rank": 8 }, { "id": "494000", "score": 0.7097146511077881, "text": "Yes, you will be able to claim it as an expense on your taxes, but not all in the current year. It is split into three categories: Current Expenses - Assets purchased such as inventory would be able to be claimed in the current year. Assets - Vehicles, Buildings, and equipment can be depreciated over time based on the value you purchased them for and the CCA class. Goodwill - In tax terms this is the value of the business purchase that is not eligible in 1 or 2 and is called Eligible Capital Property. This can be expensed over time. From info at CRA website: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/lf-vnts/byng/menu-eng.html", "topk_rank": 9 }, { "id": "541809", "score": 0.7088083624839783, "text": "\"No, your business cannot deduct your non-business expenses. You can only deduct from your business income those reasonable expenses you paid in order to earn income for the business. Moreover, for there to be a tax benefit, your business generally has to have income (but I expect there are exceptions; HST input tax credits come to mind.) The employment income from your full-time job wouldn't count as business income for your corporation. The corporation has nothing to do with that income – it's earned personally, by you. With respect to restaurant bills: These fall under a category known as \"\"meals & entertainment\"\". Even if the expense can be considered reasonable and business-related (e.g. meeting customers or vendors) the Canada Revenue Agency decided that a business can only deduct half of those kinds of expenses for tax purposes. With respect to gasoline bills: You would need to keep a mileage and expense log. Only the portion of your automobile expenses that relate to the business can be deducted. Driving to and from your full-time job doesn't count. Of course, I'm not a tax professional. If you're going to have a corporation or side-business, you ought to consult with a tax professional. (A point on terminology: A business doesn't write off eligible business expenses — it deducts them from business income. Write off is an accounting term meaning to reduce the value of an asset to zero. e.g. If you damaged your car beyond repair, one could say \"\"the car is a write-off.\"\")\"", "topk_rank": 10 }, { "id": "378484", "score": 0.7053170204162598, "text": "To quote the answer you linked to: Perhaps the simplest way to think about this is you can only deduct an expense that you actually incur. In other words, the expense should show up on a bank or CC statement. So, if your business purchased the $1000 gift card for $800, you should see a $800 charge appearing on a business CC or bank statement. You would therefore be able to deduct the $800, but not the full $1000 of items that you purchase with it. Side Notes:", "topk_rank": 11 }, { "id": "182168", "score": 0.703602135181427, "text": "It's not quite clear what you are asking, so I'll answer a few possible interpretations. Businesses pay taxes on their profits. So if your business took a million pounds in revenue (e.g. sold a million pounds worth of stuff) then you would subtract (roughly speaking) everything the business spent on making and selling that stuff, and pay taxes only on the profit. VAT however is a different matter, and you would have to pay VAT on all of that income (technically the VAT portion isn't even income - it's tax you are forced to collect on behalf of the government). If your business made a million pounds pounds profit, it would pay tax on all of that million (subject to what a tax accountant can do to reduce that, which ought to be considerable). You can't subtract your personal living expenses like that. However the company can pay you a salary, which counts as an expense and the company doesn't pay tax on that. You might also take some money from the company as dividends. Both salary and dividends count as personal income to yourself, and you will need to pay personal income tax on them. As for the Ferrari, it depends on whether you can justify it as a business expense. A lot of companies provide cars for their employees so that they can use them for business - however you have to be able to show that IS for business, otherwise they are taxed like salary. The rules for company cars are quite complicated, and you would need an accountant. If this is a real rather than hypothetical situation, definitely get a tax accountant involved.", "topk_rank": 12 }, { "id": "123358", "score": 0.7032745480537415, "text": "If you buy a car using a loan, the dealer gets benefited by the financing institution by the way of referring fee paid to the dealer by the institution, and that too if the dealer has helped in financing the purchase. Otherwise for the dealer it doesn't matter if one pays in full or through financing. The dealer is paid in full in either cases. Hence the dealer may slightly get disappointed that you are not taking a loan.", "topk_rank": 13 }, { "id": "40257", "score": 0.7026819586753845, "text": "\"The government thought of that a long time ago, and has any loophole there plugged. Like if you set up a company to buy a car and then allow you to use it ... You can use the car for company business, like driving to a customer's office to make a sales call or delivery, and the cost of the car is then tax deductible. But the company must either prohibit personal use of the car, or keep a log of personal versus business use and the personal use becomes taxable income to you. So at best you'd get to deduct an expense here and then you'd have to add it back there for a net change in taxable income of zero. In general the IRS is very careful about personal use of business property and makes it tough to get away with a free ride. I'm sure there are people who lie about it and get away with it because they're never audited, but even if that causes you no ethical qualms, it's very risky. I don't doubt that there are people with very smart lawyers who have found loopholes in the rules. But it's not as simple as, \"\"I call myself a business and now all my personal expenses become tax deductible business expenses.\"\" If you could do that, everybody would do it and no one would pay taxes. Which might be a good thing, but the IRS doesn't see it that way.\"", "topk_rank": 14 }, { "id": "348315", "score": 0.7026233673095703, "text": "The £500 are an expense associated with the loan, just like interest. You should have an expense account where you can put such financing expenses (or should create a new one). Again, treat it the same way you'll treat interest charges in future statements.", "topk_rank": 15 }, { "id": "72391", "score": 0.7019825577735901, "text": "As far as accounting goes, if you speak with a CPA, you may be able to reduce the business tax liability. So... the company buys the truck, deducts it, and the adjusted gross income drops, so he'd pay less tax. Or something. You said anything helps, hope you meant it!", "topk_rank": 16 }, { "id": "577554", "score": 0.7004889249801636, "text": "I'm a Finance major in Finland and here is how it would go here. As you loan money to the company, the company has no income, but gains an asset and a liability. When the company then uses the money to pay the bills it does have expenses that accumulate to the end of the accounting period where they have to be declared. These expenses are payed from the asset gained and has no effect to the liability. When the company then makes a profit it is taxable. How ever this taxable profit may be deducted from from a tax reserve accumulated over the last loss periods up to ten years. When the company then pays the loan back it is divided in principal and interest. The principal payment is a deduction in the company's liabilities and has no tax effect. The interest payment the again does have effect in taxes in the way of decreasing them. On your personal side giving loan has no effect. Getting the principal back has no effect. Getting interest for the loan is taxable income. When there are documents signifying the giving the loan and accounting it over the years, there should be no problem paying it back.", "topk_rank": 17 }, { "id": "365963", "score": 0.700166642665863, "text": "On a personal Loan Yes. On a business loan, it would depend on the Bank and they would like to understand the purpose of the loan and need it to be secured. They may not even grant such kind of business loan.", "topk_rank": 18 }, { "id": "513362", "score": 0.7001599073410034, "text": "Yes, the business can count that as an expense but you will need to count that as income because a computer = money.", "topk_rank": 19 } ]
21	Deducting last years (undocumented) side business loss	[ { "id": "497642", "score": 0.7804233431816101, "text": "You should speak to a good tax adviser. The less documentation you have the more problems IRS are going to cause you. Generally you can deduct business losses (in the year they occurred, which is 2011), but you have to show that that was a valid business, not just a way to reduce your tax bill with personal expenses. Thus lack of documentation reduces your ability to prove that you're entitled to the deduction. The burden of proof is generally on you. You can not deduct it from 2012 taxes, but you can still amend 2011. Keep in mind though that amended returns have higher chance of audit, and a significant business loss on a business that only existed that year is a major red flag which will raise the probability of an audit to very high percentage. Theoretically, if the business was real and just failed - you can definitely deduct this. But practically, lack of documentation may cause too big a problem, and a tax adviser might suggest you giving it up if he doesn't think you have a real chance to convince the IRS. Definitely don't do that without a professional advice. It is worth fighting for, its quite a loss, but don't do it on your own as you will definitely lose." } ]	[ { "id": "407643", "score": 0.7409721612930298, "text": "The best thing you can do here is work with the IRS to the best of your ability. You can attempt to call them, attempt to go to one of their local branches in your area, or just hire an accountant to solve the problem. Just be mentally prepared to write a check. You could attempt to figure this all our yourself, but then a lot of tax law is open to interpretation. This is why I would recommend seeking the IRS's help if you DIY. Once you have addressed the issue to the satisfaction of the IRS agent, this will no longer be a problem. Provided you have a good attitude (which you express in your question) and are honest, I have found them very easy to work with. You will be a refreshing change of pace to the actual tax cheats. While I understand that you are not seeking advice on what got you your situation, I would like to offer some encouragement. Good for you for learning from, and addressing your mistakes. Doing this will serve you well in the future.", "topk_rank": 0 }, { "id": "299211", "score": 0.7407192587852478, "text": "\"-Alain Wertheimer I'm a hobbyist... Most (probably all) of those older items were sold both prior to my establishing the LLC This is a hobby of yours, this is not your business. You purchased all of these goods for your pleasure, not for their future profit. The later items that you bought after your LLC was establish served both purposes (perks of doing what you love). How should I go about reporting this income for the items I don't have records for how much I purchased them for? There's nothing you can do. As noted above, these items (if you were to testify in court against the IRS). \"\"Losses from the sale of personal-use property, such as your home or car, aren't tax deductible.\"\" Source Do I need to indicate 100% of the income because I can't prove that I sold it at a loss? Yes, if you do not have previous records you must claim a 100% capital gain. Source Addition: As JoeTaxpayer has mentioned in the comments, the second source I posted is for stocks and bonds. So at year begin of 2016, I started selling what I didn't need on eBay and on various forums [January - September]. Because you are not in the business of doing this, you do not need to explain the cost; but you do need to report the income as Gross Income on your 1040. Yes, if you bought a TV three years ago for a $100 and sold it for $50, the IRS would recognize you earning $50. As these are all personal items, they can not be deducted; regardless of gain or loss. Source Later in the year 2016 (October), I started an LLC (October - December) If these are items that you did not record early in the process of your LLC, then it is reported as a 100% gain as you can not prove any business expenses or costs to acquire associated with it. Source Refer to above answer. Refer to above answer. Conclusion Again, this is a income tax question that is split between business and personal use items. This is not a question of other's assessment of the value of the asset. It is solely based on the instruments of the IRS and their assessment of gains and losses from businesses. As OP does not have the necessary documents to prove otherwise, a cost basis of $0 must be assumed; thus you have a 100% gain on sale.\"", "topk_rank": 1 }, { "id": "135073", "score": 0.7404131293296814, "text": "Once the business is shut down, you'll need to show that the corporation is in bankruptcy and the amounts are unrecoverable. You can then report it as investment loss. I suggest talking to a tax adviser (EA/CPA licensed in your State), and maybe an attorney, on what the specific technical details are.", "topk_rank": 2 }, { "id": "142623", "score": 0.7399857044219971, "text": "\"You need to hire a tax professional and have them sort it out for you properly and advise you on how to proceed next. Don't do it yourself, you're way past the stage when you could. You're out of compliance, and you're right - there are penalties that a professional might know how to mitigate, and maybe even negotiate a waiver with the IRS, depending on the circumstances of the case. Be careful of answers like \"\"you don't need to pay anything\"\" that are based on nothing of facts. Based on what you said in the question and in the comments, it actually sounds like you do have to pay something, and you're in trouble with the IRS already. It might be that you misunderstood something in the past (e.g.: you said the business had filed taxes before, but in fact that might never happened and you're confusing \"\"business filed taxes\"\" with \"\"I filed schedule C\"\") or it might be the actual factual representation of things (you did in fact filed a tax return for your business with the IRS, either form 1120 of some kind or 1065). In any case a good licensed (CPA or EA) professional will help you sort it out and educate you on what you need to do in the future.\"", "topk_rank": 3 }, { "id": "15606", "score": 0.739591121673584, "text": "You are not the person or entity against whom the crime was committed, so the Casualty Loss (theft) deduction doesn't apply here. You should report this as a Capital Loss, the same way all of the Enron shareholders did in their 2001 tax returns. Your cost basis is whatever you originally paid for the shares. The final value is presumably zero. You can declare a maximum capital loss of $3000, so if your net capital loss for the year is greater than that, you'll have to carry over the remainder to the following years. IRS publication 547 states: Decline in market value of stock. You can't deduct as a theft loss the decline in market value of stock acquired on the open market for investment if the decline is caused by disclosure of accounting fraud or other illegal misconduct by the officers or directors of the corporation that issued the stock. However, you can deduct as a capital loss the loss you sustain when you sell or exchange the stock or the stock becomes completely worthless. You report a capital loss on Schedule D (Form 1040). For more information about stock sales, worthless stock, and capital losses, see chapter 4 of Pub. 550.", "topk_rank": 4 }, { "id": "31144", "score": 0.7391510605812073, "text": "The regulations you're talking about (TR 1.263) are going into effect starting tax year 2016, so for purchases you made last year they're (kindof...) irrelevant. Kindof, because the IRS promises to not audit those that qualify under the regulations even if they use it before it goes into effect, but it doesn't legally have to. Since the regulations are new, I suggest you talk to a licensed professional who'd explain them to you and interpret them with regards to your specific situation. From my brief read, you can expense under these rules things that you would otherwise capitalize, with the $500 limit to the invoice. Meaning, if you bought a computer paying $500, which you use 50% for your business - you can expense $250. The benefit, comparing to the Sec. 179, is that you're not limited to new items, nor are you limited to business revenue. Otherwise, it looks like the applicability is similar. As I said - talk to a licensed tax adviser (EA/CPA licensed in your State), since these rules are new and untested, and you should probably have a professional provide guidance. I'm not such a professional.", "topk_rank": 5 }, { "id": "330269", "score": 0.7390437722206116, "text": "Ah, I did some more research and apparently Rental Income is considered Passive Income, and as such the IRS does not allow a net loss to exist, but you can carry the loss over into the next year. https://www.irs.gov/taxtopics/tc425.html Generally, losses from passive activities that exceed the income from passive activities are disallowed for the current year. You can carry forward disallowed passive losses to the next taxable year. A similar rule applies to credits from passive activities. So in the event in a loss on my rental business activity, I simply pay no tax on it, and deduct the remainder in income in 2017 from taxes. I don't make any changes to my Consulting income at all.", "topk_rank": 6 }, { "id": "427469", "score": 0.7373722791671753, "text": "If significant amounts are involved, that would be a good time to consult a tax professional (EA/CPA licensed in your state). Generally, sale of a business is an ordinary income and you can only deduct tangible expenses, as Joe said. That would be laptops, bills, expenses per receipt, of course they must all be directly attributable to the business. You will need to be able to show that the laptops has only been used in business, recapture depreciation, etc. Same with all the rest of the expenses. If you're incorporated (i.e.: you hold this software under an S-Corp), then you're selling stocks, not business, and the tax treatment may be different, but I'm guessing this is not the case for you.", "topk_rank": 7 }, { "id": "477597", "score": 0.7371428608894348, "text": "If you take the profit or loss next year, it counts on next year's taxes. There's no profit or loss until that happens.", "topk_rank": 8 }, { "id": "14255", "score": 0.736698567867279, "text": "Yes you can claim your business deductions if you are not making any income yet. But first you should decide what structure you want to have for your business. Either a Company structure or a Sole Trader or Partnership. Company Structure If you choose a Company Structure (which is more expensive to set up) you would claim your deductions but no income. So you would be making a loss, and continue making losses until your income from the business exceed your expenses. So these losses will remain inside the Company and can be carried forward to future income years when you are making profits to offset these profits. Refer to ATO - Company tax losses for more information. Sole Trader of Partnership Structure If you choose to be a Sole Trader or a Partnership and your business makes a loss you must check the non-commercial loss rules to see if you can offset the loss against your income from other sources, such as wages. In order to offset your business losses against your other income your business must pass one of these tests: If you don't pass any of these tests, which being a start-up you most likely won't, you must carry forward your business losses until an income year in which you do pass one of the tests, then you can offset it against your other income. This is what differentiates a legitimate business from someone having a hobby, because unless you start making at least $20,000 in sales income (the easiest test to pass) you cannot use your business losses against your other income. Refer to ATO - Non-commercial losses for more information.", "topk_rank": 9 }, { "id": "55500", "score": 0.7365528345108032, "text": "If the business activities are closely related you could combine them into a single Schedule C, but in your case it sounds like it should be two separate Schedule C's. The loss from one will offset profit from the other, and your self-employment and income taxes will be based on the net of the two businesses. Any business can generate losses, make sure your expenses are reasonable and documented, there are plenty of resources out there for helping you decide which expenses are proper for each business. There is some truth to the warning that not showing profit in 2/5 of years can raise flags at the IRS, and they may deem your business a hobby, which disallows losses. That is not a hard rule, legitimate businesses can lose money for years on end without issue, if you're trying to make money at it, you'll likely be fine.", "topk_rank": 10 }, { "id": "427202", "score": 0.736081600189209, "text": "If i am not wrong, any business activities such should be declared on Year End Tax filing. If your friend is going to own that website either it is commercial or nonprofit, he has to declare in the year end taxation.", "topk_rank": 11 }, { "id": "26790", "score": 0.7352051138877869, "text": "If I sell it for $50 can I write off the $50 loss. Only if you can establish that it is a normal part of your business and that you did not get $50 worth of use out of it. That's the technical, legal argument. As a practical matter, it's unlikely that they'll ding you for selling something after using it, as they won't know. If they did catch you, you would be in trouble. You can't deduct loss due to personal use. The larger problem is that if you sell one TV for a $50 loss, they aren't going to believe that you are in the business of selling TVs. If you sell a larger amount for a loss, then they still are unlikely to believe that you are in business. If you sell a large amount for an overall gain, they are unlikely to notice that you took a loss on one TV. They could only notice that if they were already auditing you, as that wouldn't be visible in your tax forms.", "topk_rank": 12 }, { "id": "246461", "score": 0.7348324656486511, "text": "In the US, you can only take a tax deduction on expenses to the extent that they offset income. For an S corp or LLC, if the business had no income, there's no deduction to take. If you have a sole proprietorship, these expenses can offset other income. You can also carry-forward net operating losses to future years when you have more income. See the article How to Carry Over Business Expenses", "topk_rank": 13 }, { "id": "550741", "score": 0.7346875667572021, "text": "The correct, legal way to handle this would be to file an amended return for that year (probably best to talk to a CPA). If you don't have the 1099, the IRS has a process to handle that here. It sounds like they would just try to contact the employer themselves, but it doesn't say exactly what would happen if the employer is out of business.", "topk_rank": 14 }, { "id": "55666", "score": 0.7342429757118225, "text": "I don't think there's much you can do. Losses from the sale of personal-use automobiles (used for pleasure, commuting, etc) are not deductible as capital losses. See IRS Tax Topic 409, end of the first paragraph. The expenses you incurred in owning and operating the car (insurance, fuel, maintenance, service plans, etc) are not deductible either. If you used it partly for business, then some of your expenses might be deductible; see IRS Tax Topic 510. This includes depreciation (decline in value), but only according to a standard schedule; you don't generally just get to deduct the difference between your buying and selling price. Also, you'd need to have records to verify your business use. But anyway, these deductions would apply (or not) regardless of whether you sell the car. You don't get your sales tax refunded when you resell the vehicle. That's why it's a sales tax, not a value-added tax. Note, however, that if you do sell it, the sales tax on this new transaction will be the buyer's responsibility, not yours. You do have the option on your federal income tax return to deduct the state sales tax you paid when you bought the car; in fact, you can deduct all the sales taxes you paid in that year. (If you have already filed your taxes for that year, you can go back and amend them.) However, this takes the place of your state income tax deduction for the year; you can't deduct both. See Tax Topic 503. So this is only useful if your sales taxes for that year exceeded the state income tax you paid in that year. Also, note that state taxes are not deductible on your state income tax return. Again, this deduction applies whether you sell the car or not.", "topk_rank": 15 }, { "id": "581265", "score": 0.7337616682052612, "text": "\"In the US tax system, you cannot \"\"write-off\"\" capital assets. You have to depreciate them, with very specific exceptions. So while you may be purchasing $4500 of equipment, your deduction may be significantly less. For example, computers are depreciated over the period of 5 years, so if you bought a $1000 computer - you write off $200/year until it is completely depreciated, not $1000 at once. There are exceptions however, for example - IRC Sec. 179 is one of them. But you should talk to a tax adviser (EA/CPA licensed in your State) about whether it is applicable to the specific expense you want to \"\"write off\"\" and to what extent. Also, keep in mind that State laws may not conform to the Federal IRC. While you may be able to use Sec. 179 or other exceptions and deduct your expenses on your Federal return, you may end up with a whole different set of deductions on your State return. And last but not least: equipment that you depreciated or otherwise \"\"wrote off\"\" that is later sold - is income to you, since depreciation/deduction reduces basis. Ah, and keep in mind - the IRS frowns upon Schedule C business that consistently show losses. If you have losses for more than 3 in the last 5 years - your business may be classified as \"\"hobby\"\", and deductions may be disallowed. But the bottom line is that yes, it is possible to end up with 0 tax liability with business income offset by business deductions. However, not for prolonged periods of time (not for years consistently, but first year may fly). Again - you should talk to a licensed tax adviser (EA/CPA licensed in your State). It is well worth the money. Do not rely on answers on free Internet forums as a tax advice - it is not.\"", "topk_rank": 16 }, { "id": "106149", "score": 0.7334377765655518, "text": "\"You're essentially asking the very common \"\"Do I Need to File a Tax Return?\"\" question. It's common enough that the IRS answers it right at the beginning of the Form 1040 Instructions, and it's answered fairly thoroughly here: http://www.irs.gov/individuals/article/0,,id=96623,00.html There's about 20 questions in that checklist which are mostly pretty specialized, but assuming you didn't have taxes withheld that you'd like to get back, and didn't have any retirement income/disbursements this year, the only interesting question is this: \"\"Were you self-employed with earnings of more than $400.00?\"\" Sounds like your losses outweighed your profits, and assuming you had no other income, I'd say you're fine not filing. Can't really speak to state law since that can vary so much, but your state's laws are likely similar to federal, and you can probably find a very similar answer near the beginning of the instructions of your state's income tax form.\"", "topk_rank": 17 }, { "id": "72391", "score": 0.7327037453651428, "text": "As far as accounting goes, if you speak with a CPA, you may be able to reduce the business tax liability. So... the company buys the truck, deducts it, and the adjusted gross income drops, so he'd pay less tax. Or something. You said anything helps, hope you meant it!", "topk_rank": 18 }, { "id": "462184", "score": 0.7326664924621582, "text": "In no ways. Both will be reported to the members on their K1 in the respective categories (or if it is a single member LLC - directly to the individual tax return). The capital gains will flow to your personal Schedule D, and the business loss to your personal Schedule C. On your individual tax return you can deduct up to 3K of capital losses from any other income. Business loss is included in the income if it is active business, for passive businesses (like rental) there are limitations.", "topk_rank": 19 } ]
23	30% share in business	[ { "id": "550624", "score": 0.6001217365264893, "text": "Keep in mind a good lawyer will have the contract cover the five D's: Its really best to lay these things out ahead of time. I watched, first hand, two friends start a business. When they were broke and struggling the worked very well together. Then the money started rolling in. Despite exceeding their dreams they were constantly at each other's throats fighting and bickering over stupid stuff. In the end, because they had decent legal docs, they both were able to pull money out of the business. Had that not been worked out they would have destroyed the business so that no one would have profited." }, { "id": "32102", "score": 0.7779107689857483, "text": "Get involved a lawyer and Accountant. Without it you may not be sure what you are getting. What exactly will 30% mean for me? It will mean exactly what gets written in contract. It can mean you are owner of 30% of the company. If this is structured as partnership, it would also mean you are party to 30% loss. It can mean by current valuation, you get x fixed shares. In future if the directors creates more shares, your % ownership can get diluted. Or anything else. It all depends on what is written in contract and how the contract is structured. Is there anything I should I be aware of before agreeing? Get a draft and talk to a Lawyer and Accountant, they should be able to tell you exactly what it means and you can then decide if you agree to it or not; or need this contract worded differently." } ]	[ { "id": "204541", "score": 0.6543166637420654, "text": "The value of the company is ill-defined until it actually has some assets and/or product. You give the investors whatever equity stakes you and they negotiate as appropriate for their investment based on how convinced they are by your plan and how badly you need their money.", "topk_rank": 0 }, { "id": "583785", "score": 0.6541721820831299, "text": "Seems like you should be aiming to beat the professionals, otherwise why not let them handle it? So 4.01% is a logical start. Perhaps round that up to 4.05%", "topk_rank": 1 }, { "id": "34882", "score": 0.6537003517150879, "text": "Open Google finance and divide the Market Capitalization by the total price. That will give you the total number of shares outstanding. Now see the number of shares you could buy for $1000(40 shares of $25 each or 10 shares of 100 shares each). Now divide the number of shares you own, by the number of shares outstanding in the company and multiply it by 100(i.e (Shares you own/shares Outstanding) * 100). That will give you the percentage or stake of the company you own(With $1000, don't expect it to be a very large number). Now ask your self the question, Is it worth it if I can buy x % of this company for $1000? If the answer is yes, go ahead and buy it. To answer your question in short, NO! it does not matter whether you buy 10 shares for $100 or 40 shares for $25. Cheers", "topk_rank": 2 }, { "id": "59697", "score": 0.6536045074462891, "text": "Equity can be diluted by future investors, royalties get paid on each sale, companies can continue selling things even when operating at negative profit, back royalties due can be negotiated and at least partially paid in a bankruptcy. From the standpoint of the investor: If it doesn't look like the company will likely have commercial success with a second product, it may be wise to simply take a portion of the product that is actually selling rather than risk your capital on the company's future successes (or failures). From the standpoint of the business owner/entreprenuer, if you believe you have a second product close to the end of the development pipeline it would be wise not to give up equity in the entire enterprise simply to gain required financing to ramp up production and marketing on an existing product. Paying a royalty may be advantageous compared to paying interest on a loan as well (royalty payments are contingent on the occurrence of a sale while interest is due regardless).", "topk_rank": 3 }, { "id": "407898", "score": 0.6534771919250488, "text": "I was looking at NAT and NAO, NAT owns 20% of NAO. They trade opposite each other on the price of oil, low is good for NAT, bad for NAO. In bad times the other company's stock would probably rise, so they could trim excess shares to keep a stable monetary holding. This would create cash in bad times, in good times they could buy more, creating a floor as well for the other.", "topk_rank": 4 }, { "id": "267266", "score": 0.6532427668571472, "text": "\"It's called \"\"dilution\"\". Usually it is done to attract more investors, and yes - the existing share holders will get diluted and their share of ownership shrinks. As a shareholder you can affect the board decisions (depends on your stake of ownership), but usually you'll want to attract more investors to keep the company running, so not much you can do to avoid it. The initial investors/employees in a startup company are almost always diluted out. Look at what happened to Steve Jobs at Apple, as an example.\"", "topk_rank": 5 }, { "id": "343206", "score": 0.6531100273132324, "text": "Look through the related questions. Make sure you fund the max your tax advantaged retirement funds will take this year. Use the 30k to backstop any shortfalls. Invest the rest in a brokerage account. In and out of your tax advantaged accounts, try to invest in index funds. Your feeling that paying someone to manage your investments might not be the best use is shared by many. jlcollinsnh is a financial independence blogger. He, and many others, recommend the Vanguard Total Stock Market Index Admiral Shares. I have not heard of a lower expense ratio (0.05%). Search for financial independence and FIRE (Financial Independence Retire Early). Use your windfall to set yourself on that road, and you will be less likely to sit where I am 25 years from now wishing you had done things differently. Edit: Your attitude should be that the earliest money in your portfolio is in there the longest, and earns the most. Starting with a big windfall puts you years ahead of where you'd normally be. If you set your goal to retire at 40, that money will be worth significantly more in 20 years. (4x what you start with, assuming 7% average yearly return).", "topk_rank": 6 }, { "id": "60750", "score": 0.6529696583747864, "text": "The numbers you have quoted don't add up. For Rs 30,000 / month is 3,60,000 a year. The tax should be around 11,000 again this will be reduced by the contributions to PF. You have indicated a tax deductions of 18,000. There are multiple ways to save taxes. Since you are beginner, investments into section 80C should give you required tax benefits. Please read this article in Economic Times", "topk_rank": 7 }, { "id": "498604", "score": 0.6525204181671143, "text": "The question is for your HR department, or administrator of the plan. How long must you hold the employee shares before you are permitted to sell? Loyalty to your company is one thing, but after a time, you will be too heavily invested in one company, and you need to diversify out. One can cite any number they wish, 5%, 10%. All I know is that when Enron blew up, it only added insult to injury that not only did these people lose their job, they lost a huge chunk of their savings as well.", "topk_rank": 8 }, { "id": "349926", "score": 0.6524524688720703, "text": "If it's just you working, I'd use a ballpark figure of 35% owed - it may be a little high or low, but it's a safe margin to keep set aside for paying your liabilities at the end of the year.", "topk_rank": 9 }, { "id": "50081", "score": 0.6524064540863037, "text": "What percent of a company are you buying when you purchase stock? The percent of a company represented by a single share can be calculated by percent = 1/number_of_shares*100% Apple comprises 5,250,000,000 shares, so one share makes up about 1.9e-8% of a company, or 0.000000019% of Apple.", "topk_rank": 10 }, { "id": "448428", "score": 0.6523550748825073, "text": "> Or are there multiple ways of buying a company? Yes, there are, and it would depend on your contextual definition of what it means to buy a business. If you were intending to acquire a company by being its majority shareholder (i.e. >50% equity stake), then you would have to buy over its shares from existing shareholders at a negotiated price (read: not necessarily book value) to attain the desired shareholding. However, buy a business could also refer to an asset purchase, where the target's fixed assets are bought by the acquirer, in which case the target equity might not necessarily be involved in the acquisition.", "topk_rank": 11 }, { "id": "228186", "score": 0.6521943807601929, "text": "In the case you mentioned, where a private company owners will take debt with the purpose of buying out other owners, is this done through a share repurchases program (I understand private companies issue them, even though it's rare)? Thank you for the insights.", "topk_rank": 12 }, { "id": "166166", "score": 0.6521024703979492, "text": "Honestly, get a ln employment lawyer, preferably one with a MBA. If you're having to ask these questions, and considering giving away equity, get proper business legal advice. I've seen several lucrative companies torn apart because things were sloppy when it was originally set up. Also remember employees don't need equity to spur them on; that what a paycheck and meaningful employment is for. And certainly don't give anything from the outset.", "topk_rank": 13 }, { "id": "77503", "score": 0.6518532037734985, "text": "You can look at the company separately from the ownership. The company needs money that it doesn't have, therefore it needs to borrow money from somewhere or go bankrupt. And if they can't get money from their bank, then they can of course ask people related to the company, like the two shareholders, for a loan. It's a loan, like every other loan, that needs to be repaid. How big the loan is doesn't depend on the ownership, but on how much money each one is willing and capable of giving. The loan doesn't give them any rights in the company, except the right to get their money back with interest in the future. Alternatively, such a company might have 200 shares, and might have given 75 to one owner and 25 to the other owner, keeping 100 shares back. In that case, the shareholders can decide to sell some of these 100 shares. I might buy 10 shares for $1,000 each, so the company has now $10,000 cash, and I have some ownership of the company (about 9.09%, and the 75% and 25% shares have gone down, because now they own 75 out of 110 or 25 out of 110 shares). I won't get the $10,000 back, ever; it's not a loan but the purchase of part of the company.", "topk_rank": 14 }, { "id": "468144", "score": 0.6518357396125793, "text": "Even without fraud, a company can get into serious trouble overnight, often through no fault of their own. That's part of the hazard of being part owner of a company -- which is what a share of stock is. As a minority owner not involved in actually running the business, there really isn't a lot you can do about that excep to play the odds and think about how that risk compares to the profit you're taking (which is one reason the current emphasis on stock price rather than dividends is considered a departure from traditional investing) and, as everyone else has said, avoid putting too much of your wealth in one place.", "topk_rank": 15 }, { "id": "232712", "score": 0.6517854332923889, "text": "Let's take a step back. My fictional company 'A' is a solid, old, established company. It's in consumer staples, so people buy the products in good times and bad. It has a dividend of $1/yr. Only knowing this, you have to decide how much you would be willing to pay for one share. You might decide that $20 is fair. Why? Because that's a 5% return on your money, 1/20 = 5%, and given the current rates, you're happy for a 5% dividend. But this company doesn't give out all its earnings as a dividend. It really earns $1.50, so the P/E you are willing to pay is 20/1.5 or 13.3. Many companies offer no dividend, but of course they still might have earnings, and the P/E is one metric that used to judge whether one wishes to buy a stock. A high P/E implies the buyers think the stock will have future growth, and they are wiling to pay more today to hold it. A low P/E might be a sign the company is solid, but not growing, if such a thing is possible.", "topk_rank": 16 }, { "id": "465313", "score": 0.6516478657722473, "text": "I think the answer you are looking for is: You are not taxed on the original basis (purchase cost) of your investment. If you pay $30 a share, and sell at $35, the $5 per share gain is taxable at time of sale. But the $30 basis cost doesn't enter into tax calculations at all. (So it's important to keep good records on your investments and how much you paid for them at purchase.)", "topk_rank": 17 }, { "id": "209716", "score": 0.6515910029411316, "text": "Well, you can just say that 1 dollar contributed = one share and pay out dividends based on number of shares. That makes it pretty easy to make things fair based. There are pros and cons with this pooling approach.", "topk_rank": 18 }, { "id": "124350", "score": 0.6513169407844543, "text": "I have a low position. Only 300 shares but will probably purchase more when it's in the .2-.3 range. They're pumping this company so it'll meet the NASDAQ requirements so i'm predicting executives will be putting a lot into the pool. Let's ride, boys.", "topk_rank": 19 } ]
25	Claiming business expense from personal credit card	[ { "id": "107584", "score": 0.7312749028205872, "text": "or just input it in my accounting software along with receipts, and then when I'm doing taxes this would go under the investment or loses (is it somewhere along that line)? Yes, this. Generally, for the long term you should have a separate bank account and charge card for your business. I started my business (LLC) by filing online, and paying a fee for a registration, and that makes it a business cost right? Startup cost. There are special rules about this. Talk to your tax adviser. For the amounts in question you could probably expense it, but verify." }, { "id": "562777", "score": 0.7053528428077698, "text": "There is no law that requires you to have a separate bank account for your business, or to pay all expenses from a business bank account. It is a GOOD IDEA to have a separate bank account and pay all business expenses from that account and all personal expenses from your personal account, because that makes sorting out what is what much simpler, both in case of an audit and for your own accounting. Whether a particular expenditure is a deductible business expense has nothing to do with what account you pay it from. If you pay advertising expenses for your business from your personal account, that's still (almost certainly) a deductible business expense. If you buy groceries from your business account, that's almost certainly not a deductible business expense. In your case, there are all kinds of rules about when and how much travel is deductible." } ]	[ { "id": "221281", "score": 0.6819740533828735, "text": "I've actually had the same problem several years running, and it's solved by filing my corporate taxes, then taking those schedules, and applying them to my 1040, along with a Schedule C You'll want to work with an accountant on this, but basically you're going to take the total set of business expenses as 1 chunk, then write them off your income (as one chunk). I always recommend an accountant for this, but that's the general idea that I've used, and for the last 10 years, it's worked great.", "topk_rank": 0 }, { "id": "140966", "score": 0.6819019913673401, "text": "You can only deduct (with the 2% AGI threshold) expenses that: You've actually incurred. I.e.: you actually paid for equipment or services provided and can show receipts for the payment. At the request of the employer. I.e.: you didn't just decide on your own to buy a new book or take a class, your employer told you to. With business necessity. I.e.: it was in order for you to do your job. And you were not reimbursed by your employer. I.e.: you went somewhere and spent your after tax money on something employer explicitly told you to pay for, and you didn't get reimbursed for that. From your story - these conditions don't hold for you. As I said in the comments - I strongly suggest you talk to a lawyer. Your story just doesn't make any sense, and I suspect your employer is doing something very fishy here.", "topk_rank": 1 }, { "id": "338539", "score": 0.6818731427192688, "text": "\"ASSUMING you're talking about a property in the United States, the answer generally would be \"\"no\"\". You aren't actually paying any of the expenses for the property and yet you want to take the deductions for doing so? That's a rather cheeky move, I'd say! (grin) It probably would lead to some real strife with your brother, since he would have proper claim to those credit on the basis he's the one footing the bills for the property. Before you do anything like what you're talking about, it might be best to speak with him, because both of you are running the very real risk of an audit, and if that happens then I can guarantee the IRS will slap the daylights out of you for it. Your brother, I'm sure, is already claiming all of the deductions he can for what he's putting into the property, and on top of that you want to file for your half. What half are you referring to, when your out-of-pocket is zero? So what you're saying is, you think that between you and your brother you should be able to take a credit of 150% of the actual deductions...Sounds like a recipe for disaster to me. I strongly encourage you to talk to a tax professional, but if you get a different answer to this than what I've already given then I'd be stunned. I hope this helps. Good luck!\"", "topk_rank": 2 }, { "id": "329810", "score": 0.6813442707061768, "text": "\"I agree with some of the points of the other answers but why not avoid all the guesswork? I highly recommend you not charge him now. Wait until the end of the year when you have much more information about both of your companies and then you can run the numbers both ways and decide if it would benefit you (collectively). If either of your businesses runs on a cash basis and you decide to invoice, just make sure the check is deposited before Dec 31. Update: If you want to do this for 2016, at least your husband's business would have to be using an accrual basis (since it's too late to take the deduction on a cash basis). Simply run the numbers both ways and see if it helps you. If it doesn't help enough to warrant it for 2016 you could rerun the numbers near the end of 2017 to see if it helps then. Diclaimer: I think it's OK to do this type of manipulation for the scenario you described since you have done (or are doing) the work and you are charging a reasonable fee, but realize that you shouldn't manipulate the amount of the invoice, or fabricate invoices. For example, you shouldn't ever think about such things as: \"\"If I invoice $50K instead of $3K, will that help us?\"\"\"", "topk_rank": 3 }, { "id": "315796", "score": 0.6808872222900391, "text": "I wouldn't lose any sleep on it until it actually happens. I believe generally the agreement of the merchant with the credit card company says they must submit to the company's arbitration. If they come back to you, I would definitely get in touch with Visa to complain. Here's some great advice on dealing with unscrupulous debt collection, the main points being It's actually you that should be threatening to sue them if the repairs were incompetent or dangerous!", "topk_rank": 4 }, { "id": "283079", "score": 0.6805221438407898, "text": "\"I'm not sure what you mean by \"\"writing off your time,\"\" but to answer your questions: Remember that, essentially, you are a salaried employee of a corporation. So if you are spending time at your job, even if you are not billing anything to a client, you are earning your salary. If there are costs involved with these activities (maybe class fees, a book purchase, or travel expenses), the corporation should be paying the costs as business expenses. However, the logistics of this, whether the corporation writes a business check to the vendor directly, or you put the expenses on a personal credit card and are reimbursed with an expense check from the corporation, don't matter. Your accountant can show you the right way to do this.\"", "topk_rank": 5 }, { "id": "541809", "score": 0.6801112294197083, "text": "\"No, your business cannot deduct your non-business expenses. You can only deduct from your business income those reasonable expenses you paid in order to earn income for the business. Moreover, for there to be a tax benefit, your business generally has to have income (but I expect there are exceptions; HST input tax credits come to mind.) The employment income from your full-time job wouldn't count as business income for your corporation. The corporation has nothing to do with that income – it's earned personally, by you. With respect to restaurant bills: These fall under a category known as \"\"meals & entertainment\"\". Even if the expense can be considered reasonable and business-related (e.g. meeting customers or vendors) the Canada Revenue Agency decided that a business can only deduct half of those kinds of expenses for tax purposes. With respect to gasoline bills: You would need to keep a mileage and expense log. Only the portion of your automobile expenses that relate to the business can be deducted. Driving to and from your full-time job doesn't count. Of course, I'm not a tax professional. If you're going to have a corporation or side-business, you ought to consult with a tax professional. (A point on terminology: A business doesn't write off eligible business expenses — it deducts them from business income. Write off is an accounting term meaning to reduce the value of an asset to zero. e.g. If you damaged your car beyond repair, one could say \"\"the car is a write-off.\"\")\"", "topk_rank": 6 }, { "id": "310612", "score": 0.6798028349876404, "text": "\"You should probably have a tax professional help you with that (generally advisable when doing corporation returns, even if its a small S corp with a single shareholder). Some of it may be deductible, depending on the tax-exemption status of the recipients. Some may be deductible as business expenses. To address Chris's comment: Generally you can deduct as a business on your 1120S anything that is necessary and ordinary for your business. Charitable deductions flow through to your personal 1040, so Colin's reference to pub 526 is the right place to look at (if it was a C-corp, it might be different). Advertisement costs is a necessary and ordinary expense for any business, but you need to look at the essence of the transaction. Did you expect the sponsorship to provide you any new clients? Did you anticipate additional exposure to the potential customers? Was the investment (80 hours of your work) similar to the costs of paid advertisement for the same audience? If so - it is probably a business expense. While you can't deduct the time on its own, you can deduct the salary you paid yourself for working on this, materials, attributed depreciation, etc. If you can't justify it as advertisement, then its a donation, and then you cannot deduct it (because you did receive something in return). It might not be allowed as a business expense, and you might be required to consider it as \"\"personal use\"\", i.e.: salary.\"", "topk_rank": 7 }, { "id": "399199", "score": 0.6796978712081909, "text": "I'm a CPA and former IRS agent and manager. Whether you are a cash or accrual basis taxpayer, you get to deduct the expense when your card is charged. Think of it this way: You are borrowing from the credit card company or bank that issued the credit card. You take that money to make a purchase of a product or service. You now have an expense and a liability to a third party. When you pay off the liability, you do not get to take a deduction. Your deduction is when you pay for the expense. Depending on what you purchased, you may have to capitalize it.", "topk_rank": 8 }, { "id": "447676", "score": 0.679571807384491, "text": "Source: Business owner for 13 years. Unfortunately you may be hard-pressed to get that money back. You can try sending him to collections, but at that point it often starts to cost you more than what he owes you, in my experience. In the worst instance I lost $2100 on a single invoice that I never received a dime for. Nearly 20 hours of my time wasted for nothing! A bit of unsolicited advice: I've found that when working on a service-basis, obtaining billing and payment info up front and taking a deposit makes sense. I take 1 hour's worth of deposit and bill the rest after. Not only does it verify the payment method works, but it also gives you a way to confirm the customer's ability to pay in the future. If the customer balks at this, just walk away. It's not worth the risk. As a business, your goal is to make money in exchange for goods or services. If your customers don't understand that and aren't willing to front a bit of money to secure your services, you'll likely going to lose time and money.", "topk_rank": 9 }, { "id": "490386", "score": 0.6794192790985107, "text": "\"Anything is negotiable. Clearly in the current draft of the contract the company isn't going to calculate or withhold taxes on your behalf - that is your responsibility. But if you want to calculate taxes yourself, and break out the fees you are receiving into several \"\"buckets\"\" on the invoice, the company might agree (they might have to run it past their legal department first). I don't see how that helps anything - it just divides the single fee into two pieces with the same overall total. As @mhoran_psprep points out, it appears that the company expects you to cover your expenses from within your charges. Thus, it's up to you to decide the appropriate fees to charge, and you are assuming the risk that you have estimated your expenses incorrectly. If you want the company to pay you a fee, plus reimburse your expenses, you will need to craft that into the contract. It's not clear what kind of expenses you need to be covered, and sometimes companies will not agree to them. For specific tax rule questions applicable to your locale, you should consult your tax adviser.\"", "topk_rank": 10 }, { "id": "167494", "score": 0.6790721416473389, "text": "\"I'm not an accountant, and you should probably get the advice of one to be sure about what to do. However, if the business is a sole-proprietorship, you'd complete a Schedule C for the business, and you'd end up with a loss at the end. If the investment you made in the business is considered to be entirely or partially \"\"at risk\"\" per the IRS definition, you'd get to claim all or part of the loss as a reduction in your income. If the business was an LLC, then you're beyond my already limited knowledge. There may be some other considerations based on whether this was really a business vs a hobby, and whether or not you're going to try to continue with the business, or whether you've shut it down. I'm not sure about those parts, but they'd be worth exploring with an accountant.\"", "topk_rank": 11 }, { "id": "108012", "score": 0.6790322661399841, "text": "Etiquette doesn't really come into the picture here. The business offers a service and I choose to accept it. Personally, I use my debit card as much as possible. For every transaction, I record it in my checkbook. Then, when I do reconciling, I know exactly how much I paid for various categories of stuff. Good for budgeting. Most often my purchases are over $10 but when they aren't, I have no qualms about using the card.", "topk_rank": 12 }, { "id": "300749", "score": 0.6785436272621155, "text": "\"I'm assuming you're operating on the cash basis of accounting, based on your comment \"\"Cash, I think that's the only way for a sole propriator (sic)\"\" Consider: There are two distinct but similar-name concepts here: \"\"paid for\"\" (in relation to a expense) and \"\"paid off\"\" (in relation to a debt). These both occur in the case you describe: Under the cash basis of accounting, when you can deduct an expense is based on when you paid for the expense, not when you eventually pay off any resulting debt arising from paying for the expense. Admittedly, \"\"cash basis\"\" isn't a great name because things don't solely revolve around cash. Rather, it's when money has changed hands – whether in the form of cash, check, credit card, etc. Perhaps \"\"monetary transaction basis\"\" might have been a better name since it would capture the paid-for concept whether using cash or credit. Unfortunately, we're stuck with the terminology the industry established.\"", "topk_rank": 13 }, { "id": "338348", "score": 0.6784828305244446, "text": "Nice try. No. If you were in the music industry, you might have a case. Depending on the exact job, certain things related to music would be a business expense. I don't see how this would pass an audit as it really is unrelated to the work you do.", "topk_rank": 14 }, { "id": "141183", "score": 0.6782786250114441, "text": "If I were you, I would go to the bank right now, pay the $100 and close the account. I would stop the bleeding first then consider the fallout later. Do you own the account jointly with your partner(s) as a partner or does the partnership (a separate formal entity) own the bank account with you a named representative? Those are two very different situations. If you're a joint owner, you're liable for the fees; along with your other partners in accordance with your partnership agreement. You never closed yourself off the account and that's your problem. If the dissolved partnership owns the account, you're not personally liable for the fees. You were never a personal owner of the account, now that the account is negative you don't magically become personally liable. The differences here are very nuanced and the details matter. If this were a large amount of money I'd suggest you go see a lawyer. Since this is about $100 I'd just pay it, make sure the account is closed, and move on.", "topk_rank": 15 }, { "id": "152449", "score": 0.6781717538833618, "text": "\"First IANAL! This is going to depend on the kind of points. If it's an internal point system that the business is doing on their own, then they may very well, give you that many \"\"extra\"\" points. They may really not care. Specially if the cost of the points is low enough. Remember that steak dinner that you paid $60 for only really cost them $2 and that they use $60 worth of points on it. If the point system is tied to a bank or credit card, then it's far more likely that the \"\"just use them\"\" is not the proper answer. The company doing the reimbursing is giving the location $60 and using your points. The points have a much higher value. With that said, your responsibility is to notify, and follow their rules. So notify them in writing, and use the rewards card as you normally would. If your being honest, then the worst that happens is that your point balance is a little negative (because you spent 100 points but really only had 98 after adjustment). Most likely, if your being honest, they will just eat the few points over that you went on accident. If you get an answer in writing to just keep the points, then I guess you know where your daughter's wedding reception will be. Let's hope it's a classy place. Of course, as a 'good' person (or maybe a 'stupid' person), I should call them, (wait 30 minutes in the queue), and then try to explain the issue to the service desk. I actually did that, and the guy thought I am nuts to even call, and told me to 'just use them they are yours now'. I don't feel like calling again and again until I get someone that believes it, just to return them their points. You will want to do this in writing. Email will work, but you really want a paper trail, either way. I could just toss the card and forget about it. However, I had quite some points on it that really belong to me, so that feels like I pay for their fault. There is no need to do this. It's like a bank error. Talk to them and they will give you an answer. In the mean time, do your best to only use the points you actually have. Use them and play stupid. It's not my duty to check their math, right? Probably nobody will ever care (let's keep religious considerations out here). What would be the consequences if they do realize their error some day in the far future? (I understand this borders on a legal question). Nope, don't do this. If you play dumb and spend 5000 points when you know you only have around 100, best case scenario you end up with -4900 points (effectively canceling the benefit of the card). You may also be banned form the program, the location, the network, etc. Worst case scenario they want the monetary value of the points and sue you for it, and the legal fees. It may even be considered fraud. TL;DR Use your card, but be honest, and handle the mistake in writing.\"", "topk_rank": 16 }, { "id": "417981", "score": 0.6776525378227234, "text": "\"While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do I quantify the travel expenses? Generally, \"\"necessary and ordinary\"\" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say \"\"no\"\" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000 miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (\"\"pleasure\"\") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is \"\"business\"\" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the property? Although, again, the \"\"necessary and ordinary\"\" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA).\"", "topk_rank": 17 }, { "id": "552356", "score": 0.6774075031280518, "text": "\"I disagree with BrenBran, I don't think this is qualified as unreimbursed employee expense. For it to qualify, it has to be ordinary and necessary, and specifically - necessary for your employer. This is not the case for you, as there's no such necessity. From employer's perspective, you can work from your home just as well. In fact, the expense is your personal, as it is your choice, not \"\"unreimbursed employee expense\"\" since your employer didn't even ask you to do it. You should clarify this with a licensed tax adviser (EA/CPA licensed in New York).\"", "topk_rank": 18 }, { "id": "219425", "score": 0.677266538143158, "text": "I think it depends on who is being paid for your app. Do you have a company the is being paid? Or is it you personally? If you have a company then that income will disappear by offsetting it through expenses to get the software developed. If they are paying you personally then you can probably still get the income to disappear by file home-office expenses. I think either way you need to talk to an accountant. If you don't want to mess with it since the amount of income is small then I would think you can file it as additional income (maybe a 1099).", "topk_rank": 19 } ]
27	Using business check to pay at retail	[ { "id": "537326", "score": 0.7491737008094788, "text": "You can just buy the items personally and then submit an expense report to the company to get reimbursed. Keep all the receipts. Paying with a company check is also fine, but you might run into problems with stores not accepting checks." } ]	[ { "id": "258504", "score": 0.7116374373435974, "text": "In some states, it is your responsibility to pay the sales tax on a transaction, even if the party your purchase from doesn't collect it. This is common with online purchases across state lines; for example, here in Massachusetts, if I buy something from New Hampshire (where there is no sales tax), I am required to pay MA sales tax on the purchase when I file my income taxes. Buying a service that did not include taxes just shifts the burden of paperwork from the other party to me. Even if you would end up saving money by paying in cash, as other here have pointed out, you are sacrificing a degree of protection if something goes wrong with the transaction. He could take your money and walk away without doing the work, or do a sloppy job, or even damage your vehicle. Without a receipt, it is your word against his that the transaction ever even took place. Should you be worried that he is offering a discount for an under the table transaction? Probably not, as long as you don't take him up on it.", "topk_rank": 0 }, { "id": "481817", "score": 0.7116360068321228, "text": "There is no bank that I know of offering such a feature and I'm not sure what the point of it would be (other than to annoy their customers). If you've been subjected to a fraudulent check your best bet is to either choose to write checks only to trusted parties and/or use your banks BillPay service (they usually issue checks on another account while transferring the money from your account). The drawbacks of your current plan, bounced legitimate checks and high maintenance nature, outweigh the potential benefits of catching a fraudulent check since you're not legally obligated to pay checks you haven't written.", "topk_rank": 1 }, { "id": "108734", "score": 0.7107204794883728, "text": "\"We have a local bank that changed to a bill pay service. The money is held as \"\"processing\"\" when the check is supposed to be cut and shows as cleared on the date the check is supposed to be received. Because our business checking is with the same bank, we discovered recently that the although the check shows cleared from our account, the recipient has not received the paper check yet - and may not for 2-3 days. We discovered this because the payroll checks we write this way (to ourselves) never arrive on the due date but clear the business account. It appears to be a new way for banks to ride the \"\"float\"\" and draw interest on the money. It happens with every check processed through the bill pay system and not with electronic transfers.\"", "topk_rank": 2 }, { "id": "388147", "score": 0.7097968459129333, "text": "\"You can try writing on the back of the check, in the signature area, \"\"For deposit only to account xxxxxxxxx\"\", leaving room for the signature. This may or may not be legally binding, but it states your intnt and is in a form the bank will recognize.\"", "topk_rank": 3 }, { "id": "189642", "score": 0.7097776532173157, "text": "I would suggest at least getting a personal card that you only use for business expenses, even if you don't opt for a business card. It makes it very clear that expenses on that card are business expenses, and is just more professional. The same goes for a checking account, if you have one of those. It makes it easier to defend if you are ever audited, and if you use an accountant or tax preparer.", "topk_rank": 4 }, { "id": "373905", "score": 0.7096644639968872, "text": "Several options: Banks - ask in the branches near to you if any of them would do that. They generally only service their account members, but if you smile and talk nicely to the tellers they might do that for you. It may involve some nominal commission. Check cashing places - they're everywhere, and they carry large denomination bills. They will probably do that, but will likely charge a commission. Money orders - if you don't want to give a personal check, buy a money order at the post office, and dump the cash on them. It costs a nominal fee ($1.60 at USPS).", "topk_rank": 5 }, { "id": "88973", "score": 0.7093431949615479, "text": "\"Check is an obligation to pay, and is unconditional. In the US, checks don't expire (there are countries where they do). Endorsements such as \"\"void after X days\"\" are meaningless and don't affect the obligation to pay. The bank is under no obligation to honor a check that is more than 6 months old (based on the date on the check, of course). This is from the Unified Commercial Code 4-404. However, this refers to the bank, not to the person who gave you the check. The bank may pay, if the check is deposited in good faith and there's nothing wrong with it or with the account. So the first thing you can do is deposit the check. If asked - you can say that the person just wrote the wrong date, which is true. Worst case the check bounces. If the check bounces - you can start with demand letters and small claim courts. The obligation to pay doesn't go away unless satisfied, i.e.: paid.\"", "topk_rank": 6 }, { "id": "8854", "score": 0.7091342210769653, "text": "\"Technically it doesn't matter what size the check is. In fact, it doesn't even have to be written on paper. While writing it on a cow may not always fly, almost any object actually will. That said, more to the question asked - you can definitely use the smaller \"\"personal\"\"-sized checks for a business account. The larger checks formatted to the \"\"letter\"\" page size: if you cut it into three equal pieces with a tiny bit left for the binder holes - you'll get exactly three check-sized pieces. This is convenient for those printing checks, keeping carbon-copy records etc. Regarding the MICR line: I just checked my business check book, which is of a smaller \"\"personal\"\" size (that I got for free from the bank) - the check number is at the end.\"", "topk_rank": 7 }, { "id": "323015", "score": 0.7089741826057434, "text": "\"To put a positive spin on the whole thing, maybe it's a small family shop, and having the check made out to \"\"cash\"\" means that your barber can hand it to someone else without the need to countersign. Or maybe his last name is \"\"Cash\"\" - there was a pretty famous singer who fit that description. Either way, it's not your place to nanny his finances.\"", "topk_rank": 8 }, { "id": "420314", "score": 0.708458662033081, "text": "The only difference that I can think of is that some business checks have two signature lines. The look and feel of a business check used to be more important. So a big check with two signatures and a machine-imprinted amount was a way to screen out fraudulent transactions. Nowadays the check is scanned and shredded, so it's probably not a big deal for 90% of your transactions.", "topk_rank": 9 }, { "id": "507287", "score": 0.7079474925994873, "text": "I'm going to give the checkmark to Joe, but I wanted to convey my personal experience. I bank with TD in New Jersey and was informed by the teller that I simply needed to endorse the check myself and indicate Parent of Minor. I cannot attest if other banks will accept this, but it at least works for TD and my situation in particular.", "topk_rank": 10 }, { "id": "524034", "score": 0.7079451084136963, "text": "If it were me, I would get a new checking account at potentially a new bank, but certainly with a new account number. As Nathan said, there is no need for you to cross her name off the check, but potentially, she could use those checks, or have new checks printed to use. Having her name on the check makes it seem like she is a legitimate signer on the account. In the end you can fight and possibly win with your bank that they should not have accepted a check signed by her as payment, but why bother? Also you will potentially alienate any merchant that accepts a check by her. It is a total mess that can be relatively easily solved with very little money ($25-$40 for check reprinting) proactively. Close the account, shred any existing checks, and move on. Heck you can actually make money by doing this and receiving a bonus. Check Nerd Wallet for current bank promotions.", "topk_rank": 11 }, { "id": "3336", "score": 0.7079423666000366, "text": "\"Yes, kinda. Talk to local banks about a business account, and tell them you want to enable certain employees to make deposits but not withdrawals. They don't need to know you're all the same person. For instance I have a PayPal account for business. These allow you to create \"\"sub accounts\"\" for your employees with a variety of access privileges. Of course I control the master account, but I also set up a \"\"sub account\"\" for myself. That is the account I use every day.\"", "topk_rank": 12 }, { "id": "199069", "score": 0.7072892785072327, "text": "I still use checks to pay rent and occasionally some bills/liabilities. That said, I did notice an (elderly) lady paying by check at the supermarket a while ago. So is it really common to get a paycheck in the sense that you get a piece of paper? Yes and no. There are some people that opt for the physical paycheck. Even if they do not, there is a pay stub which serves as a record of it. My last employer went to online pay stubs and a bunch of us opted out, sticking with the good old paper in an envelope. We sure were glad of that when there were technical issues and security concerns with the online service.", "topk_rank": 13 }, { "id": "283079", "score": 0.7069405913352966, "text": "\"I'm not sure what you mean by \"\"writing off your time,\"\" but to answer your questions: Remember that, essentially, you are a salaried employee of a corporation. So if you are spending time at your job, even if you are not billing anything to a client, you are earning your salary. If there are costs involved with these activities (maybe class fees, a book purchase, or travel expenses), the corporation should be paying the costs as business expenses. However, the logistics of this, whether the corporation writes a business check to the vendor directly, or you put the expenses on a personal credit card and are reimbursed with an expense check from the corporation, don't matter. Your accountant can show you the right way to do this.\"", "topk_rank": 14 }, { "id": "153121", "score": 0.7069196701049805, "text": "\"Can you get a cashier's check from your bank, made out in the charity's name, and mail it to the charity? From what I recall of the last few times I've gotten a cashier's check from the bank, it didn't have anything on it that identified me. A determined person could probably trace it back to you, but you're not really looking for strong anonymity. Another possibility would be a postal money order, but I'm not sure whether you can leave the \"\"From\"\" section blank. The money order would have a fee, but the cashier's check should be free. (It is at both my local bank and my CU.)\"", "topk_rank": 15 }, { "id": "531356", "score": 0.7063683867454529, "text": "I actually think your boss is creating a problem for you. Of course it's taxable. The things IRS will look at (and they very well might, as it does stand out) what kind of payment is that. Why did it not go through payroll? The company may be at risk here for avoiding FICA/FUTA/workers' compensation insurance/State payroll taxes. Some are mandatory, and cannot be left to the employee to pay. On your side it raises your taxable income without the appropriate withholding, you may end up paying underpayment penalties for that (that is why you've been suggested to keep proofs of when you were paid). Also, it's employment income. If it is not wages - you're liable for self-employment taxes (basically the portion of FICA that the employer didn't pay, and your own FICA withholding). When you deposit the check is of no matter to the IRS, its when you got it that determines when you should declare the income. You don't have a choice there. I suggest asking the company payroll why it didn't go through them, as it may be a problem for you later on.", "topk_rank": 16 }, { "id": "197862", "score": 0.7060626745223999, "text": "Avoid talking to a person: Just use an automated system, such as an ATM or a cellphone app. Automated systems will ONLY scan for the RTN # and Account number at the bottom of the check (the funny looking blocky numbers). The automated system will not care who the check is made out to, or who is present, so long as you have an account to credit the money into, and the account number on the check can get the money debited properly.", "topk_rank": 17 }, { "id": "393467", "score": 0.7053672671318054, "text": "\"If you want to deposit checks or conduct business at a window, you should look at a local savings bank or credit union. Generally, you can find one that will offer \"\"free\"\" checking in exchange for direct deposit or a minimum balance. Some are totally free, but those banks pay zippo for interest. If you don't care about location, I would look at Charles Schwab Bank. I've been using them for a couple of years and have been really satisfied with them. They provide free checking, ATM fee reimbursement, free checks and pre-paid deposit envelopes. You also can easily move money between Schwab brokerage or savings accounts. Other brokers offer similar services as well.\"", "topk_rank": 18 }, { "id": "101600", "score": 0.7051613330841064, "text": "The only certain way is to have the issuer confirm it. You'd think there would be a better way, but no there isn't. I suggest you read this story about what can happen even if you are the innocent victim trying to cash a fraudulent Cashier's Check. The consequences included some jail time and huge attorney fees for this unlucky person.", "topk_rank": 19 } ]
28	Tax whilst starting a business in full time employment	[ { "id": "250640", "score": 0.741582989692688, "text": "With a limited company, you'll have to pay yourself a salary through PAYE. With income from your other job taking you over the higher-rate threshold, you should inform HMRC of this and get a tax code of DO for the second job, meaning 40% tax (and also both employer's and employee's National Insurance) will be deducted from the whole amount of the salary. See here. Dividends should be like any other dividend -- you won't pay extra tax when you receive them, but will have to declare them on your tax return and pay the tax later. See the official information here. You'll get a £5,000 tax allowance for dividends, but they'll still count as income for purposes of hitting the higher-rate threshold. I think in practice this means the first £5,000 will be tax-free, and the rest will be taxed at 32.5%. But note that you have to pay yourself at least the minimum wage as salary, not as dividend. I can't see IR35 being an issue. However, I'm not a professional, and this situation is complicated enough to need professional advice. Talk to an accountant or a tax advisor." } ]	[ { "id": "533808", "score": 0.7039350867271423, "text": "\"There are way too many details missing to be able to give you an accurate answer, and it would be too localized in terms of time & location anyway -- the rules change every year, and your local taxes make the answer useless to other people. Instead, here's how to figure out the answer for yourself. Use a tax estimate calculator to get a ballpark figure. (And keep in mind that these only provide estimates, because there are still a lot of variables that are only considered when you're actually filling out your real tax return.) There are a number of calculators if you search for something like \"\"tax estimator calculator\"\", some are more sophisticated than others. (Fair warning: I used several of these and they told me a range of $2k - $25k worth of taxes owed for a situation like yours.) Here's an estimator from TurboTax -- it's handy because it lets you enter business income. When I plug in $140K ($70 * 40 hours * 50 weeks) for business income in 2010, married filing jointly, no spouse income, and 4 dependents, I get $30K owed in federal taxes. (That doesn't include local taxes, any itemized deductions you might be eligible for, IRA deductions, etc. You may also be able to claim some expenses as business deductions that will reduce your taxable business income.) So you'd net $110K after taxes, or about $55/hour ($110k / 50 / 40). Of course, you could get an answer from the calculator, and Congress could change the rules midway through the year -- you might come out better or worse, depending on the nature of the rule changes... that's why I stress that it's an estimate. If you take the job, don't forget to make estimated tax payments! Edit: (some additional info) If you plan on doing this on an ongoing basis (i.e. you are going into business as a contractor for this line of work), there are some tax shelters that you can take advantage of. Most of these won't be worth doing if you are only going to be doing contract work for a short period of time (1-2 years). These may or may not all be applicable to you. And do your research into these areas before diving in, I'm just scratching the surface in the notes below.\"", "topk_rank": 0 }, { "id": "525149", "score": 0.7037546038627625, "text": "I'm assuming you are in the US here. From a tax perspective you don't need to take any action to start a business and deduct expenses. If you have earned income coming from a source other than a W2 paying job, then you have a business. On your taxes, this means you file a schedule C (which is where you will deduct business expenses) and schedule SE (which computes how much FICA tax you will owe on your business income). When we talk about starting a business, we usually are talking about creating a corporation or LLC. No particular tax advantage to that in your case, but there could be liability advantages, if you are concerned about that. If you file losses consistently year after year, the IRS might try and classify your business as a hobby. That's what you should worry about. I suppose incorporating might reduce the probability of that, but it might not. Keep good records in case you need to argue with the IRS. If you do have to argue with them, they will want to ensure that you only used the laptop and internet for your business. That's a big if, but it's a potentially scary one. IRS Guidelines on hobby vs. business income Note: besides deducting expenses, another advantage of self-employment is opening a solo-401(k) or SEP or SIMPLE IRA. These potentially allow you to set aside a lot more money than the typical IRA and 401(k) arrangement. Thing is, you have to have a lot more earned income to really take advantage of them, but let's hope your app gets you there.", "topk_rank": 1 }, { "id": "333954", "score": 0.7025842666625977, "text": "Normally, incorporation is for liability reasons. Just file your taxes as a business. This just means adding a T2125 to your personal return. There's no registering, that's for GST if over a certain threshold. There's even a section in the instructions for internet businesses. http://www.cra-arc.gc.ca/E/pub/tg/t4002/t4002-e.html#internet_business_activities This is the form you have to fill out. Take note that there is a place to include costs from using your own home as well. Those specific expenses can't be used to create or increase a loss from your business, but a regular business loss can be deducted from your employment income. http://www.cra-arc.gc.ca/E/pbg/tf/t2125/t2125-15e.pdf", "topk_rank": 2 }, { "id": "541809", "score": 0.7024940252304077, "text": "\"No, your business cannot deduct your non-business expenses. You can only deduct from your business income those reasonable expenses you paid in order to earn income for the business. Moreover, for there to be a tax benefit, your business generally has to have income (but I expect there are exceptions; HST input tax credits come to mind.) The employment income from your full-time job wouldn't count as business income for your corporation. The corporation has nothing to do with that income – it's earned personally, by you. With respect to restaurant bills: These fall under a category known as \"\"meals & entertainment\"\". Even if the expense can be considered reasonable and business-related (e.g. meeting customers or vendors) the Canada Revenue Agency decided that a business can only deduct half of those kinds of expenses for tax purposes. With respect to gasoline bills: You would need to keep a mileage and expense log. Only the portion of your automobile expenses that relate to the business can be deducted. Driving to and from your full-time job doesn't count. Of course, I'm not a tax professional. If you're going to have a corporation or side-business, you ought to consult with a tax professional. (A point on terminology: A business doesn't write off eligible business expenses — it deducts them from business income. Write off is an accounting term meaning to reduce the value of an asset to zero. e.g. If you damaged your car beyond repair, one could say \"\"the car is a write-off.\"\")\"", "topk_rank": 3 }, { "id": "26508", "score": 0.7021356821060181, "text": "Because you actually reside in New Zealand, your income taxes will be paid in New Zealand. However, as a non-resident of Australia you will have tax withholding on all of the interest you earn in an Australian bank account. Obviously, because that tax is paid to Australia, that will not be counted against your New Zealand income taxes due to the taxation agreement between those countries. You should still discuss this with an accountant in New Zealand and consider acting as a sole trader. Since you are doing freelance work, that seems like the most logical setup anyway.", "topk_rank": 4 }, { "id": "177074", "score": 0.7021161317825317, "text": "\"If you use \"\"a room or other separately identifiable space\"\" within your apartment exclusively for your business, then you might be able to recoup a fraction of your rent for that. Check the rules for home office at the IRS and adopt a consistent and well-documented approach. (I would pay your full rent out of your personal account, and then do an \"\"expense report\"\" for the portion that's legitimately business related, but that's not a unique approach.) Other than that, I agree with the answer by litteadv - You cannot reduce your tax by the full amount of your rent just by having the S Corp pay, and trying to do so is probably playing with fire. Generally speaking, don't comingle business and personal expenses like that.\"", "topk_rank": 5 }, { "id": "450808", "score": 0.7012315392494202, "text": "\"One way to do these sorts of calculations is to use the spreadsheet version of IRS form 1040 available here. This is provided by a private individual and is not an official IRS tool, but in practice it is usually accurate enough for these purposes. You may have to spend some time figuring out where to enter the info. However, if you enter your self-employment income on Schedule C, this spreadsheet will calculate the self-employment tax as well as the income tax. An advantage is that it is the full 1040, so you can also select the standard deduction and the number of exemptions you are entitled to, enter ordinary W-2 income, even capital gains, etc. Of course you can also make use of other tax software to do this, but in my experience the \"\"Excel 1040\"\" is more convenient, as most websites and tax-prep software tend to be structured in a linear fashion and are more cumbersome to update in an ad-hoc way for purposes like tax estimation. You can do whatever works for you, but I would recommend taking a look at the Excel 1040. It is a surprisingly useful tool.\"", "topk_rank": 6 }, { "id": "477476", "score": 0.7009634375572205, "text": "Welcome to the wonderful but oft confusing world of self-employment. Your regular job will withhold income for you and give you a W2, which tells you and the government how much is withheld. At the end of the year uber will give you and the government a 1099-misc, which will tell you how much they paid you, but nothing will be withheld, which means you will owe the government some taxes. When it comes to taxes, you will file a 1040 (the big one, not a 1040EZ nor 1040A). In addition you will file a schedule C (self-employed income), where you will report the gross paid to you, deduct your expenses, and come up with your profit, which will be taxable. That profit goes into a line in the 1040. You need to file schedule SE. This says how much self-employment tax you will pay on your 1099 income, and it will be more than you expect. Self employment tax is SS/Medicare. There's a line for this on the 1040 as well. You can also deduct half of your self-employment tax on the 1040, there's a line for it. Now, you can pay quarterly taxes on your 1099 income by filing 1040-ES. That avoids a penalty (which usually isn't that large) for not withholding enough. As an alternative, you can have your regular W2 job withhold extra. As long as you don't owe a bunch at tax time, you won't be a fined. When you are self-employed your taxes aren't as simple. Sorry. You can either spend some time becoming an expert by studying the instructions for the 1040, pay for the expensive version of tax programs, or hire someone to do it for you. Self-employed taxes are painful, but take advantage of the upsides as well. You can start a solo 401(k) or SEP IRA, for example. Make sure you are careful to deduct every relevant business expense and keep good records in case you get audited.", "topk_rank": 7 }, { "id": "569135", "score": 0.7008364200592041, "text": "When you do your tax return, your total income from the year from all sources is added up. So you will need to include your employment income as well as your contractor income. Any tax taken off at source through PAYE will then be deducted from how there is to pay. So whether you pay the tax or your employer pays it, it should end up the same, although the timing will differ. There will be differences in National Insurance treatment, and you don't necessarily have a free option to choose which happens - the nature of your relationship may mean you have to be classed as either employed or self-employed under HMRC rules.", "topk_rank": 8 }, { "id": "175889", "score": 0.7006220817565918, "text": "They are already indirectly paying these expenses. They should be built into your rates. The amount per job or per hour needs to cover what would have been your salary, plus the what would have been sick, vacation, holidays, health insurance, life insurance, disability, education, overhead for office expenses, cost of accountants...and all taxes. In many companies the general rule of thumb is that they need to charge a customer 2x the employees salary to cover all this plus make a profit. If this is a side job some of these benefits will come from your main job. Some self employed get some of these benefits from their spouse. The company has said we give you money for the work you perform, but you need to cover everything else including paying all taxes. Depending on where you live you might have to send money in more often then once a year. They are also telling you that they will be reporting the money they give you to the government so they can claim it as a business expense. So you better make sure you report it as income.", "topk_rank": 9 }, { "id": "132780", "score": 0.6999530792236328, "text": "First - get a professional tax consultation with a NY-licensed CPA or EA. At what point do I need to worry about collecting sales taxes for the city and state of New York? Generally, from the beginning. See here for more information on NYS sales tax. At what point do I need to worry about record-keeping to report the income on my own taxes? From the beginning. Even before that, since you need the records to calculate the costs of production and expenses. I suggest starting recording everything, as soon as possible. What sort of business structures should I research if I want to formalize this as less of a hobby and more of a business? You don't have to have a business structure, you can do it as a sole proprietor. If you're doing it for-profit - I suggest treating it as a business, and reporting it on your taxes as a business (Schedule C), so that you could deduct the initial losses. But the tax authorities don't like business that keep losing money, so if you're not expecting any profit in the next 3-4 years - keep it reported as a hobby (Misc income). Talk to a licensed tax professional about the differences in tax treatment and reporting. You will still be taxed on your income, and will still be liable for sales tax, whether you treat it as a hobby or as a business. Official business (for-profit activity) will require additional licenses and fees, hobby (not-for-profit activity) might not. Check with the local authorities (city/county/State).", "topk_rank": 10 }, { "id": "90348", "score": 0.6999368071556091, "text": "You will be liable to pay the tax For the 2017 year of assessment (1 March 2016 - 28 February 2017) if you earned less than R75 000 you will not have to pay any tax The annual budget speach is this week and the new tax rates will be released but most likely that R75 000 will increase to R78 000+- so if you earn less than that tax would not even be applicable on you, Should you earn in a tax year more than R75 000 then would be able to do your own tax return and payments via E-Filling on SARS's website : http://www.sarsefiling.co.za/ But if you earn less than R350 000 then you don't have to submit a tax return, but there is nothing that stops you from submitting one if you feel that you want to. You can use https://www.taxtim.com/za/ to help you with other questions you might have. You can potentially bring down your tax-able income by showing a loss in capital value of your equipment that you purchased that is now worth less than it was when you initially purchased it, but these are all things you should discuss with a tax practitioner, I am not entirely sure how you will show a loss in capital value as a sole-proprietor, that is what you will be since you are not a company.", "topk_rank": 11 }, { "id": "42924", "score": 0.6995840072631836, "text": "If you mostly do work for businesses/individuals who are VAT registered it's a no-brainer to become VAT registered yourself... Although you will have to charge your customers VAT (and pass this on to HMRC) because they are VAT-registered they will reclaim the amount so it won't actually 'cost' them anything. At the same time, you can reclaim all the VAT you're currently being charged on your business expenditure (business equipment, tickets to business events, business software, accountancy/other business services you pay for, web hosting etc etc etc) However, if most of your clients are not VAT-registered it's not worth you registering. You would have to charge your customers an extra 20% (and they wouldn't be able to claim it back!) and you would have to pass this on to HMRC. Although you could still claim for goods and services you purchase for business use, essentially you'd just be another tax collector for HMRC. That said, at the end of the day it's up to you! VAT returns are quarterly and dead simple. Just keep a spreadsheet with your invoices (output tax) and receipts (input tax) and then do some basic maths to submit the final numbers to HMRC. No accountant required!", "topk_rank": 12 }, { "id": "319836", "score": 0.6995533108711243, "text": "Three points for you to keep in mind. 1. In the very first year, you should have 182 days outside India. So that in the year when you start your consultancy, you will not have any liability to pay tax on earning abroad. 2. Although you may be starting a consultancy abroad, if you do any services in India, there will be withholding tax depending on the country in which you have started the consultancy business. 3. Whatever money you repatriate is not taxable in India. However, if you you repatriate the money as gift to anyone who is not a relative, will be taxed in his/her hand.", "topk_rank": 13 }, { "id": "265397", "score": 0.699391782283783, "text": "\"Get some professional accounting help. You're going to have to pay for everything out of the fee you charge: taxes, retirement, health care, etc. You'll be required to pay quarterly. I don't think you should base your fee on what \"\"this\"\" company will pay as a full-time employee, but what you can expect in your area. They're saving a lot of money not going through an established employment firm and essentially, making you create your own. There are costs to setting up and maintaining a company. They have less risk hiring you because there are no unemployment consequences for letting you go. Once you're hired, they'll probably put you on salary, so you can forget about making more money if you work over 40 hrs. IMHO - there have to be better jobs in your area than this one.\"", "topk_rank": 14 }, { "id": "248761", "score": 0.6993555426597595, "text": "You can claim a deduction only if all of your business is conducted from the home, i.e. your home is your principal place of business - not just if you work from home sometimes. The CRA (Canada Revenue Agency) has pretty strict guidelines listed here, but once you're sure you qualify for a deduction, the next step would be to determine what portion of your home qualifies. You cannot attempt to deduct your entire mortgage simply because you run your business out of your home. The portion of your mortgage and other related & allowable home expense deductions has to be pro-rated to be equal to or less than the portion of your home you use for business. Simply put, if your business is operated out of a 120 sq-ft self-contained space, and your home's total square-footage is 2400 sq-ft, you can deduct 5% of your expenses (120/2,400 = 0.05). Hope this helps!", "topk_rank": 15 }, { "id": "113876", "score": 0.6989678144454956, "text": "\"I think the £35K band applies to the \"\"dividend income\"\" not the \"\"dividend paid to you\"\", and so you would only actually get £31.5K (90% of £35K) in your pocket before the next tax band kicked in. If your company will only supplying large VAT registered entities, then register for VAT yourself and elect the Flat Rate scheme - depending on your area of business, given that you have no expenses, your company will get an extra 7% - 14% on its income for free. Your clients won't care that you charge them VAT because they'll claim it back. Finally, depending on what your company is for, beware of the dreaded IR35\"", "topk_rank": 16 }, { "id": "195571", "score": 0.6981794238090515, "text": "You will almost certainly be paying taxes in Czech Republic, short of being American of Eritrean, citizenship has little to no bearing on tax. If you are working from home, you will probably be a contractor. In Romania you would work through either an SRL or you would set up a PFA. Essentially a limited company or a sole trader. You will need to find the Czech equivalents. I would advise finding a small business accountant. They will be able to advise what is the most cost effective solution, in some countries (like my one) you can save considerable amounts of tax by working through a company. There is a link with some information.", "topk_rank": 17 }, { "id": "250498", "score": 0.6980075836181641, "text": "\"From a tax/legal perspective, any income is taxable no matter how derived. On the other hand, if you're asking, \"\"When has my hobby crossed over from being something that I do on the side to something I should consider doing full-time?\"\" Different set of answers. Firstly, do you want to place that burden on your hobby? If you're doing it purely for fun, do you want to \"\"marry your mistress\"\"? Once you start depending on it for income, the money you earn is no longer fun-money and must now be used to pay legitimate expenses, taxes and other commitments. Secondly, will it support you or will you need other side projects? Consider your total income package now, including whatever you make from your hobby. How much would change if you switched your commitments and, perhaps, lost some of that revenue? Lastly, if you started your hobby to be a break from the routine, what will now break you from the routine of your now ex-hobby? All that said, if you're genuinely pleased by the income and overall profitability of the hobby, excited by the opportunities available and see a engaging and stimulating new career ahead of you then go for it.\"", "topk_rank": 18 }, { "id": "256395", "score": 0.6979750990867615, "text": "With a question like this you should talk to a tax professional who knows about international tax and knows about both the UK and the country you will be working in. They will give you up to date advice on what can be an extremely complex question. However to get you started I'll tell you what I was told when I did this nearly twenty years ago. It's all about whether you are resident in the UK for tax purposes or not. If you are, you will pay UK tax. If not, you wont (assuming you are being paid outside the UK - check with your professional exactly what is involved). In those days you could be counted as 'non resident' if you spent a complete period of twelve months outside the UK. You can make occasional visits to the UK without invalidating that. Again, check exactly how much you are allowed to return while still being not resident. Usually you will have to pay tax in the country where you are resident, but check the rules there. With some skilful timing you may be able to be considered non-resident in bouth countries, at least for some of the time. Again, your tax professional will know. The bank account question - again get a professional. I don't think it's a problem, but you may have to establish that you are being paid in the foreign country. In general you are going to need an account in the country where you work, so if its a problem get paid there and transfer any money you need in the UK.", "topk_rank": 19 } ]
30	Can I pay off my credit card balance to free up available credit?	[ { "id": "551175", "score": 0.760169506072998, "text": "Is it possible to pay off my balance more than once in a payment period in order to increase the amount I can spend in a payment period? Yes you can pay off the balance more than once even if its not due. This will get applied to outstanding and you will be able to spend again. If so, is there a reason not to do this? There is no harm. However note that it generally takes 2-3 days for the credit to be applied to the card. Hence factor this in before you make new purchases. I just got a credit card to start rebuilding my credit. Spending close to you credit limit does not help much; compared to spending less than 10% of your credit limit. So the sooner you get your limit on card increased the better." }, { "id": "434082", "score": 0.713922917842865, "text": "Banks only send your balance to credit bureaus once a month; usually a few days after your statement date. Thus, as long as your usage is below 10% in that date range, you're ok. Regarding paying it off early: sure. Every Sunday night, I pay our cards' charges from the previous week. (The internet makes this too easy.)" }, { "id": "336922", "score": 0.7668936252593994, "text": "Is it possible to pay off my balance more than once in a payment period in order to increase the amount I can spend in a payment period? Yes, but you should only do that if you expect an expense that is larger than your limit allows. Then, provide an extra payment before your expense occurs since it will take longer for the issuer to apply it to the outstanding balance. For instance, when going on holiday you could deposit additional money to increase your balance temporarily. That said if your goal is to improve your credit score I would recommend using the card, staying within your limit and pay it off every month. The 2 largest factors going into calculating your credit score are: By paying off the balance each month you After 6-9 months you can probably get a bigger limit, to improve your score. I wouldn't change to a different card or get a second one, as some issuers will run a check on your creditscore that lowers it temporarily. Also: you're entitled to a free credit report each year. I'd recommend asking for one every year so you can keep track on how your credit score improves. It also gives you the opportunity to check for mistakes on your report. Check here for more information: http://www.myfico.com/crediteducation/whatsinyourscore.aspx" }, { "id": "19233", "score": 0.7517405152320862, "text": "The card you have is one where you had to deposit an amount equivelent to your card limit -a secured limit credit card. Capital One is one if the primary cards of this type. The typical rules of credit card usage and building your credit, do not apply. So, yes, you want to use the card as much as possible and pay off your balance as often as is necessary to keep your limit freed up. You can actually pay the full balance plus 10%, and gain a little extra limit. Use your card as much as possible and call them and ask for a limit increase every three months. usually about 4 - 5 months in, they will increase your limit and do so without asking for a corresponding security deposit. This is really cool, because it means you are becoming credit-worthy. I know so much about this because I applied for this card for my son and am helping him in his attempt to repair his credit. His score increased by almost 200 points last year." } ]	[ { "id": "32985", "score": 0.7103977203369141, "text": "This can make a difference of a few points. When your balance is reported on a monthly basis to the bureaus that current balance is used to determine your utilization. Keeping it paid down will help in this case. If you are monitoring your credit regularly, you can see what time of the month your balance is reported and pay before then (just make sure you include enough padding to be sure your payment clears before the reporting date--normally only a business day or so, but weekends can throw it all off).", "topk_rank": 0 }, { "id": "525129", "score": 0.710317850112915, "text": "\"Note: this answer is true for the UK, other places may vary. There are a couple of uses for credit cards. The first is to use them in a revolving manner, if you pay off the bill in full every time you get one then with the vast majority of cards you will pay no interest, effecitvely delay your expenses by a month, build your credit rating and with many credit cards you can also get rewards. Generally you should wait until the bill comes to pay it off. This ensures that your usage is reported to the credit ratings agencies. In general you should not draw out cash on credit cards as there is usually a fee and unlike purchases it will start acruing interest immediately. The second is longer term borrowing. This is where you have to be careful. Firstly the \"\"standard\"\" rate on most credit cards is arround 20% APR which is pretty high. Secondly on many cards once you are carrying a balance any purchases start acruing interest immediately. However many credit cards offer promotional rates. In contrast to the standard rates which are an expensive way to borrow the promotional rates often allow you to borrow at 0% APR for some period. Usually when it comes to promotional rates you get the best deal by opening a new credit card and using it immediately. Ideally you should plan to pay off the card before the 0% period ends, if you can't do that then a balance transfer may be an option but be aware than in a few years the market for credit cards may (or may not) have changed. Whatever you do you should ALWAYS make sure to pay at least the minimum payment and do so on time. Not doing so may trigger steep fees, loss of promotional interest rates. There is a site called moneysavingexpert that tracks the best deals.\"", "topk_rank": 1 }, { "id": "363798", "score": 0.7102918028831482, "text": "\"I don't understand why he couldn't just log onto his account online, see the \"\"current balance\"\" and pay that? I've got 4-5 credit cards (2 of them are Chase) and they ALL have an online portal which will show you a daily-calculated \"\"current balance\"\" right on your screen... you can then enter in your checking account and transfer over that amount to pay the whole thing off virtually instantly. Does Chase continue to charge interest even after the balance goes to $0?\"", "topk_rank": 2 }, { "id": "125497", "score": 0.7100794911384583, "text": "\"I too am a full-monthly-statement-balance payer and I received a balance transfer offer from my credit-card company. This one was quite different from many others that I have read about on this forum. I could do a balance transfer for any amount up to $X from another credit card, or use the enclosed \"\"checks\"\" to pay some other (non-credit-card) bills, and I would not have to pay any interest for 12 months on the amount thus borrowed. But, There would be a 2% service charge on the amount I was borrowing. This amount would be billed on the next monthly statement, and it would have to be paid in full by the due date of that month's payment, that is, within the 25-day grace period allowed for payment of monthly statements. Else, interest would start being charged on the unpaid part of the service charge at the usual humongous rate of H% per month. If I had not paid the previous month's balance in full, I would be charged interest at H% per month on the service charge starting from Day One; no free ride till the due date of the next month's statement. Of course, the balance carried over from last month would also be charged interest at H%. If I had paid last month's bill in full, but there were any other charges (purchases) during the current month, then unless the entire amount due, this month's purchases plus service charge and that \"\"interest-free-for-twelve-months loan\"\" balance was paid off within the 25-day grace period, my purchases would be deemed unpaid and would start being charged interest. In short, the only way to avoid paying interest on the amount borrowed was to start with a card showing a $0 balance due on the previous month's statement, not make any charges on that card for a whole year, and pay off that 2% service charge within the grace period. It might also have required that one-twelfth of that interest-free loan be repaid each month, but I had stopped reading the offer at this point and filed it in the round circular file. In short, while @JoeTaxpayer's tale of how \"\"As a pay-in-full user, I've used the zero rate to throw $20K at the 5.25% mortgage\"\" is undoubtedly how things worked once, it is not at all clear that they still work that way. At least, they don't work that way for me. Heck, once upon a time, for a period of about 3 months, you could earn 1.5% interest per month from the credit card company by overpaying your credit card bill considerably. Their computers then just \"\"added on\"\" 1.5% interest by multiplying your credit balance -$X by 1.015 and so you got 1.5% per month interest from the credit card company. The credit card agreements (and the software!) got changed in a hurry, and nowdays all credit-card agreements state in the fine print that if you overpay your bill, you don't earn any interest on the overpayment.\"", "topk_rank": 3 }, { "id": "547142", "score": 0.7098104357719421, "text": "They don't do anything you can't do yourself and they charge you money for it. And of course the only way they manage to negotiate the debt down is by not paying it for a while in the first place, have it referred to collections and then negotiating with the collectors. At that time, your credit rating (if you care about that at all) will have suffered a lot more damaged than it is from a few late payments. I would address the issue as to why you end up paying late first - it sounds to me like you're cutting the time left to pay to the bone and this turned around and bit you in the you-know-where. In case you are able to pay but not organised enough to do it on time, find a way to remind yourself to pay the bill a few days early for peace of mind. That won't do anything about the 28% interest but those might serve as an additional motivation to pay the debt off faster. Once you're back to showing regular on-time payments on your credit record, you might want to investigate transferring the balance to a cheaper card or negotiate the interest down (or both). If you genuinely can't pay after you've taken care of the essentials (food, shelter, transportation) then you don't need a third party to stop paying the credit card bill, you can do that yourself.", "topk_rank": 4 }, { "id": "77564", "score": 0.7097567915916443, "text": "You cannot transfer money to a credit card account. You can transfer balances, or pay off the card with money from a bank account. Even if you could transfer money to a credit card, there's no way to do it without the credit card number. As Pete B. pointed out, this does sound like fraud.", "topk_rank": 5 }, { "id": "596692", "score": 0.709753692150116, "text": "Your best option is just to pick a card that gives you the best (highest) rewards without charging you an annual or other fees (or the lowest annual or other fees). As you are looking to pay off the full balance by the due date you won't have to worry about the interest rate but just make sure you get an interest free period.", "topk_rank": 6 }, { "id": "319090", "score": 0.7095629572868347, "text": "I had a macys card which only had $75.00 credit limit... I accidently paid over the limit so the card had $100.00 in it. I left it that way for a month.. My credit limit turned into 100.. So I do think its possible to increase your credit limit that way.. I've tried many times requesting for a credit limit increase.. I was denied many times.. The only thing I have is to add money but the tricky thing is that you'll have to add money and spend the whole amount and then pay it off at once for the credit limit to stick. But since you have great credit assuming because your limit is 1000, you should request for an increase of your credit limit.", "topk_rank": 7 }, { "id": "28191", "score": 0.7092797756195068, "text": "\"Without knowing what the balances are, I associate \"\"uncomfortable\"\" with high, as in tens of thousands. What I would do: is 1) cut up the cards and stop using them, and 2) have some balance transfer offers in hand the next time you call to negotiate with the companies. Essentially, you will have to convince them that they will have to explain one of two things to their boss: why they lowered your rate or why you left. They can collect less interest from you or no interest from you. It's up to them. If they don't offer you something that's in the ballpark of your balance transfer offer, then bid them goodbye and complete the balance transfer. As far as paying them off, the top two modes of repayment are lowest balance first (aka snowball) or high interest rate first. Both methods are similar in that you pay minimums on all but the method's focus point. Whether it is lowest balance or highest interest rate, you pay ALL of your extra money on the lowest balance or the highest interest debt until it is gone and then you move onto the next one in the list. For what it's worth, I prefer the lowest balance method, you see progress faster.\"", "topk_rank": 8 }, { "id": "442784", "score": 0.7090838551521301, "text": "Now, what if I were to spend the entire $2,000 limit on a single purchase? I've been saving up in anticipation of this purchase and therefore have the money already set aside in the bank, so I could pay off the entire $2k immediately. There is no problem with doing this. There's a bit of a time delay in credit reporting, so if you pay immediately in the middle of your statement period it will never even be reported that your card was maxed out. Make the purchase some time in the middle of the billing period, then log in to your account and pay the total before the statement period closes. If you let it roll to the next statement period, it will be reported that your account is maxed out, and possibly, you will be charged interest and potentially a fee for exceeding your limit. Your utilization is only calculated in a snapshot, there is no history kept. Even if you let your card be reported at 100% utilization, you could pay the balance that month with 0% then reported and your score will bounce back as though nothing ever happened. Separately, if you have had this card for a long while you may want to request a credit line increase.", "topk_rank": 9 }, { "id": "433933", "score": 0.7089735269546509, "text": "I agree with JoeTaxpayer that you will be better off in the end if you can just not use your card you are better off in the long run. That said if you are determined to get a card you can control go to a credit union or local bank. Most of them will give you the credit limit you want. This may provide you with a card that you can make use of but know that you can not go wild. The down side is most of these will not be reward cards but my local credit union gave me a 7% card where my Chase card is at 18%(was 5% before the changes to credit card regulations).", "topk_rank": 10 }, { "id": "526989", "score": 0.708436906337738, "text": "\"Not only does the interest get charged from Day 1 on new purchases as long as you have a revolving balance, but the credit card agreement often says something to the effect that any partial payment is applied first to the interest to date, and then transfer balances on which no interest is being charged and so the bank is losing money on it, then to other transfer balances and cash advances (and no refund of that 3% fee that was collected up front on the cash advance) and finally to the purchases starting from the most recent back to the oldest one. Even the FAQ on my card site says in simple language \"\"We apply payments and credits at our discretion, including in a manner most favorable or convenient for us.\"\" (see mhoran_psprep's answer). The moral is indeed what Dheer has already told you: do not carry a revolving balance on a credit card and if you have a revolving balance, pay it off as soon as possible, Do not wait for the end of the grace period; if possible, pay it off the day the statement is issued, or if you can make only a partial payment, make it as soon as possible. Make multiple partial payments each month if you have cash flow problems, or improve your cash flow by forgoing one or more of the many Grande Vente Mocharino Espresso Lattes you consume each day. Credit card debt is close to the worst kind of debt that you can have, and it is best to get out from under as soon as possible. Remember, there is effectively no grace period as long as you have a revolving balance on your credit card. You are paying interest for every one of those days.\"", "topk_rank": 11 }, { "id": "365561", "score": 0.7082986235618591, "text": "If you've agreed to pay the money, then you owe them whether they have a valid credit card number of yours or not. If they want to report your debt to a collections agency and/or credit bureau, they can. Which would suck for you. It may not be that likely over $9.99 or whatever, but my point is that it's still a small risk even with a temporary card number.", "topk_rank": 12 }, { "id": "509075", "score": 0.7082927823066711, "text": "I have a CapitalOne credit card, and every two or three weeks, CapitalOne Bank sends me checks that can be used almost anywhere (including a deposit into my own checking account if I wish, or to pay taxes or utility bills etc)). The amount thus borrowed is counted as a balance transfer (as if I were paying off another credit-card balance) and it will be charged 0% interest for a year. The catch is that unless I pay off the next monthly statement in full by the due date, I will be charged interest on all new purchases from the day that they post to the account till the day they are paid off. No more grace period etc. All this will continue until that loan amount is paid off in full. So, I either would have to (i) pay off all the purchases made this month plus the minimum monthly payment shown on the next monthly statement and give up use of the card till that 0% balance is all repaid, or (ii) pay interest on new purchases. It might be worth checking on the CapitalOne Credit Card site if such an offer is available to you. If so, get a check from them, pay off the invoice using that check (actually, I would strongly recommend depositing the money in your local bank and writing them your personal check for the amount to be paid), and then pay off next month's bill in full, etc.", "topk_rank": 13 }, { "id": "213159", "score": 0.7080296874046326, "text": "I feel this is best. Credit card is an immediate debt and you has the finds to wipe it out. the Student loans are a longer term debt and you have the money to pay it all off. So yes, pay cc, and keep loan on scheduled payments. Plus it helps your credit", "topk_rank": 14 }, { "id": "499098", "score": 0.7078938484191895, "text": "I'm not asking if I should carry a balance to the end of the billing period and accrue interest Typically (I say typically because there may be some fringe outlier exception product that begins accruing interest immediately), if you're not carrying a balance already you will not be charged interest for carrying a balance during the billing period. You accrue a balance, you're issued a statement, if you pay the statement before the due date indicated you don't pay interest; even if your statement balance is less than the current actual balance on the account. If you carry a balance through that due date you begin to accrue interest. Not only on the balance carried but on all new charges as well. But as long as you consistently pay your statement balance before the statement due date you will not be charged any interest. As for a reason why you may want to take advantage of this, simply to ease the administration of your finances. You just don't need to touch the accounts that frequently to avoid interest charges. Sure you can let your money sit in an interest bearing account and earn a couple dollars a year but really, you just don't need to focus on your CC charges this frequently.", "topk_rank": 15 }, { "id": "20261", "score": 0.7078003883361816, "text": "\"A \"\"balance transfer\"\" is paying one credit card with another. You probably get offers in the mail to do this all of the time. As other posters have noted, however, this usually comes with finance fees rather than the rewards that you get for normal purchases because it's written into your credit card agreement as a different class of transaction with different rules. I'm not sure if it's urban legend or true, but I have heard stories that suggest there were some \"\"loop holes\"\" in the earliest credit card reward plans that allowed for something like what you want. I doubt that any plan ever allowed exactly what you've written, but I've heard stories about people buying gift cards from merchants and then using the gift cards to pay their bill. This loop hole (if it ever existed) is closed now, but it would have allowed for essentially infinite generation of rewards at no cost to the cardholder. The banks and credit card companies have a lot of years of experience at this sort of thing now, so the threshold for you finding something that works and conforms with the cardholder agreement is pretty small.\"", "topk_rank": 16 }, { "id": "402739", "score": 0.7074321508407593, "text": "\"The short answer is no, it's probably not ok. The longer answer is, it might be, if you are very disciplined. You need to make sure that you have enough money to pay off the card after a year, and that you pay the card on time, every month, without exception. There may also be balance transfer or other fees that only make it worth while if the interest rate or balance on the other loan is high. The problem is most of these offers will raise your rates to very high levels (think 20% or more) if you are even one day late with one payment. Some of them also will back charge you interest starting from day one, although I have only seen this on store credit \"\"one year, same as cash\"\" type offers. In the end you need to balance the possible payoff against how much it will cost you if you do it wrong. Remember, the banks are not in the business of lending out free money. They wouldn't do this unless enough people didn't pay it back in one year for them to make a profit.\"", "topk_rank": 17 }, { "id": "563030", "score": 0.7073779106140137, "text": "Why not just get another credit card and transfer the balance? Many of them will give you special perks like x months of no interest for doing so. Also, once you call to actually cancel the card you will see for sure whether they really have any power to negotiate rates. From their perspective 15% APR is more than 0%APR which is what they'd get if they lose your business.", "topk_rank": 18 }, { "id": "382091", "score": 0.7071464657783508, "text": "If I were you, I would pay one of them off completely, then cut the card up and close the account. I have the feeling that you would be better off with just one card. That's all I've ever had and I've never needed a second one. It can help keep you out of trouble, too. Then I'd apply $1000 to $1500 towards the other card, and blow the rest on something stupid. Win-win.", "topk_rank": 19 } ]
31	Starting a side business slowly	[ { "id": "156554", "score": 0.6761562824249268, "text": "\"This is a great question! I've been an entrepreneur and small business owner for 20+ years and have started small businesses in 3 states that grew into nice income streams for me. I've lived off these businesses for 20+ years, so I know it can be done! First let me start by saying that the rules, regulations, requirements and laws for operating a business (small or large) legally, for the most part, are local laws and regulations. Depending on what your business does, you may have some federal rules to follow, but for the most part, it will be your locality (state, county, city) that determines what you'll have to do to comply and be \"\"legal\"\". Also, though it might be better in some cases to incorporate (and even required in some circumstances), you don't always have to. There are many small businesses (think landscapers, housekeepers, babysitters, etc.) that get income from their \"\"business operations\"\" and do so as \"\"individuals\"\". Of course, everyone has to pay taxes - so as long as you property record your income (and expenses) and properly file your tax returns every year, you are \"\"income tax legal\"\". I won't try to answer the income tax question here, though, as that can be a big question. Also, though you certainly can start a business on your own without hiring lawyers or other professionals (more on that below), when it comes to taxes, I definitely recommend you indeed plan to hire a tax professional (even if it's something like H&R Block or Jackson Hewitt, etc). In some cities, there might even be \"\"free\"\" tax preparation services by certain organizations that want to help the community and these are often available even to small businesses. In general, income taxes can be complicated and the rules are always changing. I've found that most small business owners that try to file their own taxes generally end up paying a lot more taxes than they're required to, in essence, they are overpaying! Running a business (and making a profit) can be hard enough, so on to of that, you don't need to be paying more than you are required to! Also, I am going to assume that since it sounds like it would be a business of one (you), that you won't have a Payroll. That is another area that can be complicated for sure. Ok, with those generics out of the way, let me tackle your questions related to starting and operating a business, since you have the \"\"idea for your business\"\" pretty figured out. Will you have to pay any substantial amount of money to attorneys or advisors or accountants or to register with the government? Not necessarily. Since the rules for operating a business legally vary by your operating location (where you will be providing the service or performing your work), you can certainly research this on your own. It might take a little time, but it's doable if you stick with it. Some resources: The state of Florida (where I live) has an excellent page at: http://www.myflorida.com/taxonomy/business/starting%20a%20business%20in%20florida/ You might not be in Florida, but almost every state will have something similar. What all do I need to do to remain on the right side of the law and the smart side of business? All of the answers above still apply to this question, but here are a few more items to consider: You will want to keep good records of all expenses directly related to the business. If you license some content (stock images) for example, you'll want to document receipts. These are easy usually as you know \"\"directly\"\". If you subscribe to the Apple Developer program (which you'll need to if you intend to sell Apps in the Apple App Stores), the subscription is an expense against your business income, etc. You will want to keep good records of indirect costs. These are not so easy to \"\"figure out\"\" (and where a good accountant will help you when this becomes significant) but these are important and a lot of business owners hurt themselves by not considering these. What do I mean? Well, you need an \"\"office\"\" in order to produce your work, right? You might need a computer, a phone, internet, electricity, heat, etc. all of which allow you to create a \"\"working environment\"\" that allows you to \"\"produce your product\"\". The IRS (and state tax authorities) all provide ways for you to quantify these and \"\"count them\"\" as legitimate business expenses. No, you can't use 100% of your electric bill (since your office might be inside your home, and the entire bill is not \"\"just\"\" for your business) but you are certainly entitled to some part of that bill to count as a business expense. Again, I don't want to get too far down the INCOME TAX rabbit hole, but you still need to keep track of what you spend! You must keep good record of ALL your income. This is especially important when you have money coming in from various sources (a payroll, gifts from friends, business income from clients and/or the App Stores, etc.) Do not just assume that copies of your bank deposits tell the whole story. Bank statements might tell you the amount and date of a deposit, but you don't really know \"\"where\"\" that money came from unless you are tracking it! The good news is that the above record keeping can be quite easy with something like Quicken or QuickBooks (or many many other such popular programs.) You will want to ensure you have the needed licenses (not necessarily required at all for a lot of small businesses, especially home based businesses.) Depending on your business activity, you might want to consider business liability insurance. Again, this will depend on your clients and/or other business entities you'll be dealing with. Some might require you to have some insurance. Will be efforts even be considered a business initially until some amount of money actually starts coming in? This might be a legal / accountant question as to the very specific answer from the POV of the law and taxing authorities. However, consider that not all businesses make any money at all, for a long time, and they definitely \"\"are a business\"\". For instance, Twitter was losing money for a long time (years) and no one would argue they were not a business. Again, deferring to the attorneys/cpas here for the legal answer, the practical answer is that you're performing \"\"some\"\" business activity when you start creating a product and working hard to make it happen! I would consider \"\"acting as\"\" a business regardless! What things do I need to do up-front and what things can I defer to later, especially in light of the fact that it might be several months to a couple years before any substantial income starts coming in? This question's answer could be quite long. There are potentially many items you can defer. However, one I can say is that you might consider deferring incorporation. An individual can perform a business activity and draw income from it legally in a lot of situations. (For tax purposes, this is sometimes referred to as \"\"Schedule-C\"\" income.) I'm not saying incorporation is a bad thing (it can shield you from a lot of issues), but I am saying that it's not necessary on day 1 for a lot of small businesses. Having said that, this too can be easy to do on your own. Many companies offer services so you can incorporate for a few hundred dollars. If you do incorporate, as a small business of one person, I would definitely consider a tax concept called an \"\"S-Corp\"\" to avoid paying double taxes.) But here too, we've gone down the tax rabbit hole again. :-)\"" } ]	[ { "id": "119165", "score": 0.6423449516296387, "text": "I don't like your strategy. Don't wait. Open an investment account today with a low cost providers and put those funds into a low cost investment that represents as much of the market as you can find. I am going to start by assuming you are a really smart person. With that assumption I am going to assume you can see details and trends and read into the lines. As a computer programmer I am going to assume you are pretty task oriented, and that you look for optimal solutions. Now I am going to ask you to step back. You are clearly very good at managing your money, but I believe you are over-thinking your opportunity. Reading your question, you need a starting place (and some managed expectations), so here is your plan: Now that you have a personal retirement account (IRA, Roth IRA, MyRA?) and perhaps a 401(k) (or equivalent) at work, you can start to select which investments go into that account. I know that was your question, but things you said in your question made me wonder if you had all of that clear in your head. The key point here is don't wait. You won't be able to time the market; certainly not consistently. Get in NOW and stay in. You adjust your investments based on your risk tolerance as you age, and you adjust your investments based on your wealth and needs. But get in NOW. Over the course of 40 years you are likely to be working, sometimes the market will be up, and sometimes the market will be down; but keep buying in. Because every day you are in, you money can grow; and over 40 years the chances that you will grow substantially is pretty high. No need to wait, start growing today. Things I didn't discuss but are important to you:", "topk_rank": 0 }, { "id": "428552", "score": 0.6423295736312866, "text": "\"Investing in a business can be daunting and risky, so it is not for everyone. The most common pitfalls are mentioned here: Beyond that: It all sounds a bit like \"\"Don't trust anyone\"\" and sadly, this is true when there's a lot of money involved. So be prepared and do your homework, this sometimes will save you more money than you gain with your investments :) Good luck!\"", "topk_rank": 1 }, { "id": "383382", "score": 0.6423135995864868, "text": "You don't need a book, you need to advertise. Start trying different things untill you find the money. Scale up what works and also keep trying other avenues. What's your position on Google when people search for your Jewellery, Jewelry, Jewellers, Jewellery stores, etc., + dates (anniversary, mothers day) + brand names? Do you have a website? I've been killing it on google maps & local seo for years. FB ads would do great with the right targeting.", "topk_rank": 2 }, { "id": "477566", "score": 0.6423091888427734, "text": "I suggest looking at Bill Good's philosophy on cold calling. Print out his cold call sheets that teach you about cherries and pit polishing (especially the free articles on cold calling). He teaches you to keep work as fast a possible and keep your conversations as short and non-salesy as possible. I'm sure he charges a fee for actually being taught how to fully envelop in his philosophy but I just utilized the free stuff from his website. I will admit I'm still not a huge fan of cold calling even after using his system. Honestly, it's been like pulling teeth to get me motivated to pickup the phone. But he is one of very few that have created a science around it that could truly work.", "topk_rank": 3 }, { "id": "477476", "score": 0.6423066258430481, "text": "Welcome to the wonderful but oft confusing world of self-employment. Your regular job will withhold income for you and give you a W2, which tells you and the government how much is withheld. At the end of the year uber will give you and the government a 1099-misc, which will tell you how much they paid you, but nothing will be withheld, which means you will owe the government some taxes. When it comes to taxes, you will file a 1040 (the big one, not a 1040EZ nor 1040A). In addition you will file a schedule C (self-employed income), where you will report the gross paid to you, deduct your expenses, and come up with your profit, which will be taxable. That profit goes into a line in the 1040. You need to file schedule SE. This says how much self-employment tax you will pay on your 1099 income, and it will be more than you expect. Self employment tax is SS/Medicare. There's a line for this on the 1040 as well. You can also deduct half of your self-employment tax on the 1040, there's a line for it. Now, you can pay quarterly taxes on your 1099 income by filing 1040-ES. That avoids a penalty (which usually isn't that large) for not withholding enough. As an alternative, you can have your regular W2 job withhold extra. As long as you don't owe a bunch at tax time, you won't be a fined. When you are self-employed your taxes aren't as simple. Sorry. You can either spend some time becoming an expert by studying the instructions for the 1040, pay for the expensive version of tax programs, or hire someone to do it for you. Self-employed taxes are painful, but take advantage of the upsides as well. You can start a solo 401(k) or SEP IRA, for example. Make sure you are careful to deduct every relevant business expense and keep good records in case you get audited.", "topk_rank": 4 }, { "id": "90010", "score": 0.6422489881515503, "text": "You sound ahead of the game. I personally regret locking myself in rooms in post-hs depression with the Internet and books. Honestly, I have regrets from that time a few years ago. Recognize and cherish your freedom. I know this sounds cliché as hell but at this unique stage it's priceless and fleeting. Hang with friends, drink, chase girls, have adventures with friends as much as possible before you go separate ways permanently. In your free time, lift weights to have even more fun in college. It sounds like you're hustling. In a few months life is gonna hold a proverbial gun to your head and say you can't NOT hustle for years and years and years. It doesn't have to be like that but it is for most ambitious people. Especially in finance. Assuming you're not about that or have your bases covered, any coding is great. Check out R. CSS, HTML if you wanna know web design. Read Wall Street Oasis instead of this sub. Excuse the rantyness of that", "topk_rank": 5 }, { "id": "522511", "score": 0.642164409160614, "text": "Since there are no details (rightfully so). You need to know how it will make money, period. Snap chat sounded like a weird idea, but it got super popular and is valued very high. But guess what - it doesn't know how to make money. Which is why the value has been so volatile and going down. You need to know how your idea will very specifically make money. Details about your target audience, how many people does it include, how you will attract them, why they would want your product or service over someone else's, how you will give it to them, how much they would pay, how often would it be needed. And you need to know how much money it will cost you to make that money so figure out the costs you need to know the exact resources that you will need, how much they will cost, how long it will take to even begin execution, and how long you expect it will be until you are cash flow positive. There's a lot more but hopefully that's a starting point for you since you seem to not any real research done", "topk_rank": 6 }, { "id": "65180", "score": 0.6421396732330322, "text": "You're off to a great start. Here are the steps I would take: 1.) Pay off any high-interest debt. 2.) Keep six to twelve months in a highly liquid emergency fund. If the banks aren't safe, also consider having one or two months of cash or cash-equivalents on the premises. 3.) Rent a larger apartment, if possible, until you've saved more. The cost of the land and construction will consume a very large portion of your net worth. Given the historical political instability in that region, mentioned by the previous comments, I would hesitate to put such a large percentage of your wealth in to real estate. 4.) Get a brokerage account that's insured and well known. If you're willing to take the five percent hit to move assets offshore, then consider Vanguard. I'm not sure if they'll give you an account but they're generally acknowledged as an amazing broker in the US with low fees and amazing funds. Five percent (12,500) is worth it in my opinion. As you accumulate more wealth, you can stop moving cash overseas and keep a larger mix domestically. 5.) Invest in your business and yourself even more. As far as finding new investment opportunities, I would go through the list of all the typical major asset classes and consider the pros and cons: fixed-income, stocks, currencies, real estate / REITs, own a small business, commodities etc.,", "topk_rank": 7 }, { "id": "121566", "score": 0.6421201825141907, "text": "It doesn't hurt to pencil out the details starting with a sales projection. Doing anything without a plan increases the odds of failure. Putting it in writing creates a sharable vision. I've put together multi-page business plans (40-50 pages - very pretty). The best one I have is one page, hand written and I keep it with me practically all the time, tweeking it.", "topk_rank": 8 }, { "id": "205503", "score": 0.6420794725418091, "text": "\"So your goal is to sell out? If I'm understanding correctly. I say that without connotation. Since you want stock and the ability to be bought. Your partner sounds like he wants reinvest back into the company and make it grow. If you want \"\"profit\"\", I'd say find a different partner. Again you personally can be profitable while still maintaining the company with a nonprofit status. Gotta pay employees.\"", "topk_rank": 9 }, { "id": "385073", "score": 0.6420754194259644, "text": "It's whatever you decide. Taking money out of an S-Corp via distribution isn't a taxable event. Practically speaking, yes, you should make sure you have enough money to afford the distribution after paying your expenses, lest you have to put money back a few days later in to pay the phone bill. You might not want to distribute every penny of profit the moment you book it, either -- keeping some money in the business checking account is probably a good idea. If you have consistent cash flow you could distribute monthly or quarterly profits 30 or 60 days in arrears, for example, and then still have cash on hand for operations. Your net profit is reflected on the Schedule K for inclusion on your personal tax return. As an S-Corp, the profit is passed through to the shareholders and is taxable whether or not you actually distributed the money. You owe taxes on the profit reported on the Schedule K, not the amounts distributed. You really should get a tax accountant. Long-term, you'll save money by having your books set up correctly from the start rather than have to go back and fix any mistakes. Go to a Chamber of Commerce meeting or ask a colleague, trusted vendor, or customer for a recommendation.", "topk_rank": 10 }, { "id": "498818", "score": 0.642065703868866, "text": "Sure, form an LLC with an attorney's advice. You need a buyout clause, operating agreement, etc. If you're not married, never buy a home for personal use with someone else.", "topk_rank": 11 }, { "id": "317808", "score": 0.6420455574989319, "text": "Almost every company I know of charges something like 2% per month on past due accounts. They are not financial institutions, so it's probably quite legal.", "topk_rank": 12 }, { "id": "318676", "score": 0.6420217156410217, "text": "\"Village? Are you in the states? I am not saying start a car dealership, I am saying look for cars that are sold below the value they usually go for. This takes a bit of time and effort of looking at each car and seeing what they generally sell for. Blue book is a decent indicator, but do not go solely on that alone. Go to a car auction, and write down each car you can, judge each car, the mileage, and condition, and see what it goes for at auction. Then go to other areas and find other similar cars and see what they are sold for there. Build up a database of sorts, and the cars with the best margins, and preferably higher turnover, and get those. This is not a \"\"business\"\" per say, it is a way to make money and learn the market for a while. Once you get a good bit of general knowledge, and build up a lot more money, then you could likely start a car dealership. Depending on your area you will likely need a good 50k to get started, maybe more depending on insurance and lease agreements.\"", "topk_rank": 13 }, { "id": "361978", "score": 0.642021656036377, "text": "I know that there are a lot service on the internet helping to form an LLC online with a fee around $49. Is it neccessarry to pay them to have an LLC or I can do that myself? No, you can do it yourself. The $49 is for your convenience, but there's nothing they can do that you wouldn't be able to do on your own. What I need to know and what I need to do before forming an LLC? You need to know that LLC is a legal structure that is designed to provide legal protections. As such, it is prudent to talk to a legal adviser, i.e.: a Virginia-licensed attorney. Is it possible if I hire some employees who living in India? Is the salary for my employees a expense? Do I need to claim this expense? This, I guess, is entirely unrelated to your questions about LLC. Yes, it is possible. The salary you pay your employees is your expense. You need to claim it, otherwise you'd be inflating your earnings which in certain circumstances may constitute fraud. What I need to do to protect my company? For physical protection, you'd probably hire a security guard. If you're talking about legal protections, then again - talk to a lawyer. What can I do to reduce taxes? Vote for a politician that promises to reduce taxes. Most of them never deliver though. Otherwise you can do what everyone else is doing - tax planning. That is - plan ahead your expenses, time your invoices and utilize tax deferral programs etc. Talk to your tax adviser, who should be a EA or a CPA licensed in Virginia. What I need to know after forming an LLC? You'll need to learn what are the filing requirements in your State (annual reports, tax reports, business taxes, sales taxes, payroll taxes, etc). Most are the same for same proprietors and LLCs, so you probably will not be adding to much extra red-tape. Your attorney and tax adviser will help you with this, but you can also research yourself on the Virginia department of corporations/State department (whichever deals with LLCs).", "topk_rank": 14 }, { "id": "259227", "score": 0.6420121788978577, "text": "\"To summarize your starting situation: You want to: Possible paths: No small business Get a job. Invest the 300K in safe liquid investments then move the maximum amount each year into your retirement accounts. Depending on which company you work for that could include 401K (Regular or Roth), deductible IRA, Roth IRA. The amount of money you can transfer is a function of the options they give you, how much they match, and the amount of income you earn. For the 401K you will invest from your paycheck, but pull an equal amount from the remainder of the 300K. If you are married you can use the same procedure for your spouse's account. You current income funds any vacations or splurges, because you will not need to put additional funds into your retirement plan. By your late 30's the 300K will now be fully invested in retirement account. Unfortunately you can't touch much of it without paying penalties until you are closer to age 60. Each year before semi-retirement, you will have to invest some of your salary into non-retirement accounts to cushion you between age 40 and age 60. Invest/start a business: Take a chunk of the 300K, and decide that in X years you will use it to start a small business. This chunk of money must be liquid and invested safely so that you can use it when you want to. You also don't want to invest it in investments that have a risk of loss. Take the remaining funds and invest it as described in the no small business section. You will completely convert funds to retirement funds earlier because of a smaller starting amount. Hopefully the small business creates enough income to allow you to continue to fund retirement or semi-retirement. But it might not. Comment regarding 5 year \"\"rules\"\": Roth IRA: you have to remain invested in the Roth IRA for 5 years otherwise your withdrawal is penalized. Investing in stocks: If your time horizon is short, then stocks are too volatile. If it drops just before you need the money, it might not recover in time. Final Advice: Get a financial adviser that will lay out a complete plan for a fixed fee. They will discuss investment options, types not particular funds. They will also explain the tax implications of investing in various retirement accounts, and how that will impact your semi-retirement plans. Review the plan every few years as tax laws change.\"", "topk_rank": 15 }, { "id": "267158", "score": 0.6420050859451294, "text": "\"The issues are larger than taxes. If one of you receives the check, then breaks off 25% of it for themselves and sends three checks out to each of you that will be indicated on that person's taxes. You three will then all recognize your portion of the income on your taxes and it's all settled. It's no big deal, it's a bit rag-tag but it'll get the job done. I've done little ad-hoc partnership work with people this way and it's not a problem. This is why you should really be more formal. What if this entity contracting you guys sues you? Who has the liability, if only one of you was paid? What if the money is sent to one of you and that person dies before paying you? What if you all get another client? What if this contracting entity has another project? The partnership needs to have the liability. The partnership needs to receive the money. The partnership needs to be named on whatever contract you all sign. The partnership can be a straight partnership, or maybe the four of you take a 25% stake in an LLC or Inc arrangement. Minimally, you should sit down with your partners so everyone knows everyone else's responsibilities, and you should write it all down. It probably sounds like overkill, and I'm sure your partners are you buddies and \"\"we're tight and nothing bad could come between us.\"\" I've done some partnership work with more than one friend, we've always been fine. Some ventures are successful, some aren't; I'm still very good friends with all of them. Writing things down manages expectations and when money starts moving around, everyone is happier when everyone has a solid expectation of who gets what.\"", "topk_rank": 16 }, { "id": "126065", "score": 0.6419960260391235, "text": "\"You seem to have all your financial bases covered, and others have given you good financial advice, so I will try to give you some non-financial ideas. The first and most important thing is that you are investing with a long time friend, so the dynamics are a lot different that if you had recently met a stranger with an \"\"interesting\"\" new idea. The first thing you need to ask yourself is if your friendship will survive if this thing doesn't go well? You've already said you can afford to lose the money so that's not a worry, but will there be any \"\"recriminations?\"\" The flip side is also true; if the venture succeeds, you should be able to go further with it because he's your friend. You know your friend better (back to grade school) than almost anyone else, so here are some things to ask yourself: What does your friend have that will give him a chance to succeed; tech savvy, a winning personality, a huge rolodex, general business savvy, something else? If your guardian angel had told you that one of your friends was planning to embark on an internet/advertising venture, is this the one you would have guessed? Conversely, knowing that your friend was planning to do a start up, is this the kind of venture you would have guessed? How does \"\"internet\"\" and \"\"advertising\"\" fit in with what you are doing? If this venture succeeds, could it be used to help your professional development and career, maybe as a supplier or customer? Can you see yourself leaving your current job and joining your friend's (now established) company as a vice president or acting as a member of its board of directors, the latter perhaps while pursuing your current career path? Are your other mutual friends investing? Are some of them more tech savvy than you and better able to judge the company's prospects of success? To a certain extent, there is \"\"safety in numbers\"\" and even if there isn't, \"\"misery loves company.\"\" On the upside, would you feel left out if everyone in your crowd caught \"\"the next Microsoft\"\" except you?\"", "topk_rank": 17 }, { "id": "344928", "score": 0.6419918537139893, "text": "\"Wyoming is a good state for this. It is inexpensive and annual compliance is minimal. Although Delaware has the best advertising campaign, so people know about it, the reality is that there are over 50 states/jurisdictions in the United States with their own competitive incorporation laws to attract investment (as well as their own legislative bodies that change those laws), so you just have to read the laws to find a state that is favorable for you. What I mean is that whatever Delaware does to get in the news about its easy business laws, has been mimicked and done even better by other states by this point in time. And regarding Delaware's Chancery Court, all other states in the union can also lean on Delaware case law, so this perk is not unique to Delaware. Wyoming is cheaper than Delaware for nominal presence in the United States, requires less information then Delaware, and is also tax free. A \"\"registered agent\"\" can get you set up and you can find one to help you with the address dilemma. This should only cost $99 - $200 over the state fees. An LLC does not need to have an address in the United States, but many registered agents will let you use their address, just ask. Many kinds of businesses still require a bank account for domestic and global trade. Many don't require any financial intermediary any more to receive payments. But if you do need this, then opening a bank account in the United States will be more difficult. Again, the registered agent or lawyer can get a Tax Identification Number for you from the IRS, and this will be necessary to open a US bank account. But it is more likely that you will need an employee or nominee director in the United States to go in person to a bank and open an account. This person needs to be mentioned in the Operating Agreement or other official form on the incorporation documents. They will simply walk into a bank with your articles of incorporation and operating agreement showing that they are authorized to act on behalf of the entity and open a bank account. They then resign, and this is a private document between the LLC and the employee. But you will be able to receive and accept payments and access the global financial system now. A lot of multinational entities set up subsidiaries in a number of countries this way.\"", "topk_rank": 18 }, { "id": "129806", "score": 0.6419464945793152, "text": "Actually the insertion part is interesting because they actually aren't middlemen just faster buyer's and sellers on the open market. They just buy what one person is selling and sell it to someone else who is at the same time looking to buy. So I guess the issue is the 'same time' isn't the same for all parties concerned. On the other hand both buyer and seller can set limits on the bounds of the price and only transact when someone meets their terms. If you are willing to accept 'whatever the market will bear' then it seems like you should be OK with getting it.", "topk_rank": 19 } ]
32	Why is “cheque cashing” a legitimate business?	[ { "id": "279480", "score": 0.7087239027023315, "text": "\"This answer is based on my understanding of the US banking system. We have check cashing businesses here too, which are just like what you describe, except for the spelling :-) Let's consider what \"\"cash it for free at the bank\"\" really means, and why it might not be an option for everyone. One key issue is \"\"which bank?\"\" As an example, suppose that I have an account at ABC Bank. I take out my checkbook for that account and write you a check for $500. (Terminology: In this case, I am the drawer or maker of the check, ABC Bank is the drawee bank, and you, user54609, are the payee. Disclaimer: \"\"You\"\" here is meant as a generic pronoun and I do not mean to insinuate that anything here actually applies to you personally.) There are two common things you might do with the check: If you have an account at some bank, say XYZ Bank, you might take the check to XYZ Bank and deposit it in your account. (You might be able to do this through an ATM, mobile app, or by mail, instead of in person.) XYZ Bank does not have a way to verify with certainty that the check is valid (e.g. they don't know what my signature looks like, nor whether I actually have $500 in my account at ABC), so they send it to ABC Bank, which verifies the check and transfers $500 to XYZ. (This is usually done through a central clearinghouse, such as the Federal Reserve in the US, and in some cases an image of the check may be sent electronically, instead of the physical check.) This process takes some time, so XYZ may not make the $500 available to you right away - there may be a hold period before you can withdraw that $500 from your account. You could take the check to ABC Bank, in person. They will verify on the spot that the check is valid and that you are in fact user54609. If everything looks good, they will hand you $500 in cash (perhaps subtracting a fee of a few dollars). Now we can see some possible problems with each of these approaches. For 1: Maybe you don't have a bank account at all. There are many possible reasons: You don't have enough money to meet the minimum balance that a bank account would require. You used to have an account, but you overdrew or otherwise misused an account, so the bank closed it. They then entered you in a registry such as ChexSystems which ensures that other banks know about this, and so no other bank will open a new account for you. You immigrated to the country illegally and cannot get the documents (driver's license, social security number, etc) that a bank normally requires to open an account. You simply don't like the idea of keeping your money in a bank. Maybe you do have an account at XYZ Bank, but it's in another town. You need the cash today, so you can't use mail or a mobile app, and third-party ATMs usually don't accept deposits. Maybe you need to spend the money today, and XYZ Bank would place a hold. For 2: ABC Bank may not have a branch you can conveniently visit. Maybe the nearest one is a long way away, in another city or across the country. Or maybe ABC is an online bank with no physical branches at all. Maybe it's in the same city, but you don't have transportation to get you there. Or maybe it's simply less convenient than the check-cashing business on the corner. Maybe it is after usual banking hours, or a weekend, and ABC Bank is closed, but you need cash now. In any of these situations, \"\"cash it at the bank\"\" might not be a viable option, and so you might reasonably turn to a check cashing business instead. As you say, you will pay a much higher fee there, but maybe it is worth it to you, or you just don't have any choice. Another possibility, of course, is that you are poorly educated about the banking system, and you don't really understand that 1 and 2 are options, or how to go about them. But there's this storefront on the corner that says \"\"Check Cashing\"\", so this seems like a low-stress, uncomplicated way to exchange this piece of paper for money. As such, there certainly are people who legitimately might want to cash a valid check at a check-cashing business. Check cashing business do of course take some risk of fraud, since they can't necessarily verify the check. There are sometimes steps they can take to minimize this risk. Sometimes they can call ABC Bank and check that I have sufficient money in my account. Maybe they'll only accept certain kinds of checks, such as payroll checks from well-known companies for which you can produce a matching pay stub. And they can demand identification from you (perhaps allowing more flexible options than a bank), which helps ensure that you are the payee, and would make you easier to track down if you did commit fraud. But they will probably lose some money this way, so they will have to make their fees high enough to cover those losses.\"" }, { "id": "69623", "score": 0.7242429852485657, "text": "\"In my experience (in the US), the main draw of check-cashing businesses (like \"\"CheckN2Cash\"\" is that they will hold your check for a certain period of time. This is also known as a \"\"payday loan\"\". Rather than bringing them a check someone else has written you, you write them a check yourself, postdated, and they pay you the amount on the check less their fees, and agree not to cash the check until a future date. So if you don't have the money right now but you need it before your next payday, you visit a check-cashing business and get the money, and it'll be withdrawn from your account after your next paycheck.\"" }, { "id": "84645", "score": 0.7863271236419678, "text": "\"How does this get any business? You'd be surprised on how much profit these type of businesses can bring in and the number of people who cash their checks this way. They make profit off people who want their checks cashed ASAP. Usually cheques written to \"\"cash\"\" or something can just be cashed for free at the bank right? Yes, most banks cash your check for free. Some may not cash it right away and may require a few days to process. Some charge a small fee if the check is not from the same bank. Some personal checks may not even be processed the same day as well. Wouldn't the only cheques that people would cash at these places be bad cheques? Yes and no. Yes because it may be \"\"easier\"\" to try to cash a fraudulent check at these type of check cashing places. However, some places may only cash business checks and require your ID in which they write down the information in order to possibly track you down in the future. Also some places only cash a check to a certain amount. And wouldn't this mean that the business will lose a lot of money since it pays out cash but then has the cheque bounce? Of course the business loses money if the check bounces or is fake. That is why they try to minimize their losses with certain requirements that needs to met before the check can be cashed. Who uses these services exactly? Just about anyone who needs their check cashed ASAP or like ChrisW stated in his answer is trying to keep their money on the low. There is a demand for this service even though it may seem shady to you.\"" } ]	[ { "id": "42353", "score": 0.7027157545089722, "text": "In theory there is no limit to the value of a cheque that you can write. However, that doesn't mean the bank will honour it even if you have sufficient funds in your account - if it appears out of the ordinary, they may block it on suspicion of fraud or money laundering.", "topk_rank": 0 }, { "id": "65797", "score": 0.7024217844009399, "text": "The classic Nigerian scam involves sending fraudulent cashier's checks to unwitting recipients who then deposit them in their account. The bank reverses these deposits once they discover the check is not valid. At least in the US and in the parts of the EU I'm familiar with (the Netherlands), the method of the Nigerian scam is consistent and banks will reverse the deposit after some holding period. Given this, it's unlikely that most banks will convert an arbitrary cashier's check to cash without any means to recover the amount should the check be fraudulent.", "topk_rank": 1 }, { "id": "35534", "score": 0.7007256746292114, "text": "\"Once upon a time (not all that long ago), British cheques used to say something like \"\"Pay to the order of ..,,,, or bearer the sum of ...,..\"\" (emphasis added) and could be cashed by anyone unless the cheque-writer drew two parallel lines in the upper left corner of the cheque. These lines converted the instrument into a crossed cheque which could only be deposited into a bank account of the payee; a bearer of the cheque could not walk into the bank and waltz out with the cash equivalent. Perhaps British banks no longer use this styling (Indian banks still do) but if that cheque for 60k is not a crossed cheque, it better be sent securely with lots of insurance. An uncrossed cheque is the same as cash since it can be cashed by anyone. That being said, I am with @mhoran_psprep in thinking that all this is just a scam with the OP (mug) being asked to send 3600 bucks to \"\"girlfriend\"\" (scammer) to cover the cost of sending the check with full insurance, and when the check arrives and is deposited by OP into his bank, it will turn out to be a dud, and \"\"girlfriend\"\" will be long gone. The description of how the girlfriend signed a contract for 90k and received 60k of this amount upfront, but in the form of a check payable to boyfriend (!) OP reeks of scam; is this scenario realistic? In the past, I have received offers (usually from Nigeria) from \"\"women\"\" wanting to be my girlfriend, and I am sure that such offers will continue to come in the future....\"", "topk_rank": 2 }, { "id": "213081", "score": 0.6964698433876038, "text": "This is so very much a scam. The accepted answer already tells you the basics of it. In addition to the cheque being fake, there is also the possibility that the cheque is a legitimate cheque but has been stolen (or swindled off) from somebody else. In that case, the delay with which the cashing of the cheque will blow up can be considerably longer than the accepted answer states since it depends on the other victim noticing and reporting the fraudulent transfer. The end result is the same: you are not going to be allowed to keep the money. Report this to both your sister's bank as well as her local police. Nothing good can come off this.", "topk_rank": 3 }, { "id": "16774", "score": 0.694330632686615, "text": "There's nothing particularly special about a two million dollar cheque. While they aren't commonplace, the bank certainly has experience with them. Many ATMs won't allow a deposit of that size but the bank cashiers will certainly accept them. They will typically get a supervisor to sign off on the deposit and may ask about the source of the money, for fraud prevention reasons. They may be held for longer than a smaller cheque if the bank manager chooses to do so. If there's nothing remotely suspicious (for example, it is a cheque from an insurance company for an expected payout), you should expect it will clear in about a week. On the other hand, if it is a cheque from a bank in another country and the bank manager has any reason to suspect it may not be legitimate, they may hold it for a month or more. Even then, you are not guaranteed the cheque was legitimate. This is used in a common scam.", "topk_rank": 4 }, { "id": "544949", "score": 0.6918303370475769, "text": "\"When banks would return the actual physical cheque, at least you had some printing / writing from the other bank on it, as some type of not-easily-Photoshopped proof. Now many (most?) banks don't return the actual cheques anyway, just an image of it - sometimes a low quality shrunken B&W photocopy-like image too. You'd have to check with a lawyer or court in your area, but I suspect any photocopy or image, as well as a written or carbon-copy duplicate, would not be good enough proof for a law court, since they could all be easily re-written or Photoshopped. So I don't think there's a real upside anyway. Only an official bank statement saying that the name/people written actually cashed the cheque might be \"\"good evidence\"\" (I'm having doubts that the bank's own low quality \"\"image\"\" would even qualify, unless it's verified as coming directly from the bank somehow). I'd agree with Nate (+1) that a big downside could be identity theft, either online or alongside phone loss/theft.\"", "topk_rank": 5 }, { "id": "471872", "score": 0.6910746693611145, "text": "\"There are benefits associated with a cash only business (the link states a few). However checks made out to \"\"cash\"\" don't reap those benefits listed. For anyone on SE to say your barber hides revenue from the IRS would just be speculation. With that said there are a great number of disadvantages for a cash only business. And from my experience, a business that goes out of their way to take cash only can be a little suspicious. Luckily you are not committing any crimes or fraud by paying her cash.\"", "topk_rank": 6 }, { "id": "324717", "score": 0.6908387541770935, "text": "As I replied to someone else who said that: I'm often having to send stuff with the check. Paperwork, a bill etc. While that would work to a person who knows me, it's usually not going to work with a business or government who needs to know why I'm sending this check.", "topk_rank": 7 }, { "id": "101993", "score": 0.6869868040084839, "text": "It's because they're used to it and it works for them. Everything other reason is meh. Used to, you could float a check to payday... have no money in the account, yet write a check a couple days before payday because you know that's how long it takes for the check to get to your bank and when it does, you'll have the money. But most (if not all) business that still accept checks (a dying subset, for sure) electronically present the check now. They take it from your hand, run it through a machine at the register, and it immediately clears the bank, just like a debit card would. We're nearing the end of the check era, atleast on personal accounts. Kids growing up now won't even know what a check is, aside from it's namesake on a type of bank account.", "topk_rank": 8 }, { "id": "390366", "score": 0.6859459280967712, "text": "Rational reason. They like this method of paying. There is a delay between writing the check and having the money removed from the account. Their checkbook makes a carbon copy of the check, so they can update their balance easier. They can leave the store and update their checkbook register, or the spreadsheet or their Quicken or budget application data. They don't have to try and remember the amount, store name or date.", "topk_rank": 9 }, { "id": "543812", "score": 0.6851671934127808, "text": "\"In India, Can I write a multi-city cheque to myself (Self cheque) and present to non-home branch to withdraw money? If yes, Can bank deny this transaction? Yes you can. There are limitations on the amount advised from time to time. What is \"\"genuine transactions / bonafide remittances\"\"? The multi-city cheque were created / issued to ease the clearing time. Previously outstation cheques would take max of 1 month by law. having a Multi-City cheque reduces this to max of 3 days. So what the clause says is one should use MCC to make genuine payments for parties outside your city. These should not be used as conduits for money laundering activities. No cash payment to third parties It means cash payment is not given to others except to account holder in non-home branch. A 3rd party can withdraw from home branch. Suppose someone gave me a cheque and I don't have an account in that bank (or I am out of town, so I go to a non-home branch), how can I get the money in cash? You can't. Generally I have seen that this can be en-cashed in the same city and not necessarily the same branch. However its been sometime when I have done this. Best is deposit this into your Bank or have payer initiate an IMPS/NEFT transfer.\"", "topk_rank": 10 }, { "id": "468718", "score": 0.6848999857902527, "text": "I actually had to go to the bank today and so I decided to ask. The answer I was given is that a check is a legal document (a promise to pay). In order to get your money from the bank, you need to sign the check over to them. By endorsing the check you are attesting to the fact that you have transferred said document to them and they can draw on that account.", "topk_rank": 11 }, { "id": "592785", "score": 0.6841987371444702, "text": "This is a variation of a very common scam. The principle of the scam is this: I give you a check for a huge amount of money which you pay in your account. Then I ask you to pay some money from your account into a third account. Two months later the bank detects that my check was forged / stolen / cancelled / whatever and takes the huge amount of money away from your account. But you paid the money from your account, and that money is gone from your account and irrevocably ended up in my account.", "topk_rank": 12 }, { "id": "596549", "score": 0.6835209131240845, "text": "You actually don't have to open a business account with your bank, you can have a personal account with the bank and have your business funds go into it, whether it be from cheques or from Eftpos\\Credit Card Facilities. You just have to get your customers to make the cheque out under your name (the same name used for your bank account). If you are trading as a sole trader and you trade under a name other than your own name, then officially you are supposed to register that name with Fair Trading in your state. However, if you are trading using another name and it is not registered, Fair Trading will only become aware of it if someone (usually one of your customers) makes a compliant about you, and they will then ask you to either stop using that name as your trading name or have it registered (if not already registered by someone else).", "topk_rank": 13 }, { "id": "261856", "score": 0.6833888292312622, "text": "Banks has to complete KYC. In case you want to open a bank account, most will ask for proof of address. I also feel it is difficult for bank to encash a cheque payable to a business in your account. Opening a bank account in the name of your business or alternatively obtaining a cheque payable to your personal name seems the only alternatives to me.", "topk_rank": 14 }, { "id": "424394", "score": 0.682912290096283, "text": "And if society were paying them, there is a legitimate discussion. But society doesn't pay them. Their employers and/or their customers pay them. And I'm certain there is a very strong relationship between the amounts written on the checks and the worth of that product or service to the person with the pen.", "topk_rank": 15 }, { "id": "6503", "score": 0.6826366186141968, "text": "WE're talking about companies. Cooperate companies. What cooperate company is issuing bounced or fake checks to their employees that can also issue debit cards as payments? None. You're trying to split hairs between personal cashed checks and pay roll checks. They aren't the same at all. Payroll checks don't require a 3 day waiting period before the balance is moved to your account, personal checks that don't have a history of bouncing do.", "topk_rank": 16 }, { "id": "430696", "score": 0.6813430786132812, "text": "From my reading of the wikipedia page (CRT), this only happens if you deposit or withdraw currency, not checks. The idea behind this is that checks, ACH, etc. leave paper trails that can be tracked. Cash doesn't, so it gets this extra level of scrutiny. If yu get a cashiers check or a money order to pay a bill, I don't think a CRT is created. If you withdraw $15,000 to buy a car in cash (1 stack of $100 bills), then a CRT would be generated. It still isn't a problem, as long as you can show a bill of sale showing where the money went (or came from, if you are the seller). The IRS has a FAQ about this. It says (taken from several spots at that page): Cash is money. It is currency and coins of the United States and any other country. A cashier’s check, bank draft, traveler’s check, or money order with a face amount of more than $10,000 is not treated as cash and a business does not have to file Form 8300 when it receives them. These items are not defined as cash because, if they were bought with currency, the bank or other financial institution that issued them must file a Currency Transaction Report. The exception to this is if you are buying something with a resale value of more than $10k with a check, money order, etc of less than $10k.", "topk_rank": 17 }, { "id": "200248", "score": 0.6813029050827026, "text": "\"I live in Kenya, and also here we have corruption. However, we use EFT, RTGS, Mobile Money and its more safe than cheques. Beware, that paper based payments cost you way more than anything electronic. Often the bank charge you for the cheque book, they charge for receiving paper based payment instruments, and settlement is often a day or two, while mobile/electronic settlement is instant. Seen from a tenants perspective, its also easier. Imagine too, the small likelihood that you loose the cheques from your tenants? Your fear for your account is understandable, but you may need to learn a little now, about how accounts are handled. In an online community only the persons with the necessary electronic credentials can withdraw from your account, being it online via your screen, or at the cashier, or by other means. Therefore, your money are safer via the electronic means. The cause of your concern / unease can be that you are relinquishing your control from a paper-based, visible system, into a system which you may not know so much about, maybe because of that you have not done so much on computers, yet. As a most recent caveat, though, don't get into the so called bitcoin technology, it is not safe, and as you saw, most recently, the very owner himself became the perpetrator breaking his very own bank by artificially inflating amounts on his own account, according to Japanese authorities. Now, electronic banking has been in existence since soon 40 years. Its based on cash, so behind the scenes, between the banks, huge deposits of cash are being moved physically, around from vault to vault, in the bank's money exchange / transaction settlement system. Thereby, a bank does not need to physically transfer money from one physical bank building to another - as they have huge loads of cash stashed in central depositories, between which they can now exchange money as compensation for cheques and electronic transfers. So, behind the scene of the electronic world, there are still physical cash being moved around, deep under the ground, in such vaults. I hope this has given you a little bit of confidence in the \"\"modern times\"\". If you have further questions, you are welcome. These were my 50 cents :-). My background is in software development, where I have worked on banking systems for more than 10 years, making banking systems, as part of huge teams, working for the largest banks in the world.\"", "topk_rank": 18 }, { "id": "269559", "score": 0.6812039613723755, "text": "You are correct that it is relatively easy for someone to create fake checks and steal money. They even made a movie about it, and not much has changed since that movie takes place. However, most checking accounts do indeed have $0 liability for this type of check fraud, referred to as check forgery. If someone does cash a check against your account that you did not write, you will eventually get your money back. Essentially, the thief stole from the bank (or the merchant that accepted the check), not from you. In the U.S., check forgery is generally covered by state law. According to a Q&A on the CFPB website, if you report to the bank that a check that cleared your account was forged in some way, and you do this within a reporting window defined by state law, the bank is supposed to return your money.", "topk_rank": 19 } ]
33	Is business the only way to become a millionaire?	[ { "id": "519798", "score": 0.6356104612350464, "text": "\"Not at all. The Millionaire Next Door offers a book full of anecdotes on couples that earned money and saved their way to being millionaires. I believe about 1/3 or so had businesses, but the rest were employed and simply saved wisely. $3860/yr saved for 40 years at 8% will return $1M. Adjust the numbers to hit a million sooner or reach a higher goal. The Author might be accused of survey bias. This is the phenomenon of studying the final results without looking at the pool of people years prior. Little Adv' is correct that while 1/3 of millionaires may have gotten that way by starting a business, that says nothing about how many businesses need to start to find the one millionaire that resulted. I view the book more as a lesson of \"\"spend beneath your means\"\" and focus on his anecdotes of the dual income couples who saved their way to this status. If you are in no rush, get this book from your library and spend the few hours to read it. In response to my Friend Dilip's comment, MoneyChimp offers a good look at compound growth (for the S&P) over time. The 40 years ending 2012, which obviously include the 'lost decade,' returned a CAGR of 9.78%. Not to be confused with the average 11.43%. When I pull the numbers for each year's return and apply an annual $3860 deposit, the 40 years ends with $2.2M. A 1% fee, or 1% lower return resulted in $1.6M. If 8% isn't conservative, of course you can run the numbers you wish. The 40 years contained both a lost decade and two great ones. Will the 3 decades post-lost average to get the Quad-Decade period to 8%+? I don't know.\"" }, { "id": "425387", "score": 0.7352941036224365, "text": "That's actually a pretty good way to get bankrupt quick. You can get rich quick through lottery, gambling, mere saving or investing wisely, or marrying someone from the Kennedy or Bush clans. Starting a business is one of the ways to become a millionaire, but definitely not the only one." } ]	[ { "id": "58390", "score": 0.6508021354675293, "text": "\"If that's your goal. Watch the entire webinar on warren buffet books by Preston Pysh first for a good intro into stocks bonds etc: https://m.youtube.com/watch?list=PLECECA66C0CE68B1E&v=KfDB9e_cO4k Read Dale Carnegies book \"\"How to Win Friends and Influence People\"\" in order to learn how to communicate to people effectively and create networks. The most important skill in any field you choose to go into. Read \"\"The Everything Store\"\" for essentially an MBA in business. Read \"\"The Intelligent Investor\"\" by Benjamin graham for a bachelors in finance. Then take classes that get you the very best professors in the field of finance, economics, and business at your school and make sure you never stop asking questions. Continue to develop your skills and create good saving & communication habits. And if you want great jobs, get internships. To get internships be involved in as much as you can in campus and take leadership roles (especially when you think you can't handle it) you will grow quickly as a leader and businessman if you do it right. If reading is a bit much for you, try audiobooks. And make sure you enjoy college and surround yourself with ambitious youngsters like yourself. It will help you grow. Enjoy school and be social, make mistakes and do whatever it takes to get a minimum 3.5 GPA (get old tests study groups easy teachers or GPA boosting classes if you need to) Aight that's all I got haha\"", "topk_rank": 0 }, { "id": "340482", "score": 0.6497297883033752, "text": "You are probably right that using a traditional buy and hold strategy on common equities or funds is very unlikely to generate the types of returns that would make you a millionaire in short order. However, that doesn't mean it isn't possible. You just have to accept a more risk to become eligible for such incredible returns that you'd need to do that. And by more risk I mean a LOT more risk, which is more likely to put you in the poorhouse than a mansion. Mostly we are talking about highly speculative investments like commodities and real estate. However, if you are looking for potential to make (or more likely lose) huge amounts of money in the stock market without a very large cache of cash. Options give you much more leverage than just buying a stock outright. That is, by buying option contracts you can get a much larger return on a small movement in the stock price compared to what you would get for the same investment if you bought the stock directly. Of course, you take on additional risk. A normal long position on a stock is very unlikely to cause you to lose your entire investment, whereas if the stock doesn't move far enough and in the right direction, you will lose your entire investment in option contracts.", "topk_rank": 1 }, { "id": "82627", "score": 0.6482024788856506, "text": "To get rich in a short time, it's more likely what you want to do is go into business. You could go into a non-investment business such as opening a restaurant or starting a tech company, of course. Warren Buffett was working in investing, which is quite a bit different than just buying stocks: The three ways to get rich investing I can think of are: I think the maximum real (after-inflation) return you can really count on over a lot of years is in the 5-6% range at most, maybe less. Here's a post where David Merkel argues 3-4% (assuming cash interest is close to zero real return): http://alephblog.com/2009/07/15/the-equity-premium-is-no-longer-a-puzzle/ At that rate you can double every 10-15 years. Any higher rate is probably risking much lower returns. I often post this argument against that on investment questions: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ Agree with you that lots of people seem to think they can make up for not saving money by picking a winning investment. Lots of people also use the lottery as a retirement strategy. I'm not sure this is totally irrational, if for some reason someone just can't save. But I'm sure it will fail for almost all the people who try it.", "topk_rank": 2 }, { "id": "247665", "score": 0.6474980115890503, "text": "And I'm not sure what you mean by big money. I have no plans to try and be some multi millionaire CEO, but I would like to make a nice living. For me that means in the 6 figures, even if it's on the lower end of that.", "topk_rank": 3 }, { "id": "350497", "score": 0.6469742655754089, "text": "As with any business, there's a huge learning curve. Rich Dad gives you the fundamentals.. which are sound.. you then need to spend time getting the nitty gritty details of the business ... be it real estate, stock investing etc. Kiyosaki is a wealthy man... I've listened to some of his podcasts and he know what he's talking about.. AND.. he's been in the business for 20+ years.", "topk_rank": 4 }, { "id": "219437", "score": 0.6440988779067993, "text": "I thought about this some more. Going to a top business school can help you network with entrepreneurs who would like to join you in starting your firm. But remember there is no single path to success in life. Moreover, life is what you make of it with your own hard work.", "topk_rank": 5 }, { "id": "165336", "score": 0.6432390213012695, "text": "\"Don't worry about this yet. You need the essentials first. Read in this order: \"\"How to win friends and influence people\"\" by Dale Carnegie \"\"Think and grow rich\"\" - Napoleon Hill \"\" The effective executive\"\" - Peter Drucker Then decide what type of business you want to start and learn the details. Bonus: \"\"Atlas Shrugged\"\" - not as practical but will motive you.\"", "topk_rank": 6 }, { "id": "285147", "score": 0.6431658267974854, "text": "Robert Kiyosaki repeatedly stressed that starting your own business is risk free and the easiest way to get rich, yet he's never done it - and has actually failed in business 3 times. He won't release his real estate investment history or his stock market investments. After failing many times he had no money until he joined network marketing groups to sell these books, he has made his money from his courses and books and has probably lost money from actual investments - I say this because most of his property investments were bought when market prices were very high. He's also stated that he essentially speculates on stock prices, when his broker phones him with the idea that a stock is about to go up he will shift lots of money into those stocks. If you'd like to read more, this exposes everything about him: [http://www.johntreed.com/Kiyosaki.html#bothsides](http://www.johntreed.com/Kiyosaki.html#bothsides) [Wall street journal article about him and Donald Trump.](http://online.wsj.com/article/SB116052181216688592.html?mod=money_page_left_hs) [Another video about 'get rich quick real estate gurus' ](http://www.youtube.com/watch?v=wx2KMUvqRIM&feature=player_embedded) This is turning into a cult following with people spending thousands on credit cards to go to these courses and receive this poor advice, please watch this BBC documentary to see the way people are acting about this 'get rich quick real estate' scheme: [BBC Iplayer link](http://www.bbc.co.uk/iplayer/episode/b017xgn6/Money_Who_Wants_to_be_a_Millionaire/)", "topk_rank": 7 }, { "id": "117755", "score": 0.6431388854980469, "text": "I think I came across wrong. I did not mean to imply that they didn't. I think I should have clarified by saying most business owners put in a ton of work, and most of the successful business owners also got lucky. My point was that the work is a prerequisite to getting lucky.", "topk_rank": 8 }, { "id": "267386", "score": 0.6424545645713806, "text": "any business selling for only 1,000 will not be worth getting into. marketing alone should cost you more than that if you have any genuine hope of turning a profit. buy some books instead. work for someone, learn the ropes, read books, practice what you read at work, then start something with your savings in 5 years.", "topk_rank": 9 }, { "id": "227568", "score": 0.6393742561340332, "text": "Easy. Start with 2 millions and lose only one. Jokes aside, if you want a million USD, you should be asking yourself how you can produce products or services worth $5 millions. (expect the extra to be eaten up by taxes, marketing, sales, workforce...) If by investment you mean making risky bets on the stock market, you might have a better time going to Las Vegas. On the other hand, if by investment you mean finding something that will produce $$$ and getting involved, it's a different matter.", "topk_rank": 10 }, { "id": "406876", "score": 0.6392908692359924, "text": "I can't agree more. If you have unique IP and know-how you can very well be a single successful proprietorship. That said you can even be more successful, if you can grow beyond that. The reality is that you have to be an exceptional salesperson, if you want to grow a pure commoditized services business. Otherwise you just keep on adding overhead and there is very little left over for you. Unless of course you make your money off the back of your employees.", "topk_rank": 11 }, { "id": "251422", "score": 0.6391971111297607, "text": "Wealth Generators is there for you to make you learn all the essentials techniques required to make your hard earned money provide you with the best output which you can never imagine. Yes, optimism and the smart skills are the two pivotal ways to get success over the curvature of the financial twisting.", "topk_rank": 12 }, { "id": "359580", "score": 0.6390255093574524, "text": "The short answer is yes, it is possible to do what these classes claim, however, it is highly unlikely. For every person they can show you that got rich using whatever so called method they are teaching, there are hundreds of people that didn't that they aren't telling you about. What I would recommend is invest in a well diversified portfolio. If you have a higher tolerance for risk then you can make some of that portfolio out of higher risk/reward investments. Maybe you pick the next Apple or Google or Netflix or whatever but that portion of your portfolio should be money that you can afford to lose in case you pick duds.", "topk_rank": 13 }, { "id": "465294", "score": 0.637291669845581, "text": "While I agree that luck has something to do with it, most of the successful business owners also put in crazy long hours and submitted themselves to huge financial risk in order to get their businesses started. I do not say this to mean there is no luck; there is always an element of luck. But you cannot get lucky if you aren't at the right place at the right time, and sometimes arriving at that place and trying to get lucky takes much more than people realize. Edit: some people are interpreting this to say that only successful business owners work hard. This is not what I am saying.", "topk_rank": 14 }, { "id": "545800", "score": 0.6364041566848755, "text": "\"The general answer to this is \"\"yes\"\". When you're dealing with single-digit millionaires, the answer is that their insurance habits and needs are basically the same as everyone else. When you get into the double digit and triple digit millionaires, or people worth billions, they have additional options, but those basically boil down to using \"\"self-insurance\"\" rather than paying a company for an insurance policy. The following is based on both what I've read and a fair deal of personal experience working for or with various stripes of millionaire, and even one billionaire. Addressing the types of insurance you mention: This is generally used to provide survivors with a replacement for income you can no longer provide when dead, in addition to paying for costs associated with dying (funeral, hospital/hospice bills, etc). Even millionaires and billionaires have this, yes, but the higher your net worth, the less value it has. If you're worth 9 or 10 figures, you probably already have trust funds set up for your family members, so an extra payout from an insurance policy is probably going to represent a small fraction of the wealth you're leaving your survivors, and as has been noted, insurance makes a profit, so the expectation by the insurance company is that they'll make more money on the policy than they'll have to pay out on death. That being said, the members of the 9+ figure club I've worked for all had multi-million dollar life insurance policies on them, which were paid for or heavily subsidized by the companies they owned or worked for. I doubt they would have held those policies if they had to pay the full cost, but when it's free or cheap, why not? Absolutely. As health insurance in America is an untaxed employment benefit, owing to regulations from World War II, all the wealthy folks I've had contact with got outrageously good plans as part of the companies they work for or owned. Having said that, even their trust fund beneficiaries held health insurance, because this type of insurance (in America, at least) is actually not really insurance, it's more of a pre-payment plan for medical expenses, and as such, it provides broader access to health care than you'd get from simply having enough money to pay for whatever treatments you need. If you walk into a hospital as a millionaire and state that you'll definitely be able to pay for your open-heart surgery with cash, you'll get a very different response than if you walk in with your insurance card and your \"\"diamond-level\"\" coverage. So, in this case, it's not as much as about the monetary benefits (although this is a type of \"\"insurance\"\" that's generally free or heavily discounted to the individual, so that's a factor) as it is about easier access to health care. Although this is required by law, it's one of the common forms of insurance that the very wealthy can, and often do handle differently than the rest of us. Most (if not all) US states have a provision to allow motorists to self-insure themselves, which amount to putting up a bond to cover claims against them. Basically, you deposit the minimum amount the state determines is required for auto insurance with the responsible state organization, get a certificate of self-insurance and you're good to go. All the high wealth individuals I know when this route, for two reasons - first of all, they didn't have to deal with insurance companies (or pay sky-high rates on account of all the speeding tickets they picked up) and secondly, they made their deposit with government bonds they had in their portfolios anyway, and they could still collect the interest on their self-insurance deposits. Of course, this meant that if they wrecked or dinged up their Maserati or Bentley or whatever, they'd be out of pocket to repair or replace it... but I guess if you can afford one $200,000 car, you can afford to buy a second one if you wreck it, or get by riding one of your other luxury automobiles instead. Since someone else mentioned kidnapping insurance, I'll point out here that what Robert DeNiro did in Casino when he put a couple million dollars into a safety deposit box for his wife to use if he was kidnapped or needed to pay off a government official is essentially the same thing as \"\"self-insurance\"\". Putting money away somewhere for unexpected events in lieu of buying an insurance policy against them. In real life, the very wealthy will often do this with US treasuries, government bonds and other interest-bearing, safe investments. They make a little money, diversify their portfolios and at the same time, self-insure against a potential big loss. This is another insurance area where even the very wealthy are remarkably similar to the rest of us, in that they all generally have it, yes, although the reason is a little different. For normal folks, the home they own is generally the largest part of their net worth, or at least a very substantial fraction, for those older folks with retirement savings that exceed the value of their homes. So for us, we have home owners insurance to prevent a catastrophic event from wiping out the lion's share of our net worth. If you're an ultra-wealthy individual who can afford an 8 figure home, that's not really the case (at least with the ones I've dealt with, who made their fortunes in business and are good managing their wealth and diversifying their assets - could be different for sports stars or the entertainment industry), and these people generally own multiple homes anyway, so it's not as big a deal if they lose one. However, no one actually buys a multi-million dollar home by writing a multi-million dollar check. They get a mortgage, just like the rest of us. And to get a mortgage, insurance on the property is a requirement. So yes, even the ultra wealthy generally have insurance on their home(s). There is an element of not wanting to shell out another 20 million if the place burns down, or someone breaks in and steals your valuables, but the bigger part of the reason is that it's required to get a mortgage in the first place, which is generally done for financial reasons - interest on your mortgage is a tax deduction, and you don't want to sink millions of dollars all at once into buying a property that's not going to appreciate in value, when you can get a mortgage and invest those millions of dollars to make more money instead.\"", "topk_rank": 15 }, { "id": "76623", "score": 0.6353642344474792, "text": "No doubt. But someone who is motivated by greed or money may use that motivation to do great good, at great profit. If someone could become the first trillionaire by turning China and India – and the US – away from fossil fuels, and that's the way they're motivated, and without that motivation they wouldn't bother, I'd be asking how I could help them make the Big T.", "topk_rank": 16 }, { "id": "327604", "score": 0.6352328062057495, "text": "\"Even the Wall Street jobs require skill, knowing how the stock market work, knowing how people work, etc. Even saying \"\"that luck is the main factor in the majority of cases of great wealth\"\" is still wrong. Really the only time luck is the real reason is non skill based gambling games (lottery, slots, etc), inheritance, and finding a wallet on the side of the road/street\"", "topk_rank": 17 }, { "id": "549915", "score": 0.6346873044967651, "text": "If you could find a breakdown, I suspect that it would show not just that they are self employed but own their own company. There are many people that are self employed, many of them make a good living at it, but are not millionaires. My neighbour the plumber is a perfect example of this sort of self-employed and comfortable but not rich person. The key to wealth growth is to own (a significant part of) a company. It one way to leverage a smaller amount of money to something much larger. Plough your profits back in to the company to grow it, pay yourself reasonably for some time as the company grows. After it is some size, you can afford to pay yourself more of the profits, if not sell it as a going concern to someone else. One last thought - I am assuming that your book is claiming that they made their money through self-employment, instead of choosing to become self employed after striking rich somewhere. If I were to win the lottery, I might then become a self-employed something, but in that case it was not my self-employment that got me there.", "topk_rank": 18 }, { "id": "532724", "score": 0.6345696449279785, "text": "It all depends on the country. In the US, mobility at the top is reasonably high (ie first generation millionaires, first generation billionaires, etc). In other western countries, mobility at the top is very poor. This is typically due to regulation and taxes that make it incredibly difficult for small businesses to be compliant and compete (ie hire a bad employee as a small startup, and it can cripple the business if you cannot easily fire them). Mobility at the bottom is reversed. Getting out of abject poverty in the US is incredibly difficult, almost impossible. In other western countries it is not easy, but far easier than the US thanks to those social safety nets.", "topk_rank": 19 } ]
35	Valuing a small business to invest in	[ { "id": "498681", "score": 0.7325329184532166, "text": "There is nothing fair / unfair in such deals. It is an art than a science. what kind of things should be considered, to work out what would be a fair percentage stake A true fair value is; take the current valuation of the company [This can be difficult if it is small and does not maintain proper records]. Divide by number of shares, that is the value of share and you should 20K worth of such shares. But then there is risk premium. You are taking a risk that an small start-up may do exceedingly well ... or it may close off. This risk premium is what is negotiated. It depends on how desperate the owner of the small company is; who all are interested in this specific deal ... if you want 30% share; someone else is ready to offer 20K for 15% of share. Or there is no one willing to lend 20K as they don't believe it will make money ... and the owner is desperate, you may even get 50%." }, { "id": "80913", "score": 0.7351664304733276, "text": "\"It should be pretty obvious that without knowing what sort of assets the company owns, and what sort of net earnings are being generated it's impossible to say what a $20k equity investment should get you in terms of ownership percentage. With that said, you want to look at a few to several years of books, look for trends. Some things to understand that might be subtle red flags: It's extremely common for early stage investors to essentially make loans rather than strictly buying shares. In the worst case scenario creditors get to participate in liquidation proceedings before shareholders do. You may be better off investing in this business via a loan that's convertible to equity at your discretion. Single owner service companies are difficult because all of the net earnings go to the proprietor and that person maintains all of the relationships. So taking something like 5 years of net earnings as the value of the company doesn't make much sense because you (or someone else) couldn't just step in and replace the owner. Granted, you aren't contemplating taking over the business, but it negates using an X years of net earnings valuation method. When you read about valuation there is a sort of overriding assumption that no single person could topple the operation which couldn't be farther from the truth in single employee service companies. Additionally, understand that your investment in a single owner company hinges completely on one person's ability and willingness to work. It's really vital to understand the purpose of the funds. Someone will be hired? $20,000 couldn't be even six months of wages... Put things in to perspective with a pad, pen and calculator. Don't invest in the pipe dream of a friend of yours, and DEFINITELY don't hand this person the downpayment for their new house. The first rule of investing is \"\"don't lose money,\"\" this isn't emotional, this is a dollars and cents pragmatic process. Why does the business need this money? How will you be paid back? Personally, I think it would be more gratifying to put $20k in a blender and watch it blend, this is probably a horrible investment. The risk should just be left to credit card companies.\"" } ]	[ { "id": "384213", "score": 0.6970229148864746, "text": "If the company's ownership is structured similarly to a typical start-up then an 1% employee ownership in a company which sells for 1 million will yield far less than 10k due to various liquidation preferences of the investors, different share classes, etc. It's pretty hard to get a specific number because it depends a lot on the details of earlier fundraising and stock grants. That said, unless the company is circling the drain and the sale was just to avoid BK, the share price you get should be higher unless the share class structure and acquisition deal are completely unfair.", "topk_rank": 0 }, { "id": "214571", "score": 0.6968956589698792, "text": "Thanks for the advice. I will look into index funds. The only reason I was interested in this stock in particular is that I used to work for the company, and always kept an eye on the stock price. I saw that their stock prices recently went down by quite a bit but I feel like I've seen this happen to them a few times over the past few years and I think they have a strong catalogue of products coming out soon that will cause their stock to rise over the next few years. After not being able to really understand the steps needed to purchase it though, I think I've learned that I really don't know enough about the stock system in general to make any kind of informed decisions about it and should probably stick to something lower-risk or at least do some research before making any ill-informed decisions.", "topk_rank": 1 }, { "id": "282291", "score": 0.6968502402305603, "text": "You'd probably need to prove you can run the business if you want a loan. The best proof you can have is to run the business. Unfortunately that also means that the price of the alley could go up. OP needs to start thinking about a negotiation strategy soon.", "topk_rank": 2 }, { "id": "25671", "score": 0.6966632604598999, "text": "The main question is, how much money you want to make? With every transaction, you should calculate the real price as the price plus costs. For example, if you but 10 GreatCorp stock of £100 each, and the transaction cost is £20 , then the real cost of buying a single share is in fact buying price of stock + broker costs / amount bought, or £104 in this case. Now you want to make a profit so calculate your desired profit margin. You want to receive a sales price of buying price + profit margin + broker costs / amount bought. Suppose that you'd like 5%, then you'll need the price per stock of my example to increase to 100 + 5% + £40 / 10 = £109. So you it only becomes worth while if you feel confident that GreatCorp's stock will rise to that level. Read the yearly balance of that company to see if they don't have any debt, and are profitable. Look at their dividend earning history. Study the stock's candle graphs of the last ten years or so, to find out if there's no seasonal effects, and if the stock performs well overall. Get to know the company well. You should only buy GreatCorp shares after doing your homework. But what about switching to another stock of LovelyInc? Actually it doesn't matter, since it's best to separate transactions. Sell your GreatCorp's stock when it has reached the desired profit margin or if it seems it is underperforming. Cut your losses! Make the calculations for LovelyCorp's shares without reference to GreatCorp's, and decide like that if it's worth while to buy.", "topk_rank": 3 }, { "id": "493438", "score": 0.695816159248352, "text": "A Company start with say $100. Lets say the max it can borrow from bank is $100 @ $10 a year as Interest. After a years say, On the $200 the company made a profit of $110. So it now has total $310 Option 1: Company pays back the Bank $100 + $10. It further gave away the $100 back to shareholders as dividends. The Balance with company $100. It can again start the second year, borrow from Bank $100 @ 10 interest and restart. Option 2: Company pays back the Bank $100 + $10. It now has $200. It can now borrow $200 from Bank @ $20. After a year it makes a profit of $250. [Economics of scale result $30 more] Quite a few companies in growth phase use Option 2 as they can grow faster, achieve economies of scale, keep competition at bay, etc Now if I had a share of this company say 1 @ $1, by end of first year its value would be $2, at the end of year 2 it would be $3.3. Now there is someone else who wants to buy this share at end of year 1. I would say this share gives me 100% returns every year, so I will not sell at $2. Give me $3 at the end of first year. The buyer would think well, if I buy this at $3, first year I would notionally get $.3 and from then on $1 every year. Not bad. This is still better than other stocks and better than Bank CD etc ... So as long as the company is doing well and expected to do well in future its price keeps on increasing as there is someone who want to buy. Why would someone want to sell and not hold one: 1. Needs cash for buying house or other purposes, close to retirement etc 2. Is balancing the portfolio to make is less risk based 3. Quite a few similar reasons Why would someone feel its right to buy: 1. Has cash and is young is open to small risk 2. Believes the value will still go up further 3. Quite a few similar reasons", "topk_rank": 4 }, { "id": "156923", "score": 0.6954789757728577, "text": "A rough estimate of the money you'd need to take a position in a single stock would be: In the case of your Walmart example, the current share price is 76.39, so assuming your commission is $7, and you'd like to buy, say, 3 shares, then it would cost approximately (76.39 * 3) + 7 = $236.17. Remember that the quoted price usually refers to 100-share lots, and your broker may charge you a higher commission or other fees to purchase an odd lot (less than 100 shares, usually). I say that the equation above gives an approximate minimum because However, I second the comments of others that if you're looking to invest a small amount in the stock market, a low cost mutual fund or ETF, specifically an index fund, is a safer and potentially cheaper option than purchasing individual stocks.", "topk_rank": 5 }, { "id": "166863", "score": 0.6954372525215149, "text": "One aspect of this - no matter which valuation method you choose - is that there are limited shares available to buy. Other people already know those valuation methods and have decided to buy those shares, paying higher than the previous person to notice this and take a risk. So this means that even after you have calculated the company's assets and future growth, you will be possibly buying shares that are way more expensive and overvalued than they will be in the future. You have to consider that, or you may be stuck with a loss for decades. And during that time, the company will get new management or their industry will change, completely undermining whatever fundamentals you originally considered.", "topk_rank": 6 }, { "id": "279288", "score": 0.6953244209289551, "text": "\"Simple answer: Yes A better question to ask might be \"\"Should I invest all my savings to buy 4 shares of a single stock.\"\" My answer to that would be \"\"probably not\"\". If this is your first venture into the world of owning publicly traded companies, then you're better off starting with some sort of mutual fund or ETF. This will start your portfolio with some amount of diversification so you don't have all your eggs in one basket. If you really want to get into the world of picking individual stocks, a good rule of thumb to follow is to invest $1 in some sort of indexed fund for every $1 you invest in an individual stock. This gives you some diversification while still enabling you to scratch that itch of owning a part of Apple or whatever other company you think is going in the right direction.\"", "topk_rank": 7 }, { "id": "448872", "score": 0.6952815055847168, "text": "\"IMO, what it seems like you've done is nothing more than having screened out a company worth further investigation. The next step would be a thorough analysis of the company's past financials and current statements to arrive at your own opinion / forecast of the immediate and far future of the company's prospects. Typically, this is done by looking at the company's regulatory filings, and maybe some additional searching on comparison businesses. There are many sources of instruction for how one might \"\"value\"\" or \"\"analyze\"\" a company, or that provide help on \"\"reading a balance sheet\"\". (This is not an easy skill to learn, but it is one that will prove invaluable over a lifetime of investing.) It is possible that you'll uncover a deteriorating business where the latest selling, and subsequent drop in price that caused the high yield, is well-deserved. In which case, you know to stay away and move on to the next idea. On the other hand, you might end up confident that the company is not suffering from a drop in sales, rise in expenses, growing debt payments, loss of \"\"moat\"\", etc. In which case, you've found a great investment candidate. I say candidate because you still may decide this company isn't for you, even if the financials are right, because you might find better opportunities for an equal, or acceptable, return at lower risk while you're researching. As to the yield being high when there are no problems with the fundamentals of the business, this may simply be because of panic selling during this past few week's downturn, or some other sort of temporary and superficial scare. However, be warned that the masses can remain irrational, and thus the price stay suppressed or even drop further, for longer than you're willing to wait for your ROI. The good news is that in that case, you're being well compensated to wait at a 11+% yield!\"", "topk_rank": 8 }, { "id": "496921", "score": 0.6949979662895203, "text": "\"The hardest part seems to be knowing exactly when to sell the stock. Well yes, that's the problem with all stock investing. Reports come out all the time, sometimes even from very smart people with no motivation to lie, about expected earnings for this company, or for that industry. Whether those predictions come true is something you will only find out with time. What you are considering is using financial information available to you (and equally available to the public) to make investment choices. This is called 'fundamental analysis'; that is, the analysis of the fundamentals of a business and what it should be worth. It forms the basis of how many investment firms decide where to put their money. In a perfectly 'efficient' market, all information available to the public is immediately factored into the market price for that company's stock. ie: if a bank report states with absolute certainty (through leaked documents) that Coca-Cola is going to announce 10% revenue growth tomorrow, then everyone will immediately buy Coca-Cola stock today, and then tomorrow there would be no impact. Even if PwC is 100% accurate in its predictions, if the rest of the market agrees with them, then the price at the time of IPO would equal the future value of the cashflows, meaning there would be no gain unless results surpassed expectations. So what you are proposing is to take one sliver of the information available to the public (have you also read all publicly available reports on those businesses and their industries?), and using that to make a high risk investment. Are you going to do better than the investment firms that have teams of researchers and years of experience in the investment world? You can do quite well by picking individual stocks, but you can also lose a lot of money if you do it haphazardly. Be aware that there is risk in doing any type of investing. There is higher than average risk if you invest in equities ('the stock market'). There is higher risk still, if you pick individual stocks. There is yet even higher risk, if you pick small startup companies. There are some specific interesting side-elements with your proposal to purchase stock about to have an IPO - those are better dealt with in a separate question if you want more information; search this site for 'IPO' and you should find a good starting point. In short, the company about to go public will hire a firm of analysts who will try to calculate the best price the public will accept for an offering of shares. Stock often goes up after IPO, but not always. Sometimes the company doesn't even fill its full IPO order, adding a new type of risk to a potential investor, that the stock will drop on day 1. Consider an analogy outside the investing world: Let's say Auto Trader magazine prints an article that says \"\"all 2015 Honda Civics are worth $15,000 if they have less than 50,000 Miles.\"\" Assume you have no particular knowledge about cars. If you read this article, and you see an ad in the paper the next day for a Honda Civic with 40k miles, should you buy it for $14k? The answer is not without more research. And even if you determine enough about cars to find one for $14k that you can reasonably sell for $15k, there's a whole world of mechanics out there who buy and sell cars for a living, and they have an edge both because they can repair the cars themselves to sell for more, and also because they have experience to spot low-offers faster than you. And if you pick a clunker (or a stock that doesn't perform even when everyone expected it would), then you could lose some serious money. As with buying and selling individual stocks, there is money to be made from car trading, but that money gets made by people who really know what they're doing. People who go in without full information are the ones who lose money in the long run.\"", "topk_rank": 9 }, { "id": "297724", "score": 0.6949256658554077, "text": "Its a toss up. $15k is obviously huge for a startup, but depending on what they do, with google being the first way so many people look for something, a great website with wonderful SEO might mean so many more people will find you. Compare it to buying a half page ad in the yellow pages 15 years ago. It might have a very quick ROI", "topk_rank": 10 }, { "id": "238587", "score": 0.694584310054779, "text": "Because some overhead expenses will be shared (accounting, most salaries, sales etc.) it's far easier to give him an ownership stake in the company because you won't be able to calculate net profit for each component correctly. What I would say to him is, in exchange for $80K and the contract with his building company (make sure it is significant enough to be worth it$ you will give him 35% of the company. How did you come up with he $1 million in net profit calculation? How much of that is reliant on his business?", "topk_rank": 11 }, { "id": "62290", "score": 0.694220781326294, "text": "There are several camps for stock valuation, and much of it boils down to your investment style. A growth investor will not consider something with a 50x P/E ratio to be overvalued, but a value investor certainly would. I would recommend looking up the Fama-French n-factor model (it was 3-factor, I believe they have released newer papers which introduce other factors), and reading The Intelligent Investor by Benjamin Graham. Graham's methodology is practically canon for many investors, and the methodology focuses on value, while outlining quantitative factors for determining if a stock is under or over valued.", "topk_rank": 12 }, { "id": "172590", "score": 0.6941578388214111, "text": "You could look up their old SEC filings before they were placed in conservatorship. Derive WACC from that. Comp to peer financials from the same timeframe; see how they compare. Assume some sort of size premium if you so desire. That might give you a picture of the business's cost of capital were it an independent entity. Since it's a GSE, you could make the case that its cost of capital is the rate on US treasury securities. In reality, it's current cost of capital is probably a mix of the two.", "topk_rank": 13 }, { "id": "255193", "score": 0.6941006183624268, "text": "You will probably never see it. The startup at some point may start issuing dividends to the shareholders (which would be the owners, including you if you are in fact getting equity), but that day may never come. If they hire others with this method, you'll likely lose even that 5% as more shares are created. Think of inflation that happens when government just prints more money. All notes effectively lose value. I wouldn't invest either, most startups fail. Don't work for free on the vague promise of some future compensation; you want a salary and benefits. Equity doesn't put food on your table.", "topk_rank": 14 }, { "id": "276830", "score": 0.6939470767974854, "text": "Something that you omitted in your question is whether this prospective purchase is a single family residence (SFR) or some other type of real property. If this is an investment purchase as you say it is, then the only real way to tell it is worth what you are willing to pay is based on the income it produces. Once you complete an income and expense analysis you can get a CAP rate to compare it to other like properties in the area. This is the best way to value income/investment real estate. If you don't know what a CAP rate is and how to calculate it, then you might be over your head a bit. Another important aspect to consider is the reason to pay all cash for this property. The main reason to invest in real estate is to use the banks money as leverage. Again, you should understand these kinds of basic real estate concepts before you dive into purchasing investment property.", "topk_rank": 15 }, { "id": "519963", "score": 0.6938637495040894, "text": "I don't think it has to be either-or. You can profitably invest inside the SIMPLE. (Though I wouldn't put in any more than the 1% it takes to get the match.) Let's look at some scenarios. These assume salary of $50k/year so the numbers are easy. You can fill in your own numbers to see the outcome, but the percentages will be the same. Let it sit in cash in the SIMPLE. You put in 1%, your employer matches with 1%. Your account balance is $1,000 (at the end of the year), plus a small amount of interest. Cost to you is $500 from your gross pay. 100% return on your contributions, yay! Likely 0-1% real returns going forward; you'll be lucky to keep up with inflation over the long term. Short term not so bad. Buy shares of index ETFs in the SIMPLE; let's assume the fee works out to 10%. You put in 1%, employer matches 1%. Your contributions are $500, fees are $100, your balance is $900 in ETFs. 80% instant return, and possible 6-7% real long term returns going forward. Buy funds in the SIMPLE; assume the load is 5%, management fee is 1% and you can find something that behaves like an index fund (so it is theoretically comparable to above). 1% from you, 1% from employer. Your contributions are $500, load fees are $50, your balance is $950. 90% instant return, and possible 5-6% real long term returns going forward (assuming the 6-7% real returns of equities are reduced by the 1% management fee). (You didn't list out the fees, and they're probably different for the different fund choices, so fill in your own details and do the math.) Invest outside the SIMPLE in the same ETFs or equivalent no load index funds; let's assume you can do this with no fees. You put in the same 1% of your gross (ignoring any difference that might come from paying FICA) into a self directed traditional IRA. At the end of the year the balance is $500. So deciding whether or not to take the match is a no brainer: take it. Deciding whether you should hold cash, ETFs, or (one of two types of) funds in your SIMPLE is a little trickier.", "topk_rank": 16 }, { "id": "252716", "score": 0.6938242316246033, "text": "Sorry, this isn't terribly helpful and I would post this as a comment but I'm new and apparently can't. Some considerations: 7% seems awfully high. Check SoFi and see if you can't refinance at a rate low(er) enough rate so that you won't be paying so much interest. How does reinvesting 10k into the company compare to paying off loans? 1.5 years in, you've paid down a lot of interest already... We would need a lot of particulars to give you specific advice, probably more than you're willing to give over the internet. Who does the financials for you business? They should be able to give you advice, or at least build the models specific for your situation to help you make a decision.", "topk_rank": 17 }, { "id": "189190", "score": 0.6938082575798035, "text": "\"Chris - you realize that when you buy a stock, the seller gets the money, not the company itself, unless of course, you bought IPO shares. And the amount you'd own would be such a small portion of the company, they don't know you exist. As far as morals go, if you wish to avoid certain stocks for this reason, look at the Socially Responsible funds that are out there. There are also funds that are targeted to certain religions and avoid alcohol and tobacco. The other choice is to invest in individual stocks which for the small investor is very tough and expensive. You'll spend more money to avoid the shares than these very shares are worth. Your proposal is interesting but impractical. In a portfolio of say $100K in the S&P, the bottom 400 stocks are disproportionately smaller amounts of money in those shares than the top 100. So we're talking $100 or less. You'd need to short 2 or 3 shares. Even at $1M in that fund, 20-30 shares shorted is pretty silly, no offense. Why not 'do the math' and during the year you purchase the fund, donate the amount you own in the \"\"bad\"\" companies to charity. And what littleadv said - that too.\"", "topk_rank": 18 }, { "id": "327997", "score": 0.6931190490722656, "text": "\"The recommendation is not to make the investment. In general, a company does not have to sell their shares to you or allow you to become an investor, because, as you have stated, it is a private company not quoted on the stock market. If everyone were trustworthy, you could buy the tools for $11000 -- so that you own the tools -- and sign a lease of the tools to the company whereby they pay you $X/month. The lease should be reviewed by a lawyer before it is signed, and perhaps give the buyer the right to demand back the tools at any time. However, even this arrangement is very risky, because the \"\"company\"\" could simply steal or damage the tools and disappear. It is not an investment that I would make, because it sounds too good to be true. $2800/mo steady cash flow for $11,000 invested. No, I don't think so. The following information may also be useful, either to you, or future readers: If you still want to make this investment, then you should know that: The offering for sale of shares by companies located in the USA is subject to a wild array of complex laws. This is true in many other countries as well. These laws, called securities laws or regulations, can require certain disclosures, require that investors have a high net worth so that they can afford to lose the money or conduct their own investigations and legal actions, or require that the investors know the company founders personally, and can prohibit or limit resale by the buyer/investor. Promoters who say you can still invest and are ignoring or disobeying the securities laws are being at least negligent, but more likely are dishonest and probably criminal. Even if you trust in the investment, can you trust negligent managers to do a good job executing that investment? What about dishonest managers? What about criminals and thieves?\"", "topk_rank": 19 } ]
37	Requirements for filing business taxes?	[ { "id": "523564", "score": 0.7055911421775818, "text": "\"While she can certainly get an LLC or EIN, it isn't necessarily required or needed. She can file as a sole-proprietor on her (or your joint) taxes by filling out a schedule-C addition to the 1040. Any income or losses will pass through to your existing income situation (from W-2's and such). The general requirement for filing as a business in this regard has nothing to do with any minimum income, revenue, or size. It is simply the intent to treat it as a business, and unlike a hobby, the overall intent to earn a profit eventually. If you're currently reporting the 1099-MISC income, but not deducting the expenses, this would be a means for you to offset the income with the expenses you mentioned (and possibly other legitimate ones). There is no \"\"2% AGI\"\" restriction for schedule-C.\"" } ]	[ { "id": "524879", "score": 0.670279324054718, "text": "\"Yes, your business needs to be in the business of making money in order for you to deduct the expenses associated with it. I suppose in theory this could mean that if you take in $10,000 and spend $30,000 every year, you not only don't get a net deduction of $20,000 (your loss) but you have to pay tax on $10,000 (your revenue). However this is super fixable. Just only deduct $9500 of your expenses. Tada! Small profit.For all the gory details, including how they consider whether you have an expectation of profits, see http://www.cra-arc.gc.ca/E/pub/gl/p-176r/p-176r-e.html This \"\"expectation of profit\"\" rule appears to apply to things like \"\"I sell home décor items (or home decorating advice) and therefore need to take several multi week trips to exotic vacation destinations every year and deduct them as business expenses.\"\" If you're doing woodworking or knitting in your home and selling on Etsy you don't particularly have any expenses. It's hard to imagine a scenario where you consistently sell for less than the cost of materials and then end up dinged on paying tax on revenue.\"", "topk_rank": 0 }, { "id": "316932", "score": 0.6701844334602356, "text": "As a sole trader you would fill out an Individual Tax Return and complete the Business and Professional Items Section P1 to P19, then enter the amounts from that section into Item 15 in the Supplementary Section of the Tax Return. Any business income as a sole trader will be included into your taxable income for the year together with other sources of income you may have earned in the same income year. Whether you get a tax refund will depend on the amount of taxable income you make, the amount of tax you have already paid in instalments throughout the year, and any tax deductions and tax offsets you can claim.", "topk_rank": 1 }, { "id": "227757", "score": 0.6701556444168091, "text": "\"I don't know what you mean by \"\"claim for taxes,\"\" I think you mean pay taxes. I'm not sure how corps function in Canada but in the US single owner limited liability entities typically pass the net income through to the owner to be included in their personal tax return. So it seems all of this is more or less moot, because really you should probably already be including your income sourced from this project on your personal taxes and that's not really likely to change if you formed something more formal. The formal business arrangements really exist to limit the liability of the business spilling over in to the owner's assets. Or trouble in the owner's life spilling over to interrupt the business operation. I don't know what kind of business this is, but it may make sense to set up one of the limited liability arrangements to ensure that business liability doesn't automatically mean personal liability. A sole proprietorship or in the US we have DBA (doing business as) paperwork will get you a separate tax id number, which may be beneficial if you ever have to provide a tax ID and don't want to use your individual ID; but this won't limit your liability the way incorporating does.\"", "topk_rank": 2 }, { "id": "248651", "score": 0.6701002717018127, "text": "Many states have a simple method for assessing income tax on nonresidents. If you have $X income in State A where you claim nonresident status and $Y income overall, then you owe State A a fraction (X/Y) of the income tax that would have been due on $Y income had you been a resident of State A. In other words, compute the state income tax on $Y as per State A rules, and send us (X/Y) of that amount. If you are a resident of State B, then State B will tax you on $Y but give you some credit for taxes paid to State A. Thus, you might be required to file a State A income tax return regardless of how small $X is. As a practical matter, many commercial real-estate investments are set up as limited partnerships in which most of the annual taxable income is a small amount of portfolio income (usually interest income that you report on Schedule B of Form 1040), and the annual bottom line is lots of passive losses which the limited partners report (but do not get to deduct) on the Federal return. As a result, State A is unlikely to come after you for the tax on, say, $100 of interest income each year because it will cost them more to go after you than they will recover from you. But, when the real estate is sold, there will (hopefully) be a big capital gain, most of which will be sheltered from Federal tax since the passive losses finally get to be deducted. At this point, State A is not only owed a lot of money (it knows nothing of your passive losses etc) but, after it processes the income tax return that you filed for that year, it will likely demand that you file income tax returns for previous years as well.", "topk_rank": 3 }, { "id": "442142", "score": 0.6699667572975159, "text": "I suggest to start charging slightly more than needed to cover expenses. All you need is to show profit. It doesn't have to be significant - a couple of hundred of dollars of consistent yearly profit should suffice to show a profitable business. Then you can deduct on Schedule C all the related expenses. The caveat is that the profit (after the deduction of the expenses will be a bit smaller) will be subject to not only income tax but also the self-employment tax. But at least you'll pay tax on profit that is not entirely phantom. I remember suggesting you getting a professional consultation on this matter a while ago. You should really do that - talk to a EA/CPA licensed in your state, it may be well worth the $100-200 fee they'll charge for the consultation (if at all...).", "topk_rank": 4 }, { "id": "162630", "score": 0.6699400544166565, "text": "Firstly if you've formed a limited company you don't need to register as self-employed. You're an employee and shareholder of the company and your taxes will be handled that way. Registering as self-employed is only necessary if you're operating as a sole trader (i.e. without a company). Secondly you absolutely do want to get set-up correctly with HMRC as soon as possible, whether you're a company or a sole trader. Ignoring the legal question your worry about paying taxes when you have no income is groundless - if you're not making any money there won't be any tax to pay. Furthermore it seems likely that the business is currently losing money. Those losses, if correctly recorded, can be carried forward and offset against future profits so not only do you not have to pay tax now, but you can reduce the tax you pay later when the money does start rolling in.", "topk_rank": 5 }, { "id": "521657", "score": 0.6698858737945557, "text": "You can get audited for anything Business owners are more likely to get audited than people filing 1040-EZ's for their simplistic income tax obligation. According to HR Block I hope you enjoy the process where you explain the source of your earnings", "topk_rank": 6 }, { "id": "341220", "score": 0.6697452068328857, "text": "\"No, there are no issues. When you form the corp in DE, you pick a business there to serve as your \"\"agent\"\" (essentially someone who knows to get in contact with you). The \"\"agent\"\" will notify you about taxes and any mail you get, but besides the fee they charge you for being the agent, you should file all the taxes directly with DE (franchise tax is easy to file on the web) instead of going through the agent and paying a surcharge. When your LLC files taxes, you'll do so in DE and then the LLC will issue you a federal and state K1. You'll file taxes where you reside and use the federal K1, but I think you might have to file DE state taxes (unsure about this part, feel free to edit or comment and I'll correct).\"", "topk_rank": 7 }, { "id": "390368", "score": 0.669497549533844, "text": "As a sole proprietor, the tax liability of your business is calculated based on combining your business income with your personal income together. It is good advice to keep all personal and business financial matters separate. This makes it easier to prove to the IRS that all your business expenses are actually business related. In this case however, the two items [tax payment for personal income vs tax payment for business income] are inseparable. What you can do, however, for your own personal records, is calculate how much of your tax payment relates to your business. I wouldn't get complicated about this; I would simply take the net income of your business as a % of your taxable income, and multiply that against your tax payment. ie: if your business net income is $10,000, and your total taxable income is $50,000, and you paid $6,000 in taxes, I would record that 20% of the $6k was related to business income. If you have a separate bank account for your sole proprietorship, you could make a transfer to your personal account of $1,200, and then make the $6k payment from your personal account. Remember that tax payments for either your sole proprietorship and your personal income will be treated the same: federal tax payments are not tax deductible, and state tax payments are tax deductible, whether they were paid for your sole proprietorship or the rest of your personal income. So even though this method is simplistic [for example, it doesn't factor in that different investment income types earned personally will have a lower rate than your sole proprietorship income], any difference wouldn't have an impact on any future tax liability. This would only be for your own personal record keeping.", "topk_rank": 8 }, { "id": "160474", "score": 0.6694693565368652, "text": "A couple things. First of all, most people's MAIN source of income is from their job, but they have others, such as bank interest, stock dividends, etc. So that income has to be reported with their wage income. The second thing is that most people have deductions NOT connected with their job. These deductions reduce income (and generate refunds). So it's in their interest to file.", "topk_rank": 9 }, { "id": "34338", "score": 0.6694440245628357, "text": "\"If you live outside the US, then you probably need to deal with foreign tax credits, foreign income exclusions, FBAR forms (you probably have bank account balances enough for the 10K threshold) , various monsters the Congress enacted against you like form 8939 (if you have enough banking and investment accounts), form 3520 (if you have a IRA-like local pension), form 5471 (if you have a stake in a foreign business), form 8833 (if you have treaty claims) etc ect - that's just what I had the pleasure of coming across, there's more. TurboTax/H&R Block At Home/etc/etc are not for you. These programs are developed for a \"\"mainstream\"\" American citizen and resident who has nothing, or practically nothing, abroad. They may support the FBAR/FATCA forms (IIRC H&R Block has a problem with Fatca, didn't check if they fixed it for 2013. Heard reports that TurboTax support is not perfect as well), but nothing more than that. If you know the stuff well enough to fill the forms manually - go for it (I'm not sure they even provide all these forms in the software though). Now, specifically to your questions: Turbo tax doesn't seem to like the fact that my wife is a foreigner and doesn't have a social security number. It keeps bugging me to input a valid Ssn for her. I input all zeros for now. Not sure what to do. No, you cannot do that. You need to think whether you even want to include your wife in the return. Does she have income? Do you want to pay US taxes on her income? If she's not a US citizen/green card holder, why would you want that? Consider it again. If you decide to include here after all - you have to get an ITIN for her (instead of SSN). If you hire a professional to do your taxes, that professional will also guide you through the ITIN process. Turbo tax forces me to fill out a 29something form that establishes bonafide residency. Is this really necessary? Again in here it bugs me about wife's Ssn Form 2555 probably. Yes, it is, and yes, you have to have a ITIN for your wife if she's included. My previous state is California, and for my present state I input Foreign. When I get to the state tax portion turbo doesn't seem to realize that I have input foreign and it wants me to choose a valid state. However I think my first question is do i have to file a California tax now that I am not it's resident anymore? I do not have any assets in California. No house, no phone bill etc If you're not a resident in California, then why would you file? But you might be a partial resident, if you lived in CA part of the year. If so, you need to file 540NR for the part of the year you were a resident. If you have a better way to file tax based on this situation could you please share with me? As I said - hire a professional, preferably one that practices in your country of residence and knows the provisions of that country's tax treaty with the US. You can also hire a professional in the US, but get a good one, that specializes on expats.\"", "topk_rank": 10 }, { "id": "467853", "score": 0.6693150401115417, "text": "I did this for the last tax year so hopefully I can help you. You should get a 1099-B (around the same time you're getting your W-2(s)) from the trustee (whichever company facilitates the ESPP) that has all the information you need to file. You'll fill out a Schedule D and (probably) a Form 8949 to describe the capital gains and/or losses from your sale(s). It's no different than if you had bought and sold stock with any brokerage.", "topk_rank": 11 }, { "id": "322906", "score": 0.6692323088645935, "text": "Yes. You must register for GST as well, if you will be making over the threshold (currently $60,000). That's probably a bonus for you, as your home office expenses will mostly include GST, but your income will most likely be zero-rated. Check with an accountant or with the IRD directly. Just be certain to put aside enough money from each payment to cover income tax, GST and ACC. You will get a very large bill in your second year of business.", "topk_rank": 12 }, { "id": "599142", "score": 0.6688527464866638, "text": "Why would you need to have a separate checking account just for tax payments? As long as your categorize your expense properly, you can run a report based on that category to present only your tax responsibilities. You can set up your account how you want, but IMO it seems excessive for quarterly tax payments. My other thought is that you may also be required to pay monthly bank charges to have a second business checking.", "topk_rank": 13 }, { "id": "489898", "score": 0.6684920191764832, "text": "\"Whenever you do paid work for a company, you will need to fill out some sort of paperwork so that the company knows how to pay you, and also how to report how much they paid you to the appropriate government agencies. You should not think of this as a \"\"hurdle\"\" and you shouldn't worry that you haven't been employed for a long time. The two most common ways a company pays an individual are via employee wages, or \"\"independent contractor\"\" payments. When you start a relationship with a company, if you are going to become an employee, then you will out a W4 form, and at the end of the year you will receive a W2 form. If you are an independent contractor, (which you would be considered in this case), you will fill out form W9 and at the end of the year you will receive a 1099. This is completely normal and you have nothing to worry about. All it means is that if you make more than a certain amount (typically $600) in a year, you will receive a 1099 in the mail or electronically. The 1099 form basically means that they are reporting that amount to the IRS, and it also helps you file your tax return by showing you all the numbers you need on one form. Please remember that when you are paid as an independent contractor, no taxes are withheld on your behalf, so you may owe some tax on the money you make. It's best to set aside some of your income so you are prepared to pay it come tax time next year.\"", "topk_rank": 14 }, { "id": "178942", "score": 0.6681404113769531, "text": "If your business name is your name, you are automatically considered a sole-proprietorship and any income you generate and expenses you incur can be calculated on your personal tax return. You can use QuickTax Home & Business tax software to lead you through the steps; you don't even need an accountant. One drawback of a sole-proprietorship in your name is liability. You are personally responsible for the business because you are the business. If you get sued, you can lose everything. To limit that liability you can look into opening a corporation. If the corporation gets sued you are insulated from that; the corporation goes bankrupt, not you. A lawyer and an accountant will be required to give you solid advice on this direction.", "topk_rank": 15 }, { "id": "440506", "score": 0.668133020401001, "text": "I have researched this question extensively in previous years as we have notoriously high taxes in California, while neighboring a state that has zero corporate income tax and personal income tax. Many have attempted pull a fast one on the California taxation authorities, the Franchise Tax Board, by incorporating in Nevada or attempting to declare full-year residence in the Silver State. This is basically just asking for an audit, however. California religiously examines taxpayers with any evidence of having presence in California. If they deem you to be a resident in California, and they likely will based on the fact that you live in California (physical presence), you will be subject to taxation on your worldwide income. You could incorporate in Nevada or Bangladesh, and California will still levy its taxation on any business income (Single Member LLCs are disregarded as separate corporate entities, but still taxed at ordinary income rates on the personal income tax basis). To make things worse, if California examines your Single Member LLC and finds that it is doing business in California, based on the fact that its sole owner is based in California all year long, you could feasibly end up with additional penalties for having neglected to file your LLC in California (California LLCs are considered domestic, and only file in California unless they wish to do business in other states; Nevada LLCs are considered foreign to California, requiring the owner to file a domestic LLC organization in Nevada and then a foreign LLC organization in California, which still gets hit with the minimum $800 franchise fee because it is a foreign LLC doing business in California). Evading any filing responsibility in California is not advisable. FTB consistently researches LLCs, S-Corporations and the like to determine whether they've been organized out-of-state but still principally operated in California, thus having a tax nexus with California and the subsequent requirement to be filed in California and taxed by California. No one likes paying taxes, and no one wants to get hit with franchise fees, especially when one is starting a new venture and that minimum $800 assessment seems excessive (in other words, you could have a company that earns nothing, zero, zip, nada, and still has to pay the $800 minimum fee), but the consequences of shirking tax laws and filing requirements will make the franchise fee seem trivial in comparison. If you're committed to living in California and desire to organize an LLC or S-Corp, you must file with the state of California, either as a domestic corporation/LLC or foreign corporation/LLC doing business in California. The only alternatives are being a sole proprietor (unincorporated), or leaving the state of California altogether. Not what you wanted to hear I'm sure, but that's the law.", "topk_rank": 16 }, { "id": "185681", "score": 0.6678630709648132, "text": "Schedule E is the form you'll use. It lists nearly all deductions you can take for a rental. TurboTax Deluxe will handle it and it includes State Filing.", "topk_rank": 17 }, { "id": "184559", "score": 0.6678586006164551, "text": "I've done my taxes using turbotax for years and they were not simple, Schedule C (self-employed), rental properties, ESPP, stock options, you name it. It's a lot of work and occasionally i did find bugs in TurboTax. ESPP were the biggest pain surprisingly. The hardest part is to get all the paperwork together and you'd have to do it when you hire an accountant anyway. That said this year i am using an accountant as i incorporated and it's a whole new area for me that i don't have time to research. Also in case of an audit i'd rather be represented by a pro. I think the chance of getting audited is smaller when a CPA prepares your return.", "topk_rank": 18 }, { "id": "328127", "score": 0.6678147315979004, "text": "I just scanned in a single sheet summary of my last two years tax returns. It is something our CPA does for us. How would I post it? Don't worry, I marked out all the personal information. What is says is I paid over $50K in taxes in 2015. Last year we had one of our biggest contracts put on hold, so I only paid $20K. I won't have this years figures, because we don't submit them to our CPA until the end of the year. However, this year, we just bought out two other owners at $1.2M, which makes me a 33% owner. The contract is getting restarted (knock on wood), which all together means my personal tax liability is going to be well over $100K. My company is a commercial company, but we work with the government, and matter of fact some of the stuff we produce was designed and developed by the government (as is many of today's modern inventions - I think you would be surprised). So lets tackle it one at a time. Pick one of those things that commercial does better than government. P.s. Higher taxes doesn't mean higher for you, a lot of times it means higher for guys like me or way better than me (which I am perfectly fine with, and matter of fact would support). People who use infastructure more - like large corporations - should pay more for it...", "topk_rank": 19 } ]
41	IRA for work and my business	[ { "id": "176229", "score": 0.8086498975753784, "text": "Yes, you can have both. You'll need business income to contribute to a SEP IRA though." } ]	[ { "id": "151145", "score": 0.7613952159881592, "text": "You can't do what you would like to do, unless your business has another, unrelated investor or is willing to invest an equal amount of funds + .01 into a corporation which will employ you. You will then need to set up a self-directed IRA. Additionally, you will need a trustee to account for all the disbursements from your IRA.", "topk_rank": 0 }, { "id": "413348", "score": 0.7590905427932739, "text": "On re-reading the question, I see that you're self-employed, decent income, but only have an IRA. Since the crux of the question appears to be related to your wanting to put aside more money, I suggest you open a Solo 401(k) account. The current year limit is $17,000, and you can still have an IRA if you wish.", "topk_rank": 1 }, { "id": "248536", "score": 0.7577208280563354, "text": "According to the IRS, you can still put money in your IRA. Here (https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-IRA-Contribution-Limits) they say: Can I contribute to an IRA if I participate in a retirement plan at work? You can contribute to a traditional or Roth IRA whether or not you participate in another retirement plan through your employer or business. However, you might not be able to deduct all of your traditional IRA contributions if you or your spouse participates in another retirement plan at work. Roth IRA contributions might be limited if your income exceeds a certain level. In addition, in this link (https://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits), the IRS says: Retirement plan at work: Your deduction may be limited if you (or your spouse, if you are married) are covered by a retirement plan at work and your income exceeds certain levels. The word 'covered' should clarify that - you are not covered anymore in that year, you just got a contribution in that year which was triggered by work done in a previous year. You cannot legally be covered in a plan at an employer where you did not work in that year.", "topk_rank": 2 }, { "id": "515690", "score": 0.7567136287689209, "text": "I don't quite understand your thought process here. First, in a tax-advantaged retirement account you are NOT allowed to engage in a transaction with yourself. If you just want to run a business and be able to write off expenses, how is using the self-directed IRA relevant? You can either buy the condo using your tax-advantaged account and rent it out to regular tenants. Or you buy the condo yourself using your own money and then operate your business so you can deduct business expenses from doing so. 401k's allow you to take a loan out of it, so you can look into that as well.", "topk_rank": 3 }, { "id": "5778", "score": 0.751980185508728, "text": "IRA is an account. You can open as many as you want. What's limited is the contributions: you cannot deposit to the IRA (all of them combined) more than what you've earned during the year, or $5500 (for 2013), the lowest. There are also limits on how much you can deduct, depending on your income and availability of other retirement programs at your work. You can open as many IRAs as you want in your child's name, but if your child had only earned $500 this year - that's how much you can put in these accounts. Your wife and you share the earned income limit, so if your wife is not working, you can still contribute to the IRA in her name, based on your own earnings (i.e.: if you earned more than $11000 - you can contribute the maximum $5500 for each of you). The limits are for all the IRA combined, doesn't matter how many accounts you have, and how many of them are Roth.", "topk_rank": 4 }, { "id": "332113", "score": 0.7489540576934814, "text": "You are in the perfect window for making an IRA contribution. The IRS allows you to make IRA contributions for last year until tax day. So you know that for 2014 you didn't have access to a 401K at work. You want to avoid making a deductible IRA contribution for this year (2015) until you are sure that you wont have a 401K at work this year. Take your time and decide if the detectible IRA or the Roth works best for your situation. Having a IRA now will be good becasue you have many years for it to grow. Keep in mind that it is not unusual to have multiple retirement accounts: Current 401K; rolled over into a IRA; Roth IRA... Each has different rules, limits, and benefits. There is no reason to pick one way of investing for retirement becasue you never know if the next employer will have the type of plan you like. I am assuming that your spouse, if you are married, doesn't have access to a 401K; otherwise you would have to consider the applicable limits.", "topk_rank": 5 }, { "id": "465787", "score": 0.7478803396224976, "text": "Read the Forbes article titled IRA Adventures. While it's not the detailed regulations you certainly need, the article gives some great detail and caution. You may be able to do what you wish, but it must be structured to adhere to specific rules to avoid self dealing. Those rules would be known by the custodians who would help you set up the right structure, it's well buried within IRS regs, I'm sure. Last, in general, using IRA funds to invest in the non-traditional assets adds that other layer of risk, that the investment will be deemed non-allowed and/or self-dealing. So, even if you have the best business idea going, be sure you get proper council on this.", "topk_rank": 6 }, { "id": "532839", "score": 0.7471345067024231, "text": "OK, so first of all, employers don't set up IRAs. IRA stands for Individual Retirement Account. You can set up a personal IRA for yourself, but not for employees. If that is what you're after, then just set one up for yourself - no special rules there for self employment. As far as setting up a 401(k), I'd suggest checking with benefits management companies. If you're small, you probably don't have an HR department, so managing a 401(k) yourself would likely be overly burdensome. Outsourcing this to a company which handles HR for you (maybe running payroll, etc. also), would be the best option. Barring that, I'd try calling a large financial institution (Schwab, Fidelity, etc.) for clear guidance.", "topk_rank": 7 }, { "id": "277810", "score": 0.7440569996833801, "text": "A self-directed IRA could be a good solution for you and all IRAs are qualified IRAs the administrator must allow for alternative assets. However, if you're looking to do the ROBS (Roll Over Business Start-up) system, there are not very many administrators that can facilitate that. There is also a checkbook IRA (aka single member LLC) that more administrators are able to work with, but the rules are different from a ROBS plan. Check with your financial adviser, CPA, tax guru and ask which method would work best for what you're looking to accomplish.", "topk_rank": 8 }, { "id": "303416", "score": 0.7439180016517639, "text": "In general, Roth IRAs, are associated with the individual. Unlike 401(k)s for which the business holds the retirement account in the name of the individual. So, although the company may have helped you set up the Roth it is in your name and you can continue to contribute to it. Wikipedia has some helpful information here. It should be noted, however, that sometimes businesses set up special deals with retirement service companies or brokers that hold Roth IRAs so you should check with the particular company/broker that holds your Roth.", "topk_rank": 9 }, { "id": "352760", "score": 0.7417794466018677, "text": "There are two methods of doing this Pulling out the money and paying the penalty if any, and going on your way. Having the Roth IRA own the business, and being an employee. If you go with the second choice, you should read more about it on this question.", "topk_rank": 10 }, { "id": "447698", "score": 0.7406068444252014, "text": "Your Simple IRA account is yours and yours alone, not your employer's. The only thing your employer can do with it is putting more money into it. The best option is to simple let it sit for the two years, and then either:", "topk_rank": 11 }, { "id": "222082", "score": 0.7401896119117737, "text": "There are a few things to consider. The answers others gave here are correct, but I'll offer some reasons you may not want to roll to an IRA:", "topk_rank": 12 }, { "id": "520924", "score": 0.7387731075286865, "text": "I would definitely recommend contributing to an IRA. You don't know for sure you'll get hired full-time and be eligible for the 401(k) with match, so you should save for retirement on your own. I would recommend Roth over Traditional IRA in your situation, because let's say you do get hired full-time. Since the company offers a retirement plan, your 2015 Traditional IRA contribution would no longer be deductible at your income level (assuming you're single), and non-deductible Traditional IRAs aren't a very good deal (see here and here). If there's a decent chance you would get hired, this factor would override the pre-tax versus post-tax debate for me. At your income level you could go either way on that anyway. A Solo 401(k) would be worth looking into if you wanted to increase your contribution limit beyond what IRAs offer, but given that it sounds like you're just starting out saving for retirement, and you may be eligible for a 401(k) soon, it's probably overkill at this point.", "topk_rank": 13 }, { "id": "165159", "score": 0.7376377582550049, "text": "Yes for sure. It would be redundant. I have three of them, so what. Its just more money in retirement. I would prefer a ROTH IRA in your tax bracket and you next employer may not offer that. And yes there are tax breaks either putting money in to a IRA or if you go the Roth route, on the way out. So if you put money in a Roth now you will have some money at your tax rate in 40 years from now. And if you put money in a traditional IRA when you are an employee you will save on the tax rate you are at then. So you are hedging you bets on tax rates by paying them in two different decade. Personally we are probably all on a tax holiday right now and I would be that taxes will be higher in the future as they are historically pretty low right now.", "topk_rank": 14 }, { "id": "447482", "score": 0.7361590266227722, "text": "if you have a work-sponsored retirement plan A 401k plan counts as a work-sponsored retirement plan. If you are a highly compensated employee (this is $115,000 for 2012), even your 401k contributions are limited. Given that, is there any difference at all between having a traditional IRA and a normal, taxable (non-retirement) investment account? You should consider a Roth IRA if you are making too much for a traditional IRA. When you make even more, then you can't contribute to a Roth, but can only contribute post-tax money to a traditional IRA. Use Form 8606 to keep track of non-deductable contributions over the years. Publication 590 is the official IRS explanation of what is deductable or not.", "topk_rank": 15 }, { "id": "89811", "score": 0.735167384147644, "text": "Since the I in IRA is individual. The retirement money from your accounts will end up in one or more IRAs. The retirement money from your spouses retirement accounts will end up in one or more IRAs owned by your spouse. How many IRA each will need depends on if the retirement fund contains pre-tax, post-tax, Roth and company match; and if you want to do any conversions.", "topk_rank": 16 }, { "id": "472882", "score": 0.7349397540092468, "text": "\"Why not do both? The object is to \"\"squirrel\"\" away as much money as possible. The 401k has the advantage of being a payroll deduction. The IRA, if you can save the money, gives you more control. When you change jobs, you can \"\"roll over\"\" your first 401k into either your IRA or your second job's 401k. Note: There are legal limits on total contributions to IRA and 401ks. I've forgotten what they are, so find out for yourself. There may also be income limits, but ones that don't apply to most 23-year olds, unless they own their own company or work for say, Goldman Sachs.\"", "topk_rank": 17 }, { "id": "110114", "score": 0.7345032095909119, "text": "All data for a single adult in tax year 2010. Roth IRA 401K Roth 401k Traditional IRA and your employer offers a 401k Traditional IRA and your employer does NOT offer a 401k So, here are your options. If you have a 401k at work, you could max that out. If you make close to $120K, you could reduce your AGI enough to contribute to a Roth IRA. If you do not have a 401k at work, you could contribute to a Traditional IRA and deduct the $5K from your AGI similar to how a 401k works. Other than that, I think you are looking at investing outside of a retirement plan which means more flexibility, but no tax advantage.", "topk_rank": 18 }, { "id": "75766", "score": 0.7344204783439636, "text": "They are mutually exclusive. Provided you meet the income limits you can contribute to both. Employer match do not count toward the 18K. On the other hand traditional IRA and Roth IRA are inclusive. So if single and making having a MAGI under 118K, you could do the 18K of your own money into a 401(k), and $5,500 into a Roth. You can put in $23,500 of your own money with the employer match on top of that.", "topk_rank": 19 } ]
43	Advice on money transfer business	[ { "id": "76662", "score": 0.7445607781410217, "text": "\"As soon as I see the word \"\"friends\"\" along with money transfer I think scam. But ignoring that red flag.... You will have American companies reporting to the IRS that you are a Canadian Vendor they have hired. Then you are transferring money to people in Bangladesh. Assuming also that you fill out all the regulatory paperwork to establish this Money transfer business you may still face annual reporting requirements to 3 national taxing authorities. In the United states there are situations where the US Government hires a large company to complete a project. As part of that contract they require the large company to hire small businesses to complete some of the tasks. In a situation where the large company is imply serving as a conduit for the money between the government and the sub-contractor; and the large company has no other responsibilities; the usual fee for providing that function is 8% of the funds. This pays for their expenses for their accounting functions plus profit and the taxes that will trigger. Yet you said \"\"At the end of the day, I will not earn much, but the transactions will just burden my tax returns.\"\" The 8 percent fee doesn't include doesn't include having to file paperwork with 3 nations. Adding this to all the other risks associated with being an international bank, plus the legal costs of making sure you are following all the regulations...No thanks.\"" } ]	[ { "id": "124687", "score": 0.707086443901062, "text": "I would stay away form these. I have had clients gave real problems when it comes to withdrawing the money...not only do you not have control of the investments themselves, but you also do not have a lot of control when it comes time to withdraw the money. I have also heard from one client that the fees can be outrageous. There was a securities commission investigation a few years back because a number of salespeople were over-promising. My suggestion would be to find someone independent, with access to a number of different products, who can advise you.", "topk_rank": 0 }, { "id": "45094", "score": 0.7070618271827698, "text": "The typical scam is that they overpay you - 'accidentially', or for some obscure reason they claim, and they ask you to wire the extra money either back or to someone else. Because you wire it, that money is gone for sure. Then they undo the original transaction (or it turns out it was fake anyway), and you end up with a loss. Maybe he claims that he wants to buy some more stuff, and the fees are high, so he sends you all the payments in one amount, and you pay the other sellers from it, something like that. There are honest nigerians though, actually most of them. Either way, the real problem is that the original payment is fake. Whichever way it comes to you, you need to make sure that it cannot be reversed or declared invalid after you think you have it. Wire transfer is the only way I know that is not reversible. Bank transfers are reversible; don't think you have it just because it arrives in your bank account. Talk to your bank about what all can happen. If you make the deal, when you send the bike, think about insuring it (and make him pay for that too). That way, you are out of any loss risk.", "topk_rank": 1 }, { "id": "217216", "score": 0.7069858312606812, "text": "You could use: SWIFT transfer : ask your counterparty for his bank SWIFT code and beneficiary account numbers; you can do a SWIFT transfer to most countries from your Indian bank). You will need to fill a form where they ask you what you're transferring the money for, etc. Most Indian banks provide this facility. Western Union: I'm not sure if WU is in China, but they are very simple to use. Paypal: They charge heavy fees, but may be the fastest way to get your money across.", "topk_rank": 2 }, { "id": "339282", "score": 0.7067689299583435, "text": "A quick search shows that https://www.westernunion.com/de/en/send-money/start.html says they will transfer €5,000 for a cost of €2.90. Assuming you can do a transfer every week, that would be six weeks at a cost of €17.40. €17.40 is slightly less than €1,500.00. I'm sure there are more ways.", "topk_rank": 3 }, { "id": "165710", "score": 0.7067147493362427, "text": "Crazy idea but... on the offchance your friend is near one of Europe's few bitcoin ATM's ... buy some bitcoin, transfer them to your friend, and they can presumably cash them in at the ATM. I've no idea how much bid-offer spreads will eat into the transfer or whether you can tolerate bitcoin volatility though. Unless there are money laundering regulations that mean anyone wanting to use one of these ATM's has to agree some ID checks that your friend can't satisfy (I don't actually know much about bitcoin at all). If not a bitcoin ATM, maybe there are other ways your friend can convert bitcoin value to something more useful (bitcoin to mobile-phone top-ups seem to be possible, for example).", "topk_rank": 4 }, { "id": "542466", "score": 0.7066987752914429, "text": "\"This seems almost overkill, but if you want to... I suppose one thing you could do is create a separate money in transit account, similar to Account Payable and Account Receivable. In your bookkeeping, transfer the money from the source account to the holding account on the date that the source bank withdraws it, and then transfer the money to the destination account on the date that the target bank deposits it. This both makes it clear that there is money going between places, and ensures that the daily balance on each \"\"physical\"\" account is accurate. For cash withdrawals and deposits, I'd just use the date when you make the withdrawal, since that is the day from which the money is available in the new location rather than the old one. Note: I don't know if this is the \"\"proper\"\" way to do it in a random jurisdiction, but I doubt being this explicit can get you into trouble.\"", "topk_rank": 5 }, { "id": "320405", "score": 0.7061869502067566, "text": "I can only imagine the regulatory difficulty you're going through, and for that I empathize. First, bankers everywhere mostly do not know if a bank policy is due to regulation or internal rules. Other banks may be more flexible, but only the most reputable should be used. Re Paypal, they first deposit 1 USD and then withdraw it, but things may be different in Cyprus. Also, Paypal now has debit cards, so if Paypal is permitted to issue cards in Russia then it could presumably be used in Cyprus. Again, local regulation notwithstanding. Paypal now has phone support at the very back of their site, so I suggest a call to them. In countries that permit, Western Union can be used to wire money into an account from cash. The Bitcoin route should be used as a last resort. You could wake up tomorrow losting 25% easy. The regulations are a distant second compared to this problem. With all of the above methods, there will be varying delays from days to weeks.", "topk_rank": 6 }, { "id": "59411", "score": 0.7060540914535522, "text": "Check with stock brokers. Some of them will offer ILS->USD conversion at a very beneficial rate (very close to the official), without any commission, and flat-priced wire transfers. For large amounts this is perfect. I know for a fact that Gaon Trade used to do that ($15 for a wire transfer of any amount), but they are now defunct... Check with Meitav (their successor) and others if they still do these things. If you're talking about relatively small amounts (up to several thousands $$$) - you may be better off withdrawing cash or using your credit card in the US. For mid range (up to $50K give or take, depending on your shopping and bargaining skills) banks may be cheaper. A quick note about what jamesqf has mentioned in his answer... You probably don't want to tell your banker that you're moving to the US. Some people reported banks freezing their accounts and demanding US tax info to unfreeze, something that you're not required to provide according to the Israeli law. So just don't tell them. In the US you'll need to report your Israeli bank/trading/pension/educational/savings/insurance accounts on FBAR and FATCA forms when you're doing your taxes.", "topk_rank": 7 }, { "id": "475896", "score": 0.7060527205467224, "text": "You need a lawyer and a tax accountant for a sale like this. They will be able to tell you if the proceeds are taxed as income (most likely) or capital gains and will help you structure the deal. How you spend the proceeds will not make a difference, although if it's a large amount and you plan to donate some to charity, you may be able to save on your total tax liability by creating a donor advised fund. Keep in mind the broker is mostly interested in his commission and not about making the best deal for you. Get an attorney with experience in business sales.", "topk_rank": 8 }, { "id": "282028", "score": 0.7054733037948608, "text": "\"The \"\"hidden\"\" fees in any transfer are usually: Foreign exchange transfer services are usually the cheapest option for sending money abroad when a conversion is involved. They tend to offer ways to get the money to or from them cheaply or for free and they typically offer low or no fees plus much better exchange rates than the alternatives. My preferred foreign exchange service is XE Trade. It looks like they support CAD to ZAR transfers so you might check them out. In my experience, they have not set a minimum on the amount I send although it does impact the exchange rate they will offer. The rate is still better than other alternatives available to me though. Note that for large enough transfers, the exchange rate difference will dominate all other costs. For example, if you transfer $10,000 and you pay $100 for the transfer plus $50 in wire fees ($150 in fees) but get a 2% better exchange rate than a \"\"free\"\" service, you would save $50 by choosing the non free service.\"", "topk_rank": 9 }, { "id": "1907", "score": 0.7053524851799011, "text": "For this scheme to work, you would require an investment with no chance of a loss. Money market accounts and short-term t-bills are about your only options. The other thing is that you will need to be very careful to never miss the payment date. One month's late charges will probably wipe out a few months' profit. The only other caveat, which I'm sure you've considered, is that having your credit maxed out will hurt your credit score.", "topk_rank": 10 }, { "id": "515156", "score": 0.7050449252128601, "text": "There are peer to peer services these days which work by trying to match someone who wants to convert currency X to currency Y with other people who want to convert Y to X. Obviously this works better with major currencies. They tend to give you the midmarket interbank rate banks use to trade with each less their commission of 1-2%. Banks can charge up to 5% and use different rates for buying and selling. Transfers may take a day or two, although you may be able to do it faster if you pay extra. Transferwise, CurrencyFair and MidPoint are examples of such services though there are many others. Here's a link to a newspaper article with more details.", "topk_rank": 11 }, { "id": "151412", "score": 0.7048653364181519, "text": "I think there are two options: You invest for very close friends, who trust you completely. In this case, I don't see why you need legal formalities. Just take their money, invest, and return the profits (or losses) to them. They'll know that you invest it as well as you can (rather than spend it on your dream vacation), simply because they trust you. And in case they never get to see most of their money back - they'll know that you've tried your best, and won't be upset with you. You invest for people who trust you, but not 100%. In this case, don't take their money. If you lose (and in Forex, you most likely will) then you'll lose not only money, but also your friends. Even if the legal documents would prove that you were honset, and that they knew what they're getting into, they'll still be mad at you.", "topk_rank": 12 }, { "id": "236540", "score": 0.7048361897468567, "text": "I would recommend against loans from family members. But if you decide to go down that path take care of the basics: This is a business decision so treat it like one. I would add that the situation you describe sounds extremely generous to your family member. I'd look at standard loan agreements (ie. in the marketplace) and model your situation more on them - if you do this, even with you paying a premium, you'd never come up with something as generous as what you have described.", "topk_rank": 13 }, { "id": "389848", "score": 0.7046301364898682, "text": "If possible, I would open a Canadian bank account with a bank such as TD Canada Trust. You can then have your payments wired into that account without incurring costs on receipt. They also allow access to their US ATM network via TD Bank without additional costs. So you could use the American Affiliate to pull the funds out via a US teller while only bearing the cost of currency conversion. If that option can't work then the best route would be to choose a US bank account that doesn't charge for incoming wire transfers and request that the money be wired to your account (you'll still get charged the conversion rate when the wire is in CAD and the account is in USD).", "topk_rank": 14 }, { "id": "286866", "score": 0.7042018175125122, "text": "There is nothing to worry about. There is absolutely nothing unusual about moving money between your own accounts, even if they are in separate financial institutions. I moved $200,000 when I was getting ready to by my house; I have moved similar sized chunks for other purposes. A large transfer may get some attention to make sure you aren't doing anything illegal with the money and aren't being scammed... but if the transaction is legitimate, that attention is harmless.", "topk_rank": 15 }, { "id": "38438", "score": 0.7041320204734802, "text": "Keep it simple, there is a good comparison site where you plug in how much money you want to send, and it tells you what all the major providers will end up giving you in Euros on the other end. Lots of the 'free' services give you a shit exchange rate. GBP->EUR is very competitive so when you go with non-banks you can pay very little (down to 0.1% in exchange rate differences). https://www.fxcompared.com/ is one such site. I plugged in sending 10,000 GBP to Spain, and TorFX came out best with you (at this moment in time) receiving 12,547 euros.", "topk_rank": 16 }, { "id": "549684", "score": 0.7041000127792358, "text": "Three ideas: PayPal is probably the best/cheapest way to transfer small/medium amounts of money overseas.", "topk_rank": 17 }, { "id": "217046", "score": 0.7037662267684937, "text": "\"Simplest is probably international bank transfer. If you don't like those, I had a friend who would buy travelers cheques, endorse them and write in large \"\"Only pay to the order of ****\"\" then send them by mail. Very difficult for anyone other than the recipient to cash, very low fees, and there next day if you send it overnight mail.\"", "topk_rank": 18 }, { "id": "273209", "score": 0.7037659883499146, "text": "There is a fourth option - pay those taxes. Depending on the amounts, it might be the easiest way - if you make 34.49 in interest, and pay 6 $ in taxes on it, and be done, that might not be worth any other effort. If the expected taxable amount is significant, moving (most of it) to index funds or other simply switching existing investments to ‘reinvest’ instead of ‘pay out in cash’ would be the best approach. Again, some smaller amounts in savings or checkings accounts are probably not worth any effort. Transferring the money to the US doesn’t save you taxes, as any interest would still be taxable. You have a risk to lose on the conversion back and forth (and a potential to gain - the exchange rate could go either way!), so if you are sure you go back, it’s not a good idea to move the money.", "topk_rank": 19 } ]
45	How to transfer personal auto lease to business auto lease?	[ { "id": "284610", "score": 0.7228511571884155, "text": "I'd approach the lender that you're getting the lease from, but be prepared for them either saying 'no' to putting the lease into the name of an LLC without any proven track record (because it hasn't been around for a while) or require you to sign a personal guarantee, which partially defeats the purpose of putting the car lease into the LLC. I'd also talk to an accountant to see if you can't just charge the business the mileage on your vehicle as that might be the simplest solution, especially if the lender gets stroppy. Of course the mileage rate might not cover the expense for the lease as that one is designed to cover the steepest part of the depreciation curve. Does your LLC generate the revenue needed so it can take on the lease in the first place? If it's a new business you might not need or want the drain on your finances that a lease can be." }, { "id": "261220", "score": 0.7020232081413269, "text": "See what the contract says about transfers or subleases. A lease is a credit agreement, so the lessor may not allow transfers. You probably ought to talk to an accountant about this. You can probably recognize most of the costs associated with the car without re-financing it in another lease." } ]	[ { "id": "47015", "score": 0.6754627823829651, "text": "Look at the basic cost of the lease. Option 1: keep the car for three years. Pay for repairs during that time then sell it for $7,000. Option 2: Sell the current car for $10,000. Lease a new car for three years. Assume no need for repairs during those three years. At the end of the three years return the car in return for $0. Cost of option 1 is $3000 plus repairs. Cost of Option 2 is 36 months x monthly lease cost. The first $83 of the monthly lease cost is to cover the $3000 fixed cost of option 1. The rest of the monthly lease cost is to cover the cost of repairs. Also remember that some leases have a initial down payment due at signing, and penalties for condition, and excess mileage. The lease company may also require a higher level of insurance for the lease to cover their investment if you have an accident. Plus If you fall in love with a different car two year from now, or your needs change you are locked in until the end of the lease period.", "topk_rank": 0 }, { "id": "154931", "score": 0.6739634275436401, "text": "The best way to do this is to pay for the entire car, including gas, insurance, and repairs, from S-corp funds, then meticulously track how many miles are used for personal and how many miles for business. If you pay with S-corp funds, you will claim the personal miles as a taxable benefit from the S-corp on your personal return. The S-corp can then claim all the expenses and depreciation on the vehicle, reducing the S-corp's tax liability.", "topk_rank": 1 }, { "id": "311748", "score": 0.6682443618774414, "text": "Here are the reasons I did not lease my current car. When you lease, you're tied in at a monthly payment for 48 months or more. The only way to get out of that payment is to transfer the lease or buy out the lease. If you buy/finance, you can always sell the car or trade it in to get out of the payments. Or you can pay down more of the vehicle to lower the payments. Most leases calculate the cost of leasing based on the 'residual value' of the vehicle. Often these values are far lower than the actual worth of the vehicle if you owned it for those months and sold it yourself. So when you do the math, the lease costs you more -especially with today's low financing rates.", "topk_rank": 2 }, { "id": "70456", "score": 0.665333092212677, "text": "\"The transfer is easy. Usually you just sign over the title to the new owner, and you're set. Blue book price is a fantasy designed to get you in a car dealership to trade in your car. You won't get \"\"blue book\"\" pricing. I would use NADA \"\"Yellow Book\"\" or Edmunds TMV pricing as a guide. A dealer won't pay you a good price, but will take the car off your hands quickly. Selling a car privately can be a real pain if you don't have the personality for it. You'll get more money and more hassle. Figure out where people do private party sales in your area. In my area, there's an autotrader magazine that dominates the market. Craigslist is going to attract the types of people who frequent craiglist, which is not always a good thing.\"", "topk_rank": 3 }, { "id": "72722", "score": 0.6565847396850586, "text": "\"Without the specifics of the contract, as well as the specifics of the country/state/city you're moving to, it's hard to say what's legal. But this also isn't law.se, so I'll answer this from the point of view of personal finance, and what you can/should do as next steps. Whenever paying an application fee or a deposit, you need to ensure that you have in writing exactly what you're applying for or putting a deposit in for. Whether this is an apartment, a car, or a loan, before any money changes hands, you need to get in writing exactly what you're putting that money to. So for a car, you'd want to have the complete specifications - make, model, year, color, extra packages, and any relevant loan information if applicable. You wouldn't just hand a dealer $2000 for \"\"a Toyota Camry\"\", you'd make sure it was specified which one, in writing, as well as the total you're expecting to pay. Same for an apartment: you should have, in writing (email is fine) the specific unit you are putting a deposit for, and the specific rate you'll be paying, and the length of time the lease is for. This is to avoid a common tactic: bait and switch, which is what it looks like you've run into. A company puts forth a \"\"nice\"\" model, everything looks good, you get far enough in that it seems like you're locked in - and then it turns out you're really getting a less nice model that's not as ideal as whatever you signed up for. Now if you want to get what you originally signed up for you need to pay extra - presumably \"\"something was wrong in the original ad\"\", or something like that. And all you can hear in the background is Darth Vader... \"\"I am altering the deal. Pray I don't alter it any further.\"\" So; what do you do when you've been bait-and-switched? The best thing to do is typically to walk away. Try to get your application fee back; you may or may not be able to, but it's worth a shot, and even if you cannot, walk away anyway. Someone who is going to bait-and-switch on you is probably not going to be a good landlord; my guess is that rent is going to keep going up beyond the level of the market, and you probably can kiss your security deposit goodbye. Second, if walking away isn't practical for whatever reason, you can find out what the local laws are. Some locations (though very few, sadly) require advertised prices to be accurate; particularly the fact that they re-advertised the unit again for the same rate suggests they are falling afoul of that. You can ask around, search the internet, or best yet talk to a lawyer who specializes in this sort of thing; some of them will be willing to at least answer a few questions for free (hoping to score your business for an easy, profitable lawsuit). Be aware that it's not exactly a good situation to be in, to be suing your landlord; second only to suing your employer, in my opinion, in terms of bad things to do while hoping to continue the relationship. Find an alternative as soon as you can if you go this route. In the future, pay a lot of attention to detail when making application fees. Often the application fee is needed before you get into too much detail - but pick a location that has reasonable application fees, and no extras. For example, in my area, it's typical to pay a $25 application fee, nonrefundable, to do the credit check and background check, and a refundable $100-$200 deposit to hold the unit while doing that; a place that asks for a non-refundable deposit is somewhere I'd simply not apply at all.\"", "topk_rank": 4 }, { "id": "3222", "score": 0.6545053124427795, "text": "This depends in part on where you are. Sometimes signing over the title is all it takes to transfer ownership, sometimes more is involved. Contact your local department of motor vehicles (or equivalent) and ask them about how to transfer ownership, about registration (probably NOT transferrable), about license plates (you may need new ones), and about when the next inspection will be due (here, I think they gave me a grace period of one month to complete that even though it had been inspected for the previous owner two months earlier).", "topk_rank": 5 }, { "id": "58599", "score": 0.6502432823181152, "text": "\"Uh, you want to lease a car through a dealer? That is the worst possible way to obtain a car. Dealers love leases because it allows them to sell a car for an unnegotiated price and to hide additional fees. It's the most profitable kind of sale for them. The best option would be to buy a used car off of Craigslist or eBay, then sell it again the same way when you leave. If you sell the car for what you paid, then you get the car for a year for free. If you are determined to go through with the expensive, risky and annoying plan of leasing a car, then you should use a leasing agent. I recommend reading some car buying guides before going out into the wilderness with the tigers and bears. Comment on Leasing Tricks Don't get tricked by the \"\"interest rate\"\" game. The whole interest thing is just a distraction to trick you into think you are getting some kind of reasonable deal. The leasing company makes most of their money from fees. For example, if you get into an accident it is a big payday for them. The average person thinks they will never get into an accident, but the reality is that most people get into an accident sooner or later. They also collect big penalties for \"\"maintenance failures\"\". Forget to change the oil? BOOM! money. Forget to comply with manufacture recall? BOOM! more money. Forget to do the annual service? BOOM! more money. Scratch the car? BOOM! more money. The original car mats are missing? BOOM! you just paid $400 for a set of mats that cost the leasing company $25 bucks. The leasing company is counting on the fact that 99% of people will not maintain the car correctly or will damage it in some way. They also usually have all kinds of other bogus fees, so-called \"\"walk-away fees\"\", \"\"disposition fees\"\", \"\"initiation fees\"\". Whatever they think they can get away with. The whole system is calculated to screw you.\"", "topk_rank": 6 }, { "id": "201122", "score": 0.649505078792572, "text": "Yes, but then either of you will need the other's permission to sell the car. I strongly recommend you get an agreement on that point, in writing, and possibly reviewed by a lawyer, before entering into this kind of relationship. (See past discussions of car titles and loan cosigners for some examples of how and why this can go wrong.) When doung business with friends, treating it as a serious business transaction is the best way to avoid ruining the friendship.", "topk_rank": 7 }, { "id": "465176", "score": 0.6494384407997131, "text": "The other person has to decide that they want to be wholly responsible for the loan, and they have to be able to qualify for the loan. They are in essence purchasing the car from you with the sale price being the remaining balance of the loan. You will then use the processed from the new loan to pay the old loan off completely. They will then take the bill of sale to the state DMV/MVA to register the car in their name. You should have them start with their bank for a new car loan.", "topk_rank": 8 }, { "id": "339965", "score": 0.6427282691001892, "text": "Besides the ex-MIL not coming up with the monthly payments, and the ex-wife destroying the car there are other problems. A lease generally limits you you a specific number of miles over the term of the lease. You may be limited to 1,000 miles a month for a total of 36,000 over the 3 year time of the lease. Your ex-wife could drive all 36K miles in her 24 months. Which means every mile your son drives will be at a penalty rate. Driving 1000 mile a month at 15 cents a mile is $150 a month in penalties, plus the original monthly cost of the lease. You need to understand if the lease contract will allow this sort of transaction. You will need to name the principal drivers. They will require specific levels of insurance. If you don't name your ex-wife on the policy, and she is in an accident, the damages might not be covered. The leasing company could also pursue you for fraud.", "topk_rank": 9 }, { "id": "215225", "score": 0.6421414613723755, "text": "Trade-in values are generally below what you can get in a private sale. To directly answer your question, you should sell the crossover yourself and use the balance to purchase your new vehicle. I would encourage you to use the $9k to finance directly without a lease, especially if you are planning on financing after the lease term. The lease will not save you money over the time you drive the vehicle in this case, and worse, will likely expose you to risk of having to pay additional fees if you break certain terms in the lease (mileage, wear and tear, etc) Best option mathematically is to use the $9k to purchase a vehicle for cash. This provides the lowest total cost of ownership. Even if you are afraid of purchasing a lemon, leasing a vehicle is awfully expensive insurance against that possibility. You would have to rack up some significant repairs to justify the cost of the lease vs cash over the term of operating the vehicle.", "topk_rank": 10 }, { "id": "205742", "score": 0.6414279341697693, "text": "You need to look at the numbers when you're ready to transact. What your crossover is worth now, what the truck will lease for then, what financing deals may or may not be available will all change. I'm not sure why you've already decided you will lease the truck, perhaps you're planning to take advantage of some kind of business write off. I would personally never put anything down on a lease, though I have argued with people on here about that particular decision. The reality is you need to look at the numbers. Some banks will adjust the interest you pay on your lease to account for your down payment, some don't. Consider a $9,000 lease, $250 per month for 36 months. Consider you pay $1,000 up front as a down payment. Example 1: $1,000 lowers the amount due on the lease to $8,000 lowering your monthly payment to $222.22 from $250, the downpayment has accomplished nothing. Over the 36 months you will have still paid the same $9,000. Example 2: $1,000 up front changes the amount owed and other fees generally applicable to a lease (gap insurance etc) and your payment drops to $215, your total over the lease is now $8,740 ($1,000 down and $7,740 in payments). You need to look at the numbers. In general if you know you will be purchasing the truck at the end of the lease it's more financially advantageous to just purchase it from the start.", "topk_rank": 11 }, { "id": "202630", "score": 0.6413207650184631, "text": "You cannot do a like-kind (Sec. 1031) exchange for personal property, only for business/investment property. Since you said that you traded in your personal car - no like-kind exchange is possible. Also, since the new car doesn't belong to you - you didn't actually perform any exchange. You sold your old car, but you didn't buy a new one. If Turbo-Tax suggests you to fill the exchange form - you must have entered something wrong to make it think there was an exchange. Check your entries again, specifically - check if you entered that you purchased a new car instead of the old one, since you didn't. See an example of where to start looking here.", "topk_rank": 12 }, { "id": "528568", "score": 0.6407519578933716, "text": "Just tell the buyer that there is a lien and explain the situation. Give them the car with a bill of sale after they buy the car from you. They can get a temporary tag at least in the State of Florida during this period of time. Take the buyer's money and deposit the check. Pay off your loan. Ask your bank to expedite the electronic title by paying a fee. I did this in March 2012 with no hassle at all. I was the seller. Some buyers may balk at this idea so just keep this in mind.", "topk_rank": 13 }, { "id": "34722", "score": 0.6403568983078003, "text": "\"This will probably require asking the SO to sign a quitclaim and/or to \"\"sell\"\" him her share of the vehicle's ownership and getting it re-titled in his own name alone, which is the question you actually asked. To cancel the cosigner arrangement, he has to pay off the loan. If he can't or doesn't want to do that in cash, he'd have to qualify for a new loan to refinasnce in his name only, or get someone else (such as yourself) to co-sign. Alternatively, he might sell the car (or something else) to pay what he still owes on it. As noted in other answers, this kind of mess is why you shouldn't get into either cosigning or joint ownership without a written agreement spelling out exactly what happens should one of the parties wish to end this arrangement. Doing business with friends is still doing business.\"", "topk_rank": 14 }, { "id": "488258", "score": 0.6399720311164856, "text": "A Lease is an entirely different way of getting a car. In two situations it makes sense, in all other scenarios it generally doesn't make sense to lease. In the case of always wanting a new car every 2 or 3 years it can make sense to lease. Of course if you drive more the allowed miles you will pay extra at the end of the lease. If you can take the monthly lease as a business expense leasing makes sense. Otherwise you want to pay cash, or get financing. Does zero percent make sense? Sometimes. The only way to make sense of the numbers is to start with your bank, have them approve of the loan first. Then armed with the maximum loan amount they will give you and the rate and the length of the loan, then visit the dealer. You have to run the numbers for your situation. It depends on your income, your other expenses, your credit score, your bank, what deal the dealership is running, how much you have for a down payment. Here is an example. For a recent loan situation I saw: 36 months, 1.49% rate, 20K loan, total interest paid: ~$466. Armed with that information can the person get a better deal at the dealership? There was only one way to find out. In that case the credit union was better. The rebate was larger than the interest paid.", "topk_rank": 15 }, { "id": "312090", "score": 0.6398442387580872, "text": "You could have the buyer go to the bank with you so that he can get evidence that the loan will be paid in full and that the lien will be lifted. The bank won't sign over the title (and lift the lien) until the loan is paid back in full. DMV.org has a pretty good section about this. (Note: not affiliated with the actual DMV) Selling to a Private Party Though more effort will be required on your part, selling a car with a lien privately could net you a higher profit. Here are a few things you'll need to consider to make the process easier: Include the details of the lien in your listing. You'll list an advertisement for your car just as you would any other vehicle, with the addition of the lien information that buyers will need so as to avoid confusion. Sell in the location of the lienholder, if possible. If the bank or financial institution holding the lien is located in the area you're trying to sell, this will make the transaction much easier. Once you make an agreement with the buyer, you can go directly to the lender to pay off the existing lien. Ownership can then be transferred in person from the financial institution to the buyer. Consider an escrow service. If the financial institution isn't in your area, an escrow service can help to ensure a secure transaction. An escrow service will assume responsibility for receiving payments from the buyer and will hold the title until the purchase is complete. Advantages of an escrow service include: Payoff services, which will do most of the work with the financing institution for you. Title transfer services, which can help to ensure a safe and legitimate transaction and provide the necessary paperwork once the sale is complete.", "topk_rank": 16 }, { "id": "504432", "score": 0.6394304037094116, "text": "\"I strongly discourage leasing (or loans, but at least you own the car at the end of it) in any situation. it's just a bad deal, but that doesn't answer your question. Most new cars are \"\"loss leaders\"\" for dealerships. It's too easy to know what their costs are these days, so they make most of their money though financing. They might make a less than $500 on the sale of a new car, but if it's financed though them then they might get $2,000 - $4,000 commission/sale on the financing contract. Yes, it is possible and entirely likely that the advertised rate will only go to the best qualified lessees (possibly with a credit score about 750 or 800 or so other high number, for example). If the lessee meets the requirements then they won't deny you, they really want your business, but it is more likely to start the process and do all the paperwork for them to come back and say, \"\"Well, you don't qualify for the $99/month leasing program, but we can offer you the $199/month lease.\"\" (since that's the price you're giving from other dealerships). From there you just need to negotiate again. Note: Make sure you always do your research and negotiate the price of the car before talking about financing.\"", "topk_rank": 17 }, { "id": "74822", "score": 0.6391778588294983, "text": "Get rid of the lease and buy a used car. A good buy is an Audi because they are popular, high-quality cars. A 2007 Audi A4 costs about $7000. You will save a lot of money by dumping the lease and owning. Go for quality. Stay away from fad cars and SUVs which are overpriced for their value. Full sized sedans are the safest cars. The maintenance on a high-quality old car is way cheaper than the costs of a newer car. Sell the overseas property. It is a strong real estate market now, good time to sell. It is never good to have property far away from where you are. You need to have a timeline to plan investments. Are you going to medical school in one year, three years, five years? You need to make a plan. Every investment is a BUY and a SELL and you should plan for both. If your business is software, look for a revenue-generating asset in that area. An example of a revenue-generating asset is a license. For example, some software like ANSYS has license costs in the region of $30,000 annually. If you broker the license, or buy and re-sell the license you can make a good profit. This is just one example. Use your expertise to find the right vehicle. Make sure it is a REVENUE-GENERATING ASSET.", "topk_rank": 18 }, { "id": "233836", "score": 0.6390960216522217, "text": "Contact the lien holder (the bank) and they'll have a procedure for you. Usually, you complete the transaction at the bank after agreeing on the purchase price: you will cut a check to the bank to pay off the loan, and then write a second check to the seller for whatever extra amount should go to him. The bank will handle the paperwork for transferring the title of the car to your name. Obviously, under no circumstances should you give all the money to the seller in the hopes that he pays off the loan. You need to follow the lender's procedures because they hold the title to the car and must be the ones to transfer it to you. Banks do this type of transaction all the time. Just call them and ask about how to proceed.", "topk_rank": 19 } ]
46	Tutoring Business Payroll Management	[ { "id": "91325", "score": 0.7031567096710205, "text": "\"This is going to depend on the tax jurisdiction and I have no knowledge of the rules in Illinois. But I'd like to give you some direction about how to think about this. The biggest problem that you might hit is that if you collect a single check and then distribute to the tutors, you may be considered their employer. As an employer, you would be responsible for things like This is not meant as an exhaustive list. Even if not an employer, you are still paying them. You would be responsible for issuing 1099 forms to anyone who goes above $600 for the year (source). You would need to file for a taxpayer identification number for your organization, as it is acting as a business. You need to give this number to the school so that they can issue the correct form to you. You might have to register a \"\"Doing Business As\"\" name. It's conceivable that you could get away with having the school write the check to you as an individual. But if you do that, it will show up as income on your taxes and you will have to deduct payments to the other tutors. If the organization already has a separate tax identity, then you could use that. Note that the organization will be responsible for paying income tax. It should be able to deduct payments to the tutors as well as marketing expenses, etc. If the school will go for it, consider structuring things with a payment to your organization for your organization duties. Then you tell the school how much to pay each tutor. You would be responsible for giving the school the necessary information, like name, address, Social Security number, and cost (or possibly hours worked).\"" } ]	[ { "id": "315660", "score": 0.6669166088104248, "text": "This sounds to me like a very nice little job for a computer. This assumes that you have some experience of programming a computer, which I believe you do. A program like this does not require a lot of programming experience; a beginner in any simple scripting language could implement it, which is why I think it is a fairly general answer. You can set up a small simulation with either your real loans, or the examples you have given. Then have the computer work through the situation at a monthly time step until the debt is paid, and have it output all the interesting information per month. Then you set it up with your different payment scenarios: each paying proportionally, each paying their own debt separately, paying them in different orders etc. When you have these graphs, it should be possible to answer your main questions: The more information you add to this simulation, the more effective it gets. For example, I'm sure there are various tax deductions that you can make, depending on how much each of you pay, that depends on all sorts of things (location, income, age?).", "topk_rank": 0 }, { "id": "369993", "score": 0.6634184122085571, "text": "That changes things. If they are provide the service for free why would anyone pay for the same services from you? What do you provide that they don't? What makes your tutoring better than theirs? Being 'professional' doesn't really help. There needs to be a reason that someone should pay you instead of the free tutoring.", "topk_rank": 1 }, { "id": "342844", "score": 0.6633287668228149, "text": "This is a great response, thanks. I appreciate Dale Carnegie, Sun Tzu etc, but after reading them I felt they didn't offer anything really specific towards running a business. I've just ordered the personal MBA after reading a bit more on it so thanks for that too. Prince2 methodology looks pretty in depth so that's going on the the 'later' pile for now!", "topk_rank": 2 }, { "id": "333034", "score": 0.6629312634468079, "text": "Attempting to treat every BU as a profit center is doomed for failure. Some of the record keeping for charge back models are good for data collection and any BU that primarily acts as a profit center can easily do charge backs with other BUs that utilize their services (say a publishing company asking the BU in charge of printing to provide some internal material). If the business function is not a core competency and is not a profit driver it is a cost center and should be treated as such. For cost center based BUs record keeping, budgeting and controlling your commitments are key however you have a higher chance of being jerked around in some scenarios, this really comes down to the kinds of leadership around the BU.", "topk_rank": 3 }, { "id": "599546", "score": 0.6615604758262634, "text": "I'm not saying your not a hard worker but you sound like a whiner that thinks they have all the answers. It sounds like your parents want you to just do your job. I disagree with your parents 'selling' you the business. I think you should start your own business before trying to run someone else's. Your workplace is a business not a training camp, i entirely agree that you should not be training customers or employees how to use excel or google sheets. maybe a friendly YouTube link, but that's it.", "topk_rank": 4 }, { "id": "428350", "score": 0.6606064438819885, "text": "I once worked on creating a payroll system that essentially automated the process for a company of 40k employees. There were 2 coders working for 18 months and we put 12 payroll people out of a job when we were finished. Needless to say once they realized what we were doing the work environment became quite uncomfortable.", "topk_rank": 5 }, { "id": "365476", "score": 0.6601228713989258, "text": "In general spreadsheets can do all of what you ask. Have a try of some online training like these to get started.", "topk_rank": 6 }, { "id": "372666", "score": 0.6568336486816406, "text": "Payroll is undeniably one of the most important part of any business and it very important that you have a timely payroll every month. To avoid the hassle of payroll processing, it is best to get the service outsourced. We,DHpayroll, will be more than happy to offer you our expert services.", "topk_rank": 7 }, { "id": "335021", "score": 0.6567404866218567, "text": "Maybe try Flow (Getflow.com) or Proworkflow (proworkflow.com) I use TaskWorld for my projects and Trello to keep track of my kids' assignments (4 kids in 4 different grades!). Several of my clients have used Asana. If none of those options provide all the features you need, check out Product Hunt. I remember seeing an app somewhere that allowed you to identify free time and bump tasks based on priority but I wasn't able to find it when I did a search. So- can't help you find it but there are some great apps out there. : )", "topk_rank": 8 }, { "id": "89503", "score": 0.6549742817878723, "text": "You really shouldn't be using class tracking to keep business and personal operations separate. I'm pretty sure the IRS and courts frown upon this, and you're probably risking losing any limited liability you may have. And for keeping separate parts of the business separate, like say stores in a franchise, one approach would be subaccounts. Messy, I'm sure.", "topk_rank": 9 }, { "id": "300897", "score": 0.6537854075431824, "text": "Couldn't have asked for a better response. As for my courses, yes I had various group projects in different classes, with my capstone finance course being entirely group project based, so that would definitely put a dent in the required hours. But still the whole thing seems a bit arbitrary doesn't it? There's no real way of keeping track of hours, then again I haven't done much research on the program yet and if it comes down to the wording I can probably make it work as it is. Regardless thanks for pointing me in the right direction, I am for sure interested in the PMP and in the mean time ill check out what you suggested. Appreciate it.", "topk_rank": 10 }, { "id": "35284", "score": 0.6507883667945862, "text": "A constant answer which I see brought up in a variety of forums is the complaint that schools don't teach money management (budgeting) and how to do taxes. Another good bit of information would be to take apart a credit card statement, show how the interest is calculated, etc. I'd start with those topics, which might take a bit of research on your part (many adults don't understand many of these concepts either), and then build from there. I remember the first time I was able to go from a list of transactions on a credit card statement, and calculate the interest owed from the average daily balance, and it was like a light coming on. Most people use these concepts on a regular basis, but have no conception of what's going on beneath the surface.", "topk_rank": 11 }, { "id": "569240", "score": 0.6503860354423523, "text": "Keep in mind that you NEED to have a cash reserve. Blindly applying all stray cash to debt reduction is a bad idea. Your lenders do not care about your balance. All they care about is your NEXT payment. It is therefore imperative that you have a cash reserve that can carry these payments for several months. Having zero cash reserves puts you at high risk for such simple things as the payroll clerk at work missing the monthly deposit (Rare, but it happens.) I've also been in situations where a major client had a cash flow issue and delayed payment, and our company had to borrow to meet payroll that month. Fortunately, we were in good standing with the bank and had low debt, but it could have been catastrophic for any employees living paycheque to paycheque.", "topk_rank": 12 }, { "id": "221014", "score": 0.6503544449806213, "text": "I had a chat with a coworker whose spouse also teaches music lessons. One interesting insight was that after raising prices, the children were much more likely to come prepared because the parents felt more invested when it cost them more. They were also less likely to cancel the lessons at the last minute. This is an argument in favor of TTT's suggestion to charge something even if we donate the income to charity. Along those lines it might also make sense to give discounts if the child comes prepared having practiced daily. I agree that it's not a lot of paperwork for some additional pay, the problem is that I would also be tempted to buy a new piano and find other expenses to reduce the income. That's a discussion for another day. I think the break-even point is probably somewhere around $1000/year when I weigh record-keeping time verses the income. So as long as we exceed that, I will probably encourage her to charge for the lessons even if she charges below the market for them. I will consider setting up a charitable giving account that they can pay to instead of paying us directly.", "topk_rank": 13 }, { "id": "530690", "score": 0.649601936340332, "text": "It's simple, really: Practice. Fiscal responsibility is not a trick you can learn look up on Google, or a service you can buy from your accountant. Being responsible with your money is a skill that is learned over a lifetime. The only way to get better at it is to practice, and not get discouraged when you make mistakes.", "topk_rank": 14 }, { "id": "482462", "score": 0.6494348049163818, "text": "As a business analyst, a tool I've picked up recently is Tableau. It's a powerful reporting tool that can build powerful dashboards which are great for presentations. If you have an academic email, you can get a free licence otherwise I believe it's around $3000. The bank I work at pays contractors $100,000+ for a single dashboard which can be built by a single person in a few weeks with some basic knowledge in the tool. It's a very versatile tool, I have a friend that tracks his fitness data with a Fitbit and then creates visualizations to date with his friends. I use it to import massive data extracts from multiple sources and then link common share points to build visuals that are put into a dashboard and reported to executives monthly. It's very interactive and that's why the higher-ups love it.", "topk_rank": 15 }, { "id": "284578", "score": 0.6475462317466736, "text": "Of course not. But you walked into this with your eyes open, did you not? Did you think it was going to be 20 min a week or did you know what you were agreeing to? You are asking to jump your price 300% a day into the work. Your friends are in a tight spot already, there is a time crunch until these tests, and her passing or not has real consequences for her. If it were me it would seem clear you lowballed me to get me to say yes then are leveraging that to a massive price hike assuming I won't want to change tutors once you've started. If we were friends we wouldn't be after this. Honestly I think your best option is to go to them and apologize. Say you did not understand the commitment you were making and you do not think you are the right person to tutor their daughter. Offer to continue working with her until they find a proper tutor. If they offer more money maybe you can discuss it but don't you bring it up. They may. I'm not sure about in Europe but in the USA even $10/hr is way below average for a private tutor. That's more like prices for a group test prep course. You definitely lowballed yourself on price and the rate you are thinking is probably a reasonable if not discounted one still. If this weren't involving friends you could be more firm on needing to push up the price because if they walk away angry it's just a lost customer. But doing business with friends is always messier. I could be wrong here, but are you maybe closer to the daughter's age? Are these family friends more accurately your parent's friends? If I'm off on that my advise above stands. If I'm right, think about how your actions will affect the friendship between your parents and this family. Might want to talk with them about it first.", "topk_rank": 16 }, { "id": "228343", "score": 0.647252082824707, "text": "Wow I honestly hope this is your first ever finance class. Anyway this isn't even finance, the only thing here finance related are the terms. It's really an algebra problem. Which is 1,312,500/x = 2 soooo find X. X = 656250 so 131,250 in notes payable. If you don't know what to do know to find the quick ratio, then change majors", "topk_rank": 17 }, { "id": "24890", "score": 0.6468884348869324, "text": "\"Since this is a cooperative I'm guessing your partners may want to be able to view the books so another key point you may want to consider is collaboration. QuickBooks desktop has all of these same issues because it is meant to be used on a single desktop. We're in an age of mobile devices, and especially in a business like landscaping it would be nice if certain aspects of record keeping could be done at the point and time where they are incurred. I'd argue you want a Software as a Service (SaaS) accounting package as opposed to \"\"accounting software\"\" which might come on a CD in the form of QuickBooks, Sage and others. Additionally, most of these will also have guides to help make sure you are properly entering your records. Most of these SaaS products also have customer success teams to help you along should you need assistance. Depending on the level of your subscription you may get more sophisticated handling of taxes, customized invoices or integrated payroll. Your goal is to keep accurate records so you can better run your business and maintain obligations like filing taxes. You're not keeping the records just to have them. Keep them in a place where they will work for you and provide the insights and functionality that will help your business grow and become successful. Accounting software will always win in this scenario over a spreadsheet. FULL DISCLAIMER: I work for Kashoo, a simple cloud accounting product designed for small businesses. But the points I mention above are true for Xero, QuickBooks Online and Wave as well as Kashoo. And if you really want expertise to go with the actual software consider service providers with a platform like: Indinero, Bench, easyrecordbooks or Liberty Accounting.\"", "topk_rank": 18 }, { "id": "472924", "score": 0.6456132531166077, "text": "\"I would say that all of the reasons you list in your question are valid, and I would add the following... You are in the landscaping business, not the accounting business. If you manage everything in spreadsheets, at least one of you has to become the bookkeeper and leave the landscaping to the others. Spreadsheets are \"\"agnostic\"\" in how you use them, so you have to turn them into an accounting system, which means you're now not only more of a bookkeeper, but you're also more of a developer, too, and even less of a landscaper. Accounting software is already developed by developers who understand accounting. Using it requires you to only perform the data entry tasks, and then you can focus on the landscaping, customer service, sales and marketing, etc., things that actually contribute to your business. It is still good for you to understand basic accounting principles. Specialized accounting software will guide you through the process of learning and help you avoid making many of the costly mistakes you might have made in that learning process.\"", "topk_rank": 19 } ]
47	As a small business owner, should I pay my taxes from my personal or business checking account?	[ { "id": "133299", "score": 0.738837718963623, "text": "Payment of taxes for your personal return filed with the IRS always come from your personal account, regardless of how the money was earned. Sales tax would be paid from your business account, so would corporate taxes, if those apply; but if you're talking about your tax payments to the IRS for your personal income that should be paid from your personal account. Also, stating the obvious, if you're paying an accountant to handle things you can always ask them for clarification as well. They will have more precise answers. EDIT Adding on for your last part of the question I missed: In virtually all cases LLC's are what's called a pass through entity. For these entities, all income in the eyes of the federal government passes directly through the entity to the owners at the end of each year. They are then taxed personally on this net income at their individual tax rate, that's the very abridged version at least. The LLC pays no taxes directly to the federal government related to your income. Here's a resource if you'd like to learn more about LLC's: http://www.nolo.com/legal-encyclopedia/llc-basics-30163.html" } ]	[ { "id": "400230", "score": 0.7017234563827515, "text": "\"IANAL, but. As you note, when you open a new account, they give you temporary checks that are usually blank in the upper left. I've used such checks and the bank has honored them. Therefore, I conclude that there must not be any legal requirement for anything to appear there, nor does the bank require it. Businesses are often reluctant to accept such temporary checks, for the obvious reason that anyone could go to the bank, open an account with $10, write checks for thousands of dollars, and disappear. At least if they've waited long enough to get the permanent checks in, there's some reason to believe that they plan to stick around. In any case, it's not clear what you are trying to accomplish. You want to hand-write either your business name or your personal name depending on whether the check is for personal or business purposes? I don't see what that gains. You could always use a personal check for business purposes. If you're afraid someone will say, \"\"Hey, that doesn't look very professional, what kind of fly-by-night company is this that uses personal checks?\"\", surely a hand-written company name would look even less professional. Why not just open a business account and have your personal checks printed with your personal name and your business checks with your business name? I don't know where you live, but I have a business account on which I pay zero fees. The only cost is getting checks printed. There's the small hassle of having to make one trip to the bank to open the account. Well, the biggest hassle I have is that the bank won't let me transfer money between my personal and business accounts over the Internet, so I have to either go to the bank to move money back and forth, or I have to write a check from one account to the other and deposit through an ATM.\"", "topk_rank": 0 }, { "id": "357037", "score": 0.701654314994812, "text": "You should be careful about mingling your personal money and that of the business, even if it is a sole prop right now. It is a good habit to keep separate business and personal bank/credit accounts just so that when you change to an LLC, it is simpler for you to separate what belongs to the company and what is yours personally. What you're doing makes it more difficult (although only marginally so) to itemize business deductions that were paid with an ostensibly personal credit account. The better habit to get into now is keeping that distinct separation between personal and business. That being said, there's nothing illegal in what you're doing, but it would make an accountant cringe, that's for sure. (chuckle) Hope this helps. Good luck!", "topk_rank": 1 }, { "id": "397920", "score": 0.7012555599212646, "text": "I heard that a C-Corp being a one person shop (no other employees but the owner) can pay for the full amount 100% of personal rent if the residence is being used as a home office. Sure. Especially if you don't mind being audited. Technically, it doesn't matter how the money gets where it goes as long as the income tax filings accurately describe the tax situation. But the IRS hates it when you make personal expenses from a business account, even if you've paid the required personal income tax (because their computers simply aren't smart enough to keep up with that level of chaos). Also, on a non-tax level, commingling of business and personal funds can reduce the effectiveness of your company's liability protection and you could more easily become personally liable if the company goes bankrupt. From what I understand the 30% would be the expense, and the 70% profit distribution. I recommend you just pay yourself and pay the rent from your personal account and claim the allowed deductions properly like everyone else. Why & when it would make sense to do this? Are there any tax benefits? Never, because, no. You would still have to pay personal income tax on your 70% share of the rent (the 30% you may be able to get deductions for but the rules are quite complicated and you should never just estimate). The only way to get money out of a corporation without paying personal income tax is by having a qualified dividend. That's quite complicated - your accounting has to be clear that the money being issued as a qualified dividend came from an economic profit, not from a paper profit resulting from the fact that you worked hard without paying yourself market value.", "topk_rank": 2 }, { "id": "40628", "score": 0.7007881999015808, "text": "\"There's no law in California that says you have to have a cash register. Logging cash sales manually, as you are doing, is fine. A cash register would help you track your cash sales as you describe. Some POS software will also allow you to log cash transactions, but it sounds like you just use a credit card processing web site or application, not a full-fledged POS system. In any case, for a small business, one option might be to get a cash register to log your cash sales, and continue to process credit cards the way you are (or continue as you are doing). Come tax season, use the output from both systems to calculate your income. You might want to consider an accounting software like Quickbooks so you can reconcile your income and expenses and statements from different sources. Also, as with any small business, it's worth your while to consult a tax accountant to make sure you're doing everything \"\"by the books\"\". Once you're set up properly, keeping the books in order becomes routine and easy.\"", "topk_rank": 3 }, { "id": "556021", "score": 0.700560450553894, "text": "Yes, you can do this. I do this for my own single-member LLC, but I usually do it online instead of writing a check. Your only legal obligation is to pay quarterly estimated tax payments to the IRS. I'm assuming you are not otherwise doing anything shady. For example, that you have funds in your business account to pay any expenses that will be due soon or that you are trying to somehow pull a fast one on someone else...", "topk_rank": 4 }, { "id": "510409", "score": 0.6998322606086731, "text": "No, even businesses pay taxes quarterly. So if you formed Nathan, LLC, or otherwise became self employed, you'd still have to file quarterly estimates and make tax payments. This would cause taxes to be a much more high touch part of your life. However, you should ensure that you're claiming the proper exemptions etc to avoid excessive withholding.", "topk_rank": 5 }, { "id": "494280", "score": 0.699731707572937, "text": "It's for the benefit of the bank, certainly. You might consider it a convenience to write one check, but it comes at a cost. Your cost of money is the interest you pay on the most costly loan you carry. But the escrow account will usually get a low rate of interest, 1% or so today. Also, as I describe in an article titled Fun With Schedule A there's a strategy for those who straddle the line between itemizing and taking the standard deduction. Paying your own tax allows you to pay as much as 6 quarters of property tax in one year and then just two quarters in the next. This opens up a biannual itemizing and a savings on your tax return.", "topk_rank": 6 }, { "id": "8018", "score": 0.699629545211792, "text": "I will answer this question broadly for various jurisdictions, and also specifically for the US, given the OP's tax home: Generally, for any tax jurisdiction If your tax system relies on periodic prepayments through the year, and a final top-up/refund at the end of the year (ie: basically every country), you have 3 theoretical goals with how much you pre-pay: Specifically, for the U.S. All information gathered from here: https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes. In short, depending on your circumstance, you may need to pay quarterly estimated tax payments to avoid penalties on April 15th. Even if you won't be penalized, you, may benefit from doing so anyway (to force yourself to save the money necessary by April 15th). I have translated the general goals above, into US-specific advice:", "topk_rank": 7 }, { "id": "109203", "score": 0.6993919610977173, "text": "You could, but the bank won't let you... If you're a sole proprietor - then you could probably open a personal account and just use it, and never tell them that is actually a business. However, depending on your volume of operations, they may switch you on their own to business account by the pattern of your transactions. For corporations, you cannot use a personal account since the corporation is a separate legal entity that owns the funds. Also, you're generally required to separate corporate and personal funds to keep the limited liability protection (which is why you have the corporation to begin with). Generally, business accounts have much higher volumes and much more transactions than personal accounts, and it costs more for the banks to run them. In the US, some banks offer free, or very low-cost, business accounts for small businesses that don't need too many transactions. I'm sure if you shop around, you'll find those in Canada as well.", "topk_rank": 8 }, { "id": "311285", "score": 0.698714554309845, "text": "If your business is operating on an accrual basis, the income would be counted as occurring in 2016. If your business is operating on a cash basis, the income would be counted as occurring in 2017. If you don't know what that means, you are probably using a cash basis for your business, which means income and expenses take place when you actually receive or incur them. According to cash-based principles, if you receive the check in 2017, that is when you report the income. For more information, see Accounting Methods in Publication 538. In summary, you can choose both as an individual and as a business which accounting method you want to use, and it is not trivial to change it. Cash basis on a calendar year is more or less the default, and is recommended unless you have a specific reason for doing something else.", "topk_rank": 9 }, { "id": "71569", "score": 0.69804447889328, "text": "You can move money in and out of the business at will, just keep track of every transaction. Ideally you'd use an accounting software like QuickBooks or similar. Create a Capital Contributions account and every time you put money into the business checking account record it as a Capital Contribution. Likewise, if you take money out of the business, it comes from your capital accounts. (You can create a separate Capital Distributions account in your accounting software, or just use a single account for contributions and distributions). Money coming in and out of those capital accounts is not taxable because you will pay taxes based on net earnings regardless of whether or not you have distributed any profits. So there's no need to make a loan to the company, which would have tax consequences. To reimburse yourself for purchases already made, submit an expense report to the company. If the company is unfunded right now, you can make a capital contribution to cover current expenses, submit the expense report, and wait until you have some profits before paying out the expense report or making any distributions. Welcome to entrepreneurship.", "topk_rank": 10 }, { "id": "101877", "score": 0.6971675157546997, "text": "\"Even for me (I keep a fair bit of \"\"cash\"\" on hand because I'm self-employed) it would be a challenge to keep 5k in my checking account all the time when it could be in tax-deferred accounts making me money instead. I put the bare minimum in checking every two weeks as I've found when I leave money there it gets spent.\"", "topk_rank": 11 }, { "id": "309023", "score": 0.6961066126823425, "text": "\"Depending on how the check was made out, you may be able to file a DBA (\"\"doing business as\"\"), which would give you the business name locally. Then open an account under that name and deposit the check. Or simply go back to the customer and say \"\"hey, I don't have yhe company bak account open yet; could I exchange this check for one made out to me personally?\"\" That's how I've been handling hobby income under a company name. (I really do ned to file that DBA!)\"", "topk_rank": 12 }, { "id": "1873", "score": 0.6936430335044861, "text": "\"I expect the company wanted to pay you for a product (on a purchase order) rather than as a contract laborer. Whatever. Would they be willing to re-issue the check to you as a sole proprietor of a business named ABC Consulting (or anything like that)? You can register your sole proprietor business with the state using a \"\"Doing Business As\"\" (DBA, or fictitious name), and then open the bank account for your business using the check provided by the customer as the first deposit. (There is likely a smaller registration fee for the DBA.) If they won't re-issue the check and you have to go the LLC route... Scrounge up $125 doing odd jobs or borrowing from a friend or parents. Seriously, anyone can earn that amount of money in a week or two. Besides the filing fee for the LLC, your bank may require you to provide an Operating Agreement (which is not required by the State). The Operating Agreement can be simple, or more complex if you have a partner (even if it's a spouse). If you do have a partner, it is essential to have such an agreement because it would specify the responsibilities and benefits allocated to each partner, particularly in the event of equity distributions (taking money out of the business, or liquidating and ending the LLC). There are websites that will provide you a boilerplate form for Operating Agreements. But if your business is anything more than just single member LLC, you should pay an attorney to draw one up for you so the wording is right. It's a safeguard against potential future lawsuits. And, while we're at it, don't forget to obtain a EIN (equivalent to a SSN) from the IRS for your LLC. There's no cost, but you'll have to have it to file taxes as a business for every year the LLC exists and has income. Good luck!\"", "topk_rank": 13 }, { "id": "12729", "score": 0.6935570240020752, "text": "No, you can't claim personal expenses as business expenses. What is the alternative to paying someone to do your chores? Letting the chores go undone. How does it affect your business if your household chores go undone? It doesn't; it only affects your personal life--that's why they are personal expenses.", "topk_rank": 14 }, { "id": "382908", "score": 0.6935549974441528, "text": "Can I work on 1099 from my own company instead of on W2? The reason is on W2 I can't deduct my commute, Health Insurance and some other expenses while on 1099 I think I can able do that. Since I am going to client place to work not at my own office, I am not sure whether I should able to do that or not. If you have LLC, unless you elected to tax it as a corporation, you need neither 1099 nor W2. For tax purposes the LLC is disregarded. So it is, from tax perspective, a sole proprietorship (or partnership, if multiple members). Being a W2 employee of your own LLC is a bad idea. For all these above expenses, which can I use company's debit/credit card or I need to use only my personal debit/credit card? It would be better to always use a business account for business purposes. Doesn't matter much for tax per se, but will make your life easier in case of an audit or a legal dispute (limited liability protection may depend on it). If I work on 1099, I guess I need to file some reasonable taxes on quarterly basis instead of filing at year end. If so, how do I pay my tax on quarterly basis to IRS? I mean which forms should I file and how to pay tax? Unless you're a W2 employee, you need to do quarterly estimate payments using form 1040-ES. If you are a W2 employee (even for a different job, and even if it is not you, but your spouse with whom you're filing jointly) - you can adjust your/spouse's withholding using form W4 to cover the additional tax liability. This is, IMHO, a better way than paying estimates. There are numerous questions on this, search the site or ask another one for details.", "topk_rank": 15 }, { "id": "308938", "score": 0.6935268640518188, "text": "\"You should have separate files for each of the two businesses. The business that transfers money out should \"\"write check\"\" in its QB file. The business that receives money should \"\"make deposit\"\" in its QB file. (In QB you \"\"write check\"\" even when you make the payment by some other means like ACH.) Neither business should have the bank accounts of the other explicitly represented. On each side, you will also need to classify the payment as having originated from / gone to some other account - To know what's correct there, we'd need to know why your transferring the money in the first place and how you otherwise have your books established. I think that's probably beyond the scope of what's on-topic / feasible here. Money into your business from your personal account is probably owner's equity, unless you have something else going on. For example, on the S Corp you should be paying yourself a salary. If you overpay by accident, then you might write a check back to the company from your personal account to correct the mistake. That's not equity - It's probably a \"\"negative expense\"\" in some other account that tracks the salary payments.\"", "topk_rank": 16 }, { "id": "160301", "score": 0.6932200789451599, "text": "It's going to depend entirely on your tax situation, its complexity, and your willingness/interest in dealing with tax filings. Personally I find that not only do I not enjoy dealing with figuring out my taxes, but I don't know even a fraction of the possible deductions available and all the clever ways to leverage them. Plus the tax code is changing constantly and staying on top of that is not something I'm ever going to attempt. I am of the philosophy that it is my duty to pay only the absolute minimum tax legally required, and to utilize every possible exemption, deduction, credit, etc. that is available to me. Plus my business activities are a bit on the non-traditional side so it requires some unorthodox thinking at times. For me, a trained professional is the only way to go. What it costs me, I way more than make up in savings on my tax bill. I also go out of my way to never get a refund because if I get one, it just means I gave the government a free loan. The last time I computed my own taxes (used TurboTax if memory serves) was I think in the late 90s.", "topk_rank": 17 }, { "id": "188893", "score": 0.6931247711181641, "text": "Assuming it's your business, endorse the check as yourself and your DBA name, payable to your personal account", "topk_rank": 18 }, { "id": "357520", "score": 0.6926680207252502, "text": "Yes, you are the proprietor of the business and your SSN is listed on Schedule C. The information on Schedule C is for your unincorporated business as a contractor; it is a sole proprietorship. You might choose to do this business under your own name e.g. Tim Taylor (getting paid with checks made out to Tim Taylor) or a modified name such as Tim the Tool Man Taylor (this is often referred to as DBA - Doing Business as), under a business name such as Tool Time etc. with business address being your home address or separate premises, and checking accounts to match etc. and all that is what the IRS wants to know about on Schedule C. Information about the company that paid you is not listed on Schedule C.", "topk_rank": 19 } ]
48	Should my husband's business pay my business?	[ { "id": "108062", "score": 0.7435784935951233, "text": "It depends on the finances involved, but particularly if you're not billing anything right now and may have no revenue this year, it's probably a good idea to bill his company. This is in part because some deductions or other tax treatments are only allowed if you have revenue and/or income. The biggest example I can think of is the Solo 401k - you can only contribute up to your self employed income. If you're planning to contribute to one (and you should, they're amazingly powerful tools for saving for retirement and for reducing your tax burden), you will have to have some revenue in order to have something to pay yourself with. I don't believe you have to charge him, though, if it makes more tax sense not to (for example, if his business is operating at a loss and cannot benefit from expensing it, but you'd then have to pay taxes on your own income from it)." }, { "id": "401260", "score": 0.7070114016532898, "text": "\"Is it worth it for me to \"\"charge\"\" him? I can think of two reasons why you might want to charge your husband:\"" }, { "id": "329810", "score": 0.7573890686035156, "text": "\"I agree with some of the points of the other answers but why not avoid all the guesswork? I highly recommend you not charge him now. Wait until the end of the year when you have much more information about both of your companies and then you can run the numbers both ways and decide if it would benefit you (collectively). If either of your businesses runs on a cash basis and you decide to invoice, just make sure the check is deposited before Dec 31. Update: If you want to do this for 2016, at least your husband's business would have to be using an accrual basis (since it's too late to take the deduction on a cash basis). Simply run the numbers both ways and see if it helps you. If it doesn't help enough to warrant it for 2016 you could rerun the numbers near the end of 2017 to see if it helps then. Diclaimer: I think it's OK to do this type of manipulation for the scenario you described since you have done (or are doing) the work and you are charging a reasonable fee, but realize that you shouldn't manipulate the amount of the invoice, or fabricate invoices. For example, you shouldn't ever think about such things as: \"\"If I invoice $50K instead of $3K, will that help us?\"\"\"" }, { "id": "512151", "score": 0.7260699272155762, "text": "Just from my own experience (I am not an accountant): In addition to counting as 'business income' (1040 line 12 [1]) your $3000 (or whatever) will be subject to ~15% self-employment tax, on Schedule SE. This carries to your 1040 line ~57, which is after all your 'adjustments to income', exemptions, and deductions - so, those don't reduce it. Half of the 15% is deductible on line ~27, if you have enough taxable income for it to matter; but, in any case, you will owe at least 1/2 of the 15%, on top of your regular income tax. Your husband could deduct this payment as a business expense on Schedule C; but, if (AIUI) he will have a loss already, he'll get no benefit from this in the current year. If you do count this as income to you, it will be FICA income; so, it will be credited to your Social Security account. Things outside my experience that might bear looking into: I suspect the IRS has criteria to determine whether spousal payments are legit, or just gaming the tax system. Even if your husband can't 'use' the loss this year, he may be able to apply it in the future, when/if he has net business income. [1] NB: Any tax form line numbers are as of the last I looked - they may be off by one or two." } ]	[ { "id": "82163", "score": 0.6962149739265442, "text": "Not a good idea. When you form a partnership with someone that creates a legal connection between you two. What if he racks up $50,000 on the company credit card? Do you want to be responsible for that debt? A better way to do this would be to either charge your clients $X for IT work and pay him half of $X which would get you the same 50% or simply have him agree to share 50% of any income he gets from people referred by you. This can be done in a simple contract or agreement without force you both into a partnership.", "topk_rank": 0 }, { "id": "109546", "score": 0.6960697174072266, "text": "I'm not sure I am fully understanding the nuance of your question, but based on your answer in the comments you and your business are not separate legal entities. So your income is the full $70K, there is no distinct business to have income. If you clarify your question to include why you want to know this I might be able to give a more meaningful answer for your situation.", "topk_rank": 1 }, { "id": "318491", "score": 0.6955720782279968, "text": "\"In the US, you'd run the risk of being accused of fraud if this weren't set up properly. It would only be proper if your wife could show that she were involved, acting as your agent, bookkeeper, etc. Even so, to suggest that your time is billed at one rate but you are only paid a tiny fraction of that is still a high risk alert. I believe the expression \"\"if it quacks like a duck...\"\" is pretty universal. If not, I'll edit in a clarification. note -I know OP is in UK, but I imagine tax collection is pretty similar in this regard.\"", "topk_rank": 2 }, { "id": "267158", "score": 0.6935980916023254, "text": "\"The issues are larger than taxes. If one of you receives the check, then breaks off 25% of it for themselves and sends three checks out to each of you that will be indicated on that person's taxes. You three will then all recognize your portion of the income on your taxes and it's all settled. It's no big deal, it's a bit rag-tag but it'll get the job done. I've done little ad-hoc partnership work with people this way and it's not a problem. This is why you should really be more formal. What if this entity contracting you guys sues you? Who has the liability, if only one of you was paid? What if the money is sent to one of you and that person dies before paying you? What if you all get another client? What if this contracting entity has another project? The partnership needs to have the liability. The partnership needs to receive the money. The partnership needs to be named on whatever contract you all sign. The partnership can be a straight partnership, or maybe the four of you take a 25% stake in an LLC or Inc arrangement. Minimally, you should sit down with your partners so everyone knows everyone else's responsibilities, and you should write it all down. It probably sounds like overkill, and I'm sure your partners are you buddies and \"\"we're tight and nothing bad could come between us.\"\" I've done some partnership work with more than one friend, we've always been fine. Some ventures are successful, some aren't; I'm still very good friends with all of them. Writing things down manages expectations and when money starts moving around, everyone is happier when everyone has a solid expectation of who gets what.\"", "topk_rank": 3 }, { "id": "207997", "score": 0.6935877799987793, "text": "You can ask the client to pay you through the LLC. In that case you should invoice them from the LLC and have them pay the invoice. If they pay you personally, you can always make a capital contribution to the LLC and use that money to buy equipment. The tax implications for a single person LLC providing professional services are the same for you either way: income is income whether it's from your LLC or an employer. It's different for the employer if they are giving you a W2 vs a 1099. So it doesn't matter much for you. If the LLC is buying equipment, make sure you get enough revenue through the LLC to at least offset those expenses.", "topk_rank": 4 }, { "id": "422436", "score": 0.6924903392791748, "text": "\"You're right about your suspicions. I'm not a professional (I suggest you talk to a real one, a one with CPA, EA or Attorney credentials and license in your State), but I would be very cautious in this case. The IRS will look at all the facts and circumstances to make a claim, but my guess would be that the initial claim would be for this to be taxable income for your husband. He'd have to prove it to be otherwise. It does seem to be related to his performance, and I doubt that had they not known him through his employment, they'd give him such a gift. I may be wrong. So may be an IRS Revenue Officer. But I'd bet he'd think the same. Did they give \"\"gifts\"\" like that to anyone else? If they did - was it to other employees or they gave similar gifts to all their friends and family? Did those who gave your husband a gift file a gift tax return? Had they paid the gift tax? Were they principles in the partnership or they were limited partners (i.e.: not the ones with authority to make any decision)? Was your husband instrumental in making their extraordinary profit, or his job was not related to the profits these people made? These questions are inquiring about the facts and circumstances of the transaction. Based on what he can find out, and other potential information, your husband will have to decide whether he can reasonably claim that it was a gift. Beware: unreasonable claims lead to equally unreasonable penalties and charges. IRS and your State will definitely want to know more about this transaction, its not an amount to slide under the radar. This is not a matter where you can rely on a free opinions written by amateurs who don't know the whole story. You (or, rather, your husband) are highly encouraged to hire a paid professional - a CPA, EA (enrolled agent) or tax attorney with enough experience in fighting gift vs income characterization issues against the IRS (and the State, don't forget your State). An experienced professional may be able to identify something in the facts and the circumstances of the situation that would lead to reducing the tax bill or shifting it to the partners, but it is not something you do on your own.\"", "topk_rank": 5 }, { "id": "147080", "score": 0.6918405294418335, "text": "The amount of the income taxes you will owe depends upon how much income you have, after valid business expenses, also it will depend upon your filing status as well as the ownership form of your business and what state you live in. That said, you will need to be sure to make the Federal 1040ES quarterly prepayments of your tax on time or there will be penalties. You also must remember that you will be needing to file a schedule SE with your 1040. That is for the social security taxes you owe, which is in addition to your income taxes. With an employer/employee situation, the FICA withhoding you have seen on your paycheck are matched by the same payment by your employer. Now that you are self-employed you are responcible for your share and the employer share as well; in this situation it is known as self-employment tax. the amount of it will be the same as your share of FICA and half of the employer's share of FICA taxes. If you are married and your wife also is working self-employed, then she will have to files herown schedule SE along with yours. meaning that you will pay based on your business income and she will pay baed on hers. your 1040Es quarterly prepayment must cover your income tax and your combined (yours and hers) Self Employment taxes. Many people will debate on the final results of the results of schedule SE vrs an employee's and an employer's payments combined. If one were to provides a ball park percentage that would likely apply to you final total addition to your tax libility as a result of needing schedule SE would tend to fluctuate depending upon your total tax situation; many would debate it. It has been this way since, I first studied and use this schedule decades ago. For this reason it is best for you to review these PDF documents, Form 1040 Schedule SE Instructions and Form 1040 Schedule SE. As for your state income taxes, it will depend on the laws of the state you are based in.", "topk_rank": 6 }, { "id": "326843", "score": 0.6912828087806702, "text": "\"Profit sharing adds complexity. I'd pitch it as a percentage of revenue to him. \"\"Profit\"\" is a term than can be abused. Sales are sales. Somewhat related, if you're giving him 30% of all profit on all deals, you're basically selling 30% of your business for $80K. No surprise he's interested. Think more about how you'll finance working capital. You need money to buy the pool supplies, pay for labor, etc. Ideally, you should float as little of this money as you can. An incentive structure that rewards the salespeople should also be taken into consideration. Build that in somewhere. You want his reps to want to pitch your pools. They need some kind of incentive. These are just thoughts off the top of my head. I don't completely understand the details, but maybe it'll help.\"", "topk_rank": 7 }, { "id": "128350", "score": 0.69118732213974, "text": "Echoing Justkt, different approaches will work for different couples. It also depends on your background, life experience, age, maturity.... Irrespective of the structure, any agreement must be based on a thorough understanding of the mechanism by which responsibility and accountability is apportioned. As in any financial relationship, when money is plentiful and covers all ends, then conflict hardly ever arises. Problems only turn up when money vanishes. Business contracts are written with a view to such conflicts and agreements within a marriage must be equatable and based on a shared understanding. So, don't worry too much about the structure. Think about thinkgs like the following: In other words, given that income between spouses is likely to be unbalanced, how do you manage this within a caring relationship so that neither feels like a charity case, a social worker, or dependent? There will not be one clear answer except that open and honest discussion on an ongoing bases can only serve to strengthen your relationship.", "topk_rank": 8 }, { "id": "72391", "score": 0.6907833814620972, "text": "As far as accounting goes, if you speak with a CPA, you may be able to reduce the business tax liability. So... the company buys the truck, deducts it, and the adjusted gross income drops, so he'd pay less tax. Or something. You said anything helps, hope you meant it!", "topk_rank": 9 }, { "id": "474433", "score": 0.6906121969223022, "text": "Check out personal finance. But, my guess is no. Given you are married and you were prepared to contribute $x out of the entire family pot, why don't they just contribute $x from their portion of the entire family pot? Net effect should be similar or identical. (I'm not an accountant nor married, so enjoy the grain of salt).", "topk_rank": 10 }, { "id": "253210", "score": 0.6898502707481384, "text": "This may not exactly answer your question but, as a small business owner, I would highly recommend having a professional handle your taxes. It is worth the money to have it done correctly rather than doing something wrong and getting audited or worse having penalties assessed and owing more than you thought would be possible. I would recommend this especially if this is how you make your primary income, you can always write it off as a business expense.", "topk_rank": 11 }, { "id": "237207", "score": 0.6885152459144592, "text": "It's wrong in several situations: One, the business owner counts this as a business expense, which it is not, and therefore reduces the company's profit and taxes. That would be tax avoidance and probably criminal. Two, someone who is not the sole owner counts this as a business expense, which it is not, reduces the company's profit and when profits are shared, the company pays out less money to the other owners. That's probably fraud. Third, if the owner or owners of a limited liability company draw out lots of money from the company with the intent that the company should go bankrupt with tons of debt that the owners are not going to pay, while keeping the money they siphoned off for themselves. That would probably bankruptcy fraud. Apart from being wrong, there is the obvious risk that you lose control over your company's and your own expenses, and might be in for a nasty surprise if the company has to pay out money and there's nothing left. That would be ordinary stupidity. If you have to tell your employees that you can't pay their salaries but offer them to admire your brand new Ferrari, that's something I'd consider deeply unethical.", "topk_rank": 12 }, { "id": "294753", "score": 0.6872456073760986, "text": "I'm not certain I understand what you're trying to do, but it sounds like you're trying to create a business expense for paying off your personal debt. If so - you cannot do that. It will constitute a tax fraud, and if you have additional partners in the LLC other than you and your spouse - it may also become an embezzlement issue. Re your edits: Or for example, can you create a tuition assistance program within your company and pay yourself out of that for the purposes of student loan money. Explicitly forbidden. Tuition assistance program cannot pay more than 5% of its benefits to owners. See IRS pub 15-B. You would think that if there was a way to just incorporate and make your debts pre-tax - everyone would be doing it, wouldn't you?", "topk_rank": 13 }, { "id": "204554", "score": 0.6869937777519226, "text": "The key here is that you are defacto running your own company no matter if you acknowledge it or not. In the end these questions have the goal of deciding if you can and will repay the loan. Presumably you filed taxes on your income. These can be shown to the loan officer as proof you have the ability to repay your loan. Running your freelancing as a business has advantages of being able to deduct normal expenses for running the business from your revenue. I am not sure how business cards improves your credit worthiness as they can be had for $10 in about an hour.", "topk_rank": 14 }, { "id": "238587", "score": 0.6868471503257751, "text": "Because some overhead expenses will be shared (accounting, most salaries, sales etc.) it's far easier to give him an ownership stake in the company because you won't be able to calculate net profit for each component correctly. What I would say to him is, in exchange for $80K and the contract with his building company (make sure it is significant enough to be worth it$ you will give him 35% of the company. How did you come up with he $1 million in net profit calculation? How much of that is reliant on his business?", "topk_rank": 15 }, { "id": "177362", "score": 0.6865231394767761, "text": "The bottom line is choosing the right partner. If your partner works as hard as you do, than everything should be split, irregardless of who makes more. Unfortunately, my bf, now by separated husband, borrowed money from me before we were married. I saw a lack of work ethic in him from the beginning, loved him anyway and married him but decided to keep my money separate as a result. This was a beginning with lack of trust and knowing I would be the higher earner, harder worker, and better provider. Down the road he won a lawsuit and got about $700k. I saw about $25k of this money to pay bills created with the intention of him paying them off when he got the money, and because he pilfered it away, we lost our house and it ended in my leaving.... I'm still doing ok because I work hard for what I have. He is struggling. We were never on the same page, never discussed finances because of his lack of work ethic and my mistrust of how he would decide how the money would be used. Sadly, who you decide to be your partner is the most important decision here...It should be based on mutual respect, both working hard to achieve a common goal, and communicating the budget every year, perhaps even each month.... I'm the terrible example.", "topk_rank": 16 }, { "id": "253541", "score": 0.6862784624099731, "text": "I think we should re-think about paying taxes. If they don't have to pay income tax. It is just one way: to minimize the revenue and maximize their expense. As you know, profit (or loss) = revenue - expense. If they want to reduce their income tax. They have to do this. We can't say anything about the income tax that G.E must pay. They maybe have some rights to encourage their business by being decreased some kinds of taxes. It's very normal. If you have some knowledge about tax and accounting, audits, You will have a clearly point about it! I'm not native speaker. I might not understand your tax rules. But they have all general standards all over the world. If I use wrongly grammar or misunderstanding, pls forgive me. Thank you!", "topk_rank": 17 }, { "id": "208989", "score": 0.6861076354980469, "text": "\"It's not possible to determine whether you can \"\"expect a refund\"\" or whether you are claiming the right number of exemptions from the information given. If your wife were not working and you did not do independent contracting, then the answer would be much simpler. However, in this case, we must also factor in how much your contracting brings in (since you must pay income tax on that, as well as Medicare and, probably, Social Security), whether you are filing jointly or separately, and your wife's income from her business. There are also other factors such as whether you'll be claiming certain child care expenses, and certain tax credits which may phase out depending on your income. If you can accurately estimate your total household income for the year, and separate that into income from wages, contracting, and your wife's business, as well as your expenses for things like state and local income and property taxes, then you can make a very reasonable estimate about your total tax burden (including the self-employment taxes on your non-wage income) and then determine whether you are having enough tax withheld from your paycheck. Some people may find that they should have additional tax withheld to compensate for these expenses (see IRS W-4 Line #6).\"", "topk_rank": 18 }, { "id": "86474", "score": 0.6852380037307739, "text": "Normally when thinking about whether it's worth it to start a small business, the biggest factor is your time. There's a big difference between spending 10 hours to make a profit of $50 vs spending 1 hour to make a profit of $50. Your scenario is quite different though, in that you suggest your wife is considering teaching for free instead of accepting payment. In this case the time factor almost goes away, since if you accept payment there is very little extra time involved for depositing checks, tracking income, and filling out some extra forms come tax time. From a financial point of view there is no reason to turn down the money if people are willing to pay it. There may be other reasons to prefer doing it for free, but taxes, Social Security payments, and the small extra effort to run the business wouldn't normally be among those reasons. I don't know what your reasons for possibly preferring to do it for free are, but an alternative option to consider is to donate all of her income to charity.", "topk_rank": 19 } ]
49	Why can't online transactions be completed outside of business hours?	[ { "id": "352927", "score": 0.7321499586105347, "text": "Generally, unless you're doing a wire transfer, bank transactions are processed in batches overnight. So the credit card company won't be able to confirm your transfer until the next business day (it may take even longer for them to actually receive the money)." } ]	[ { "id": "560251", "score": 0.6891814470291138, "text": "I don't believe Saturday is a business day either. When I deposit a check at a bank's drive-in after 4pm Friday, the receipt tells me it will credit as if I deposited on Monday. If a business' computer doesn't adjust their billing to have a weekday due date, they are supposed to accept the payment on the next business day, else, as you discovered, a Sunday due date is really the prior Friday. In which case they may be running afoul of the rules that require X number of days from the time they mail a bill to the time it's due. The flip side to all of this, is to pick and choose your battles in life. Just pay the bill 2 days early. The interest on a few hundred dollars is a few cents per week. You save that by not using a stamp, just charge it on their site on the Friday. Keep in mind, you can be right, but their computer still dings you. So you call and spend your valuable time when ever the due date is over a weekend, getting an agent to reverse the late fee. The cost of 'right' is wasting ten minutes, which is worth far more than just avoiding the issue altogether. But - if you are in the US (you didn't give your country), we have regulations for everything. HR 627, aka The CARD act of 2009, offers - ‘‘(2) WEEKEND OR HOLIDAY DUE DATES.—If the payment due date for a credit card account under an open end consumer credit plan is a day on which the creditor does not receive or accept payments by mail (including weekends and holidays), the creditor may not treat a payment received on the next business day as late for any purpose.’’. So, if you really want to pursue this, you have the power of our illustrious congress on your side.", "topk_rank": 0 }, { "id": "405847", "score": 0.6876251101493835, "text": "After-hours trading and alternate venues allow one to trade outside of regular market hours. However there are a few reasons why you would not want to: The purpose of an exchange is to improve liquidity by gathering all buyers and sellers in the same place at the same time. If trading was 24/7, not all market participants would be trading at the same time. Some markets (including NASDAQ) depend on market makers or specialists to help liquidity. These exchanges are able to mandate that the market maker actively make a market in a security during a meaningful percentage of the trading day. Requiring 24/7 active market making may not be reasonable. Trading systems, meaning both exchange infrastructure and market participant infrastructure, need maintenance time. It's nice to have the evenings and weekends for scheduled work. Post-trade clearing and settlement procedures are still somewhat manual at times. You need staff around to handle these processes.", "topk_rank": 1 }, { "id": "98302", "score": 0.6870127320289612, "text": "How come when I sell stocks, the brokerage won't let me cash out for three days, telling me the SEC requires this clearance period for the transaction to clear, but they can swap shit around in under a second? Be interesting to see what would happen if every transaction wasn't cleared until the closing bell.", "topk_rank": 2 }, { "id": "283889", "score": 0.6853193044662476, "text": "\"From my days in e-commerce they break down like this? The company doesn't know a debit from a credit card. Got the Visa logo, then it is a Visa through the company's payment gateway. The gateway talks to the bank and that is where the particulars for money is figured out. When I programmed gateway interfaces, I had the option to \"\"authorize\"\" or check for funds (which didn't reserve anything, just verified funds existed), run for batch (which put a hold on the funds and collected them at the end of the night) or just take the money. Most places did a verify during the early checkout stages and then did a batch at the end of the night. The nightly batch allows a merchant to cancel a transaction without getting charged a fee. The \"\"authorize\"\" doesn't mean the money is tied up, although that might be your banks policy. Furthermore, an authorize can only last for so many days. This also explains why most of your banks don't report your transactions to you the day of. There is a bunch more activity on your card than the transactions that complete.\"", "topk_rank": 3 }, { "id": "306684", "score": 0.6833062767982483, "text": "Hence why I pay bill by bill and don't authorize automatic withdrawals. Are you telling me your online banking and/or utility company don't allow you to make non automatic payments online? If so I guess thats the answer to OP's question...", "topk_rank": 4 }, { "id": "166431", "score": 0.6824028491973877, "text": "Its not just late fees. The fees for going over your credit limit are exorbitant. To make things worse, they will rearrange the transactions you make during a day so that they can charge you more by making more of them fail.", "topk_rank": 5 }, { "id": "479016", "score": 0.6822031736373901, "text": "\"I didn't say \"\"not at all available outside of work hours\"\". I said \"\"not checking work email\"\". If something urgent comes up at the office when I'm out where it makes more sense for someone to call me and ask for help, sure, they can call, and I'll answer if I can, or get back to them when it's reasonably convenient to do so. I'm not going to waste my non-work hours looking for work to do, though; if it's not urgent, it waits until the next time I'm in the office.\"", "topk_rank": 6 }, { "id": "350237", "score": 0.681136965751648, "text": "Some businesses verify the shipping address with the credit card company, and refuse to ship to an alternate address without additional, offline verification. Of course, this is only useful for physical goods.", "topk_rank": 7 }, { "id": "304662", "score": 0.680944561958313, "text": "The fact that your credit card has seen the payment is strong evidence that the transaction did in fact take place. But it's not unusual for there to be a delay of one or two business days before transactions show up in your online banking records. Saturday and Sunday are not business days. I bet you will see it on Monday. If it's not there by Tuesday, you could call the bank.", "topk_rank": 8 }, { "id": "179615", "score": 0.6806215643882751, "text": "You're knowingly providing a payment method which has insufficient funds to meet the terms of the contract, because you are too lazy to comply with the contract. That's unethical and fraudulent behavior. Will you get in trouble? I don't know. I'd suggest getting acquainted with an electronic calendar that can remind you to do things.", "topk_rank": 9 }, { "id": "159460", "score": 0.6799589991569519, "text": "As far as I'm aware, PINs are only used for in-person transactions, not 'remote' (over the Internet or phone).", "topk_rank": 10 }, { "id": "224259", "score": 0.6785262227058411, "text": "\"I was perplexed by this until a few days ago when it finally clicked in a meeting with our fraud and money laundering teams in work (I work on trading surveillance). Apparently fraud detection and prevention of money laundering are currently the biggest delayers when it comes to electronic transfer of funds, checking that the transferring party has the funds to transfer etc. takes no time at all. It takes some time for a bank user to \"\"release\"\" a funds transfer; once it has been initiated it is put into a queue to be reviewed as potentially fraudulent or money laundering activity. Almost every transaction has to be monitored for this from a legal standpoint. The compliance process can take multiple days. Once the process is complete the request also has to go through \"\"settling\"\" which is an end of day process whereby banks \"\"net off\"\" their customers' transactions with other banks and only pass the net value between them. This is an end of day process by nature so only happens once a day meaning that once all of the checks have occurred any transaction will take until the end of the day to crystallise for the bank and so get credited to their customers' accounts. Incidentally in the UK and Europe banks are moving to streamline this process through \"\"faster payment\"\" systems (that is the industry term for the technology) so that customers see the effect within a few hours (2 in the UK currently) and then the banks net off at the end of day as usual. This means reducing the time it takes to do the checks that have to be done using specialist software to flag transfers as potentially fraudulent or not and making banks' processes much clearer and faster.\"", "topk_rank": 11 }, { "id": "193196", "score": 0.6783822178840637, "text": "Restaurant owner here. Comcast's SLA is 4 hours. So, when it goes down at 7pm on a Friday (and it has, multiple times) then I'm pretty much screwed on my credit card transactions. So, I have to have a failover device that uses a mobile network in order to make sure that I can keep processing transactions. That's another $700/year just because Comcast's reliability is so bad.", "topk_rank": 12 }, { "id": "564488", "score": 0.6772238612174988, "text": "It's likely that your bill always shows the 24th as the due date. Their system is programmed to maintain that consistency regardless of the day of the week that falls on. When the 24th isn't a business day it is good to error on the side of caution and use the business day prior. It would have accepted using their system with a CC payment on the 24th because that goes through their automated system. I would hazard a guess that because your payment was submitted through your bank and arrived on the 23rd it wasn't credited because a live person would have needed to be there to do it and their live people probably don't work weekends. I do much of my bill paying online and have found it easiest to just build a couple days of fluff into the schedule to avoid problems like this. That said, if you call them and explain the situation it is likely that they will credit the late charge back to you.", "topk_rank": 13 }, { "id": "175448", "score": 0.6772057414054871, "text": "\"Why would you consider it null and void? It might be that something went wrong and the business \"\"lost\"\" the transaction one way or another. It might be something else. It might never appear. It might appear. In one of the questions a while ago someone posted a link of a story where an account was overdrawn because of a forgotten debit card charge that resurfaced months later. Can't find the link right now, but it can definitely happen.\"", "topk_rank": 14 }, { "id": "53520", "score": 0.676706075668335, "text": "The reason they want the transaction to go through is because they make money that way. Remember the overdraft protection might incur a fee. If it does their experience may show them that the fee is a greater source of profit when balanced against the losses incurred because of insufficient funds. Even free overdraft transactions are limited. If they didn't want to make money they would have a way to make sure that multiple overdrafts in a short time window wouldn't require multiple protection events. Remember each time they transfer funds they only bring you to zero. As it is now the coffee you buy after putting money on your subway fare card might also trigger an overdraft transfer.", "topk_rank": 15 }, { "id": "166721", "score": 0.6757461428642273, "text": "\"Banks don't generally \"\"Post\"\" transactions on Friday-Sunday, meaning any transfers made on those days don't show up until someone processes it on Monday. I would expect the money to show today, and call your bank tomorrow if it doesn't.\"", "topk_rank": 16 }, { "id": "24459", "score": 0.6722138524055481, "text": "\"You'd have to check the rules for your broker to make sure that the term is being used in its usual sense, but the typical answer to your question is \"\"no.\"\" A GTC will execute during market hours. You would need to explicitly specify extended hours if you want to execute outside of market hours (which your broker may or may not support).\"", "topk_rank": 17 }, { "id": "21167", "score": 0.6708953380584717, "text": "You typically need to specify that you want the GTC order to be working during the Extended hours session. I trade on TD Ameritrade's Thinkorswim platform, and you can select DAY, GTC, EXT or GTC_EXT. So in your case, you would select GTC_EXT.", "topk_rank": 18 }, { "id": "428290", "score": 0.6703689694404602, "text": "\"When processing credit/debit cards there is a choice made by the company on how they want to go about doing it. The options are Authorization/Capture and Sale. For online transactions that require the delivery of goods, companies are supposed to start by initially Authorizing the transaction. This signals your bank to mark the funds but it does not actually transfer them. Once the company is actually shipping the goods, they will send a Capture command that tells the bank to go ahead and transfer the funds. There can be a time delay between the two actions. 3 days is fairly common, but longer can certainly be seen. It normally takes a week for a gas station local to me to clear their transactions. The second one, a Sale is normally used for online transactions in which a service is immediately delivered or a Point of Sale transaction (buying something in person at a store). This action wraps up both an Authorization and Capture into a single step. Now, not all systems have the same requirements. It is actually fairly common for people who play online games to \"\"accidentally\"\" authorize funds to be transferred from their bank. Processing those refunds can be fairly expensive. However, if the company simply performs an Authorization and never issues a capture then it's as if the transaction never occurred and the costs involved to the company are much smaller (close to zero) I'd suspect they have a high degree of parents claiming their kids were never authorized to perform transactions or that fraud was involved. If this is the case then it would be in the company's interest to authorize the transaction, apply the credits to your account then wait a few days before actually capturing the funds from the bank. Depending upon the amount of time for the wait your bank might have silently rolled back the authorization. When it came time for the company to capture, then they'd just reissue it as a sale. I hope that makes sense. The point is, this is actually fairly common. Not just for games but for a whole host of areas in which fraud might exist (like getting gas).\"", "topk_rank": 19 } ]
51	Full-time work + running small side business: Best business structure for taxes?	[ { "id": "107817", "score": 0.6883689165115356, "text": "You should look into an LLC. Its a fairly simple process, and the income simply flows through to your individual return. It will allow you to deduct supplies and other expenses from that income. It should also protect you if someone sues you for doing shoddy work (even if the work was fine), although you would need to consult a lawyer to be sure. For last year, it sounds like your taxes were done wrong. There are very, very few ways that you can end up adding more income and earning less after taxes. I'm tempted to say none, but our tax laws are so complex that I'm sure you can do it somehow." }, { "id": "257168", "score": 0.7112183570861816, "text": "\"A tax return is a document you sign and file with the government to self-report your tax obligations. A tax refund is the payment you receive from the government if your payments into the tax system exceeded your obligations. As others have mentioned, if an extra $2K in income generated $5K in taxes, chances are your return was prepared incorrectly. The selection of an appropriate entity type for your business depends a lot on what you expect to see over the next several years in terms of income and expenses, and the extent to which you want or need to pay for fringe benefits or make pretax retirement contributions from your business income. There are four basic flavors of entity which are available to you: Sole proprietorship. This is the simplest option in terms of tax reporting and paperwork required for ongoing operations. Your net (gross minus expenses) income is added to your wage income and you'll pay tax on the total. If your wage income is less than approximately $100K, you'll also owe self-employment tax of approximately 15% in addition to income tax on your business income. If your business runs at a loss, you can deduct the loss from your other income in calculating your taxable income, though you won't be able to run at a loss indefinitely. You are liable for all of the debts and obligations of the business to the extent of all of your personal assets. Partnership. You will need at least two participants (humans or entities) to form a partnership. Individual items of income and expense are identified on a partnership tax return, and each partner's proportionate share is then reported on the individual partners' tax returns. General partners (who actively participate in the business) also must pay self-employment tax on their earnings below approximately $100K. Each general partner is responsible for all of the debts and obligations of the business to the extent of their personal assets. A general partnership can be created informally or with an oral agreement although that's not a good idea. Corporation. Business entities can be taxed as \"\"S\"\" or \"\"C\"\" corporations. Either way, the corporation is created by filing articles of incorporation with a state government (doesn't have to be the state where you live) and corporations are typically required to file yearly entity statements with the state where they were formed as well as all states where they do business. Shareholders are only liable for the debts and obligations of the corporation to the extent of their investment in the corporation. An \"\"S\"\" corporation files an information-only return similar to a partnership which reports items of income and expense, but those items are actually taken into account on the individual tax returns of the shareholders. If an \"\"S\"\" corporation runs at a loss, the losses are deductible against the shareholders' other income. A \"\"C\"\" corporation files a tax return more similar to an individual's. A C corporation calculates and pays its own tax at the corporate level. Payments from the C corporation to individuals are typically taxable as wages (from a tax point of view, it's the same as having a second job) or as dividends, depending on how and why the payments are made. (If they're in exchange for effort and work, they're probably wages - if they're payments of business profits to the business owners, they're probably dividends.) If a C corporation runs at a loss, the loss is not deductible against the shareholders' other income. Fringe benefits such as health insurance for business owners are not deductible as business expenses on the business returns for S corps, partnerships, or sole proprietorships. C corporations can deduct expenses for providing fringe benefits. LLCs don't have a predefined tax treatment - the members or managers of the LLC choose, when the LLC is formed, if they would like to be taxed as a partnership, an S corporation, or as a C corporation. If an LLC is owned by a single person, it can be considered a \"\"disregarded entity\"\" and treated for tax purposes as a sole proprietorship. This option is not available if the LLC has multiple owners. The asset protection provided by the use of an entity depends quite a bit on the source of the claim. If a creditor/plaintiff has a claim based on a contract signed on behalf of the entity, then they likely will not be able to \"\"pierce the veil\"\" and collect the entity's debts from the individual owners. On the other hand, if a creditor/plaintiff has a claim based on negligence or another tort-like action (such as sexual harassment), then it's very likely that the individual(s) involved will also be sued as individuals, which takes away a lot of the effectiveness of the purported asset protection. The entity-based asset protection is also often unavailable even for contract claims because sophisticated creditors (like banks and landlords) will often insist the the business owners sign a personal guarantee putting their own assets at risk in the event that the business fails to honor its obligations. There's no particular type of entity which will allow you to entirely avoid tax. Most tax planning revolves around characterizing income and expense items in the most favorable ways possible, or around controlling the timing of the appearance of those items on the tax return.\"" }, { "id": "75195", "score": 0.7358094453811646, "text": "I have a very similar situation doing side IT projects. I set up an LLC for the business, created a separate bank account, and track things separately. I then pay myself from the LLC bank account based on my hours for the consulting job. (I keep a percentage in the LLC account to pay for expenses.) I used to do my taxes myself, but when I created this arrangement, I started having an accountant do them. An LLC will not affect your tax status, but it will protect you from liability and make things more accountable come tax time." } ]	[ { "id": "245447", "score": 0.6761857867240906, "text": "\"For simplicity, let's start by just considering cash back. In general, cash back from credit cards for personal use is not taxable, but for business use it is taxable (sort of, I'll explain later). The reason is most personal purchases are made with after tax dollars; you typically aren't deducting the cost of what you purchased from your personal income, so if you purchase something that costs $100 and you receive $2 back from the CC company, effectively you have paid $98 for that item but that wouldn't affect your tax bill. However, since businesses typically deduct most expenses, that same $100 deduction would have only been a $98 deduction for business tax purposes, so in this case the $2 should be accounted for. Note, you should not consider that $2 as income though; that would artificially inflate your revenue. It should be treated as a negative expense, similar to how you would handle returning an item you purchased and receiving a CC refund. Now for your specific questions: Part 1: As a small business owner, I wish to attend an annual seminar to improve my business. I have enough credit card reward points to cover the airfare, hotel, and rental car. Will those expenses still be deductible at the value displayed on the receipt? Effectively no, these expenses are not deductible. If you deduct them they will be completely counter-acted by the \"\"refund\"\" you receive for the payments. Part 2: Does it matter if those points are accrued on my personal credit card, rather than a business credit card? This is where it gets hairy. Suppose your company policy is that employees make purchases with their own personal credit cards and submit receipts for reimbursement. In this case the employer can simply reimburse and would not know or care if the employee is racking up rewards/points/cashback. The trick is, as the employee, you must always purchase business related items normally so you have receipts to show, and if you receive cashback on the side there seems to be a \"\"don't ask, don't tell\"\" rule that the IRS is OK with. It works the same way with heavy business travelers and airline miles- the free vacations those users get as perks are not treated as taxable income. However, I would not go out of my way to abuse this \"\"loophole\"\". Typically, things like travel (airfare, hotel, car rental, meals) are expected. But I wouldn't go purchase 100 company laptops on your personal card and ask the company to reimburse you. The company should purchase those 100 laptops on a company card and effectively reduce the sale price by the cashback received. (Or more realistically, negotiate a better discount with your account rep and just cut them a check.) Part 3: Would there be any difference between credit card points and brand-loyalty points? If the rental car were paid for with points earned directly on the rental car company's loyalty system (not a CC), would that yield a different result? There is no difference. Perhaps the simplest way to think about this is you can only deduct an expense that you actually incur. In other words, the expense should show up on a bank or CC statement. This is why when you volunteer and work 10 hours for a charity, you can't call that a \"\"donation\"\" of any amount of money because there is no actual payment made that would show up on a bank statement. Instead you could have billed the charity for your 10 hours of work, and then turned around and donated that same amount back to them, but it ends up being a wash.\"", "topk_rank": 0 }, { "id": "242923", "score": 0.6761108040809631, "text": "\"You will need to set up accounts in your chart of accounts for each of the partners. These are equity accounts where you can track your contributions, share of the profits and losses, and distributions. You're going to have to go back into the beginning years to get this right. I'm not sure what you mean by a \"\"Built-in function\"\". All the accounting software I'm familiar with requires data entry of some kind. You need to post your contributions and distributions to the correct accounts, and close properly at year end. You were indeed legally considered a partnership as soon as you started a for-profit business venture together. It's a bug in the legal system that a written partnership agreement is not necessarily required - you can form a partnership unknowingly. (BTW, a partnership actually is pretty far off from a sole proprietorship, legally and taxwise - the change from one person to two is major. It's the change from two to three or four or more that's incremental ;) I know you said you didn't want to consult a professional, but I have to say that I think it's worth the money to get your books set up by someone who has experience and can show you how to do it. And get a separate bank account for the partnership, if you haven't done so already. And check with your state to see if there are any requirements regarding partnerships. Hope this helps, Mariette IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law.\"", "topk_rank": 1 }, { "id": "250640", "score": 0.6760346293449402, "text": "With a limited company, you'll have to pay yourself a salary through PAYE. With income from your other job taking you over the higher-rate threshold, you should inform HMRC of this and get a tax code of DO for the second job, meaning 40% tax (and also both employer's and employee's National Insurance) will be deducted from the whole amount of the salary. See here. Dividends should be like any other dividend -- you won't pay extra tax when you receive them, but will have to declare them on your tax return and pay the tax later. See the official information here. You'll get a £5,000 tax allowance for dividends, but they'll still count as income for purposes of hitting the higher-rate threshold. I think in practice this means the first £5,000 will be tax-free, and the rest will be taxed at 32.5%. But note that you have to pay yourself at least the minimum wage as salary, not as dividend. I can't see IR35 being an issue. However, I'm not a professional, and this situation is complicated enough to need professional advice. Talk to an accountant or a tax advisor.", "topk_rank": 2 }, { "id": "269575", "score": 0.675836443901062, "text": "Based on the additional comment you gave, I would recommend that you keep the capital from the businesses separate as much as possible. It sounds like you won't get into any trouble legally if you make 'loans' or transfers of capital from one business into the other. But I would suggest that you keep detailed records of any transfers that you do make. The reason why is that in any business, it is important to know the economics of how your business makes money. If you find yourself making transfers repeatedly, then your business model may be bad. Even if your transfers are only to deal with the cost of poor customers, it could still mean that your business model needs to be adjusted. But if it's a question of the timing of cash flows, then there's really nothing wrong with taking some of the money from your successful pants operation and building up more working capital in your stationery shop.", "topk_rank": 3 }, { "id": "40257", "score": 0.675829291343689, "text": "\"The government thought of that a long time ago, and has any loophole there plugged. Like if you set up a company to buy a car and then allow you to use it ... You can use the car for company business, like driving to a customer's office to make a sales call or delivery, and the cost of the car is then tax deductible. But the company must either prohibit personal use of the car, or keep a log of personal versus business use and the personal use becomes taxable income to you. So at best you'd get to deduct an expense here and then you'd have to add it back there for a net change in taxable income of zero. In general the IRS is very careful about personal use of business property and makes it tough to get away with a free ride. I'm sure there are people who lie about it and get away with it because they're never audited, but even if that causes you no ethical qualms, it's very risky. I don't doubt that there are people with very smart lawyers who have found loopholes in the rules. But it's not as simple as, \"\"I call myself a business and now all my personal expenses become tax deductible business expenses.\"\" If you could do that, everybody would do it and no one would pay taxes. Which might be a good thing, but the IRS doesn't see it that way.\"", "topk_rank": 4 }, { "id": "161020", "score": 0.6757811903953552, "text": "\"This is going to vary tremendously from country to country (and even from state to state, in some cases). In general, though: Sole proprietorship: LLC: There are a lot of permutations depending on local law. One thing that isn't actually much of an advantage is the \"\"limited liability\"\" component of the LLC. Simply put: for a really small company the majority shareholders are usually going to be \"\"forced\"\" to stand surety for the company in their personal capacity. Limited liability only becomes available once the company has quite a lot of cash/assets (or the illusion of a lot of cash/assets). Update - noticed two further questions that appear very similar: Should all of these be merged?\"", "topk_rank": 5 }, { "id": "450147", "score": 0.6757360100746155, "text": "I'm glad keshlam and Bobby mentioned there are free tools, both from the IRS and private software companies. Also search for Volunteer Income Tax Assistance (VITA) in your area for individual help with your return. A walk-in tax clinic strength is tax preparation. CPAs and EAs provide a higher level of service. For example, they compile and review your prior year's return and your current year, although that is not relevant to your current situation. EAs and CPAs are allowed to represent you before the IRS. They can directly meet or contact the IRS and navigate audits and other requests on your behalf. Outside of tax season, an accountant can help you with tax planning and other taxable events. Some people do not hire a CPA or EA until they need representation. Establishing a relationship and familiarity with an accountant now can save time and money if you do anticipate you will need representation later. Part of what makes the tax code complicated is it can use very specific definitions of a common word. Furthermore, the specific definition of a phrase or word can change between publications. Also, the tax code uses all-encompassing definitions and provide detailed and lengthy lists that are not exhaustive; you may not find your situation listed or described in the tax code, yet you are responsible for reporting your taxable events. The best software cannot navigate you through your tax situation like an accountant. Lastly, some of the smartest people I have met are accountants and to get the most out of meeting with them you should be as familiar as possible with your position. The more familiar you are with accounting, the more advanced knowledge they can share with you. In short, you will probably need an accountant when: You need to explain yourself before the IRS (representation), you are encountering varying definitions in the tax code that have an impact on your return, or you have important economic activities that you are unsure of appropriate tax treatment.", "topk_rank": 6 }, { "id": "223624", "score": 0.6756690740585327, "text": "Yes, you need to include income from your freelance work on your tax return. In the eyes of the IRS, this is self-employment income from your sole-proprietorship business. The reason you don't see it mentioned in the 1040EZ instructions is that you can't use the 1040EZ form if you have self-employment income. You'll need to use the full 1040 form. Your business income and expenses will be reported on a Schedule C or Schedule C-EZ, and the result will end up on Line 12 of the 1040. Take a look at the requirements at the top of the C-EZ form; you probably meet them and can use it instead of the more complicated C form. If you have any deductible business expenses related to your freelance business, this would be done on Schedule C or C-EZ. If your freelance income was more than $400, you'll also need to pay self-employment tax. To do this, you file Schedule SE, and the tax from that schedule lands on form 1040 Line 57.", "topk_rank": 7 }, { "id": "519473", "score": 0.6755475997924805, "text": "\"The difference between the provincial/territorial low and high corporate income tax rates is clear if you read through the page you linked: Lower rate The lower rate applies to the income eligible for the federal small business deduction. One component of the small business deduction is the business limit. Some provinces or territories choose to use the federal business limit. Others establish their own business limit. Higher rate The higher rate applies to all other income. [emphasis mine] Essentially, you pay the lower rate only if your income qualifies for the federal small business deduction (SBD). If you then followed the small business deduction link in the same page, you'd find the SBD page describing \"\"active business income\"\" from a business carried on in Canada as qualifying for the small business deduction. If your corporation is an investment vehicle realizing passive investment income, generally that isn't considered \"\"active business income.\"\" Determining if your business qualifies for the SBD isn't trivial — it depends on the nature of your business and the kind and amount of income it generates. Talk to a qualified corporate tax accountant. If you're looking at doing IT contracting, also pay close attention to the definition of \"\"personal services business\"\", which wouldn't qualify for the SBD. Your accountant should be able to advise you how best to conduct your business in order to qualify for the SBD. Don't have a good accountant? Get one. I wouldn't operate as an incorporated IT contractor without one. I'll also note that the federal rate you would pay would also differ based on whether or not you qualified for the SBD. (15% if you didn't qualify, vs. 11% if you qualify.) The combined corporate income tax rate for a Canadian-controlled private corporation in Ontario that does qualify for the small business deduction would be 11% + 4.5% = 15.5% (in 2013). Additional reading:\"", "topk_rank": 8 }, { "id": "391668", "score": 0.6755473613739014, "text": "A company would have significantly less capital to pay a skilled worker at that point though. Keep that in mind. So, to circle back now. Small businesses make up a decent amount of our GDP and job creation. Let's say you have had it working fir someone else and want to strike out on your own. You decide to start an e-commerce site, reselling from a factory on amazon. Simple enough set up. Online marketing made simple through amazon, google and facebook. But you don't have any idea how to translate that info into QuickBooks and push out the financial info needed for taxes, payroll, etc. You need to hire a bookkeeper to sort it out, but it os only 5 hours worth of work per week. Do you hire them as a salaried employee giving them a liveable wage or pay them the rate you agreed upon for those 5 hours?", "topk_rank": 9 }, { "id": "133152", "score": 0.6754940152168274, "text": "The estimated approach puts more burden on you to get it right. Depending on when in the year you make the sale, it may or may not have advantages to you in addition. Other than the responsibility of ensuring that you make the payment on time, the pros and cons seem to be: Either strategy is legitimate. It depends on when in the year you have the sale, how sure you are of the sale, and just your personal preference on how to get this done. Your total tax due for the year will not be different (as long as you pay in such as way that you don't incur late penalties in any quarter).", "topk_rank": 10 }, { "id": "373180", "score": 0.675491213798523, "text": "A tax liability account is a common thing. In my own books I track US-based social insurance (Medicare and Social Security) using such an account. At the time I pay an employee, a tax liability is incurred, increasing my tax liability account; at the same time, on the other end of the double-entry, I increase a tax expense account. Notably, though, the US IRS does not necessarily require that the tax is paid at the time it is incurred. In my case I incur a liability twice a month, but I only have to pay the taxes quarterly. So, between the time of incurring and the time of remitting/paying, the amount is held in the tax liability account. At the time that I remit payment to the IRS, the transaction will decrease both my checking account and also, on the other end of the double-entry, my liability account. To answer your question in short, use an expense account for your other-side-account.", "topk_rank": 11 }, { "id": "18570", "score": 0.6753398776054382, "text": "Don't overthink it. As an employee, whether of your own corporation or of someone else, you get a salary and there are deductions taken out. As the owner of a business you get (hopefully) business profits as well. And, in general, you often have other sources of income from investments, etc. Your estimated tax payments are based on the difference between what was withheld from your salary and what you will owe, based on salary, business income, and other sources. So, in essence, you just add up all the income you expect, estimate what the tax bill will be, and subtract what's been withheld. That's your estimated tax payment.", "topk_rank": 12 }, { "id": "351925", "score": 0.6753131151199341, "text": "\"1 - in most cases, the difference between filing joint or married filing single is close to zero. When there is a difference you're better off filing joint. 2 - The way the W4 works is based on how many allowances you claim. Unfortunately, even in the day of computers, it does not allow for a simple \"\"well my deduction are $xxx, don't tax that money.\"\" Each allowance is equal to one exemption, same as you get for being you, same as the wife gets, same as each kid. 3 people X $3800 = $11,400 you are telling the employer to take off the top before calculating your tax. She does this by using Circular E and is able to calculate your tax as you request. If one is in the 15% bracket, one more exemption changes the tax withheld by $570. So if you were going to owe $400 in April, one few exemption will have you overpay $170. i.e. in this 15% bracket, each exemption changes annual withholding by that $570. For most people, running the W4 numbers will get them very close, and only if they are getting back or owing over $500, will they even think of adjusting. 3 - My recently published Last Minute Tax Moves offers a number of interesting ideas to address this. The concept of grouping deductions in odd years is worth noting. 4 - I'm not sure what this means, 2 accounts each worth $5000 should grow at the same rate if invested the same. The time it makes sense to load one person's account first is if they have better matching. You say you are not sure what percent your wife's company matches. You need to change this. For both of your retirement plans you need to know every detail, exact way to maximize matching, expense ratios for the investments you choose, any other fees, etc. Knowledge is power, and all that. In What is an appropriate level of 401k fees or expenses in a typical plan? I go on to preach about how fees can wipe out any tax benefit over time. For any new investor, my first warning is always to understand what you are getting into. If you can't explain it to a friend, you shouldn't be in it. Edit - you first need to understand what choices are within the accounts. The 4% and 6% are in hindsight, right? These are not fixed returns. You should look at the choices and more heavily fund the account with the better selection. Deposit to her account at least to grab the match. As far as the longer term goals, see how the house purchase goes. Life has a way of sending you two kids and forcing you to tighten the budget. You may have other ideas in three years. (I have no P2P lending experience, by the way.) Last - many advise that separate finances are a bad path for a couple. It depends. Jane and I have separate check books, and every paycheck just keep enough to write small checks without worry, most of the money goes to the house account. Whatever works for you is what you should do. We've been happily married for most of the 17 years we've been married.\"", "topk_rank": 13 }, { "id": "260795", "score": 0.6752662062644958, "text": "Whether you're self-employed or not, knowing exactly how much tax you will pay is not always an easy task. Various actions you can take (e.g., charitable donations, IRA contributions, selling stocks) may increase or reduce your tax liability. One tool I've found useful for estimating federal taxes is the Excel 1040 spreadsheet. This is a spreadsheet version of the income tax return form. It is not official and is not created by the IRS, but is maintained as a labor of love by a private individual. In practice, however, it is pretty much an accurate implementation of the tax calculation algorithms encoded in the tax forms and instructions. The nice thing about it is that it's a spreadsheet. You can plug numbers into various slots in the spreadsheet and see how they affect your federal tax liability. (You may also owe state taxes depending on what state you live in.) Of course, the estimates you get by doing this are only (at most) as accurate as your estimates of the various numbers you plug in. Still, I think it's a free and useful way to get a ballpark estimate of your tax liability based on numbers that you can more easily estimate (e.g., how much money you expect to earn).", "topk_rank": 14 }, { "id": "296345", "score": 0.6751994490623474, "text": "\"From Rich Dad, Poor Dad. 3 Major Things: With rental real estate, in addition to mortgage interest, you also deduct property taxes, and must claim depreciation (cost of house / 27.5 years) Business Expenses. For example, buy a yacht and put it in a charter fleet. Deduct interest on the loan, depreciation of the asset, property taxes, upkeep of the boat. Your \"\"business\"\" earns profit from chartering the boat, which if I recall correctly is taxed at a lower rate. You get to go sailing for free. Then there was the concept of subdividing the businesses. If you own a restaurant, create another business to own the property, and the equipment used in the company. Then lease the equipment and rent the land to the restaurant. Now admittedly I thought this was like the Daylight Savings plan of tax avoidance, I mean now aren't you essentially having two companies paying half the taxes. I am sure there are well paid CPAs that make the math happen, perhaps using insurance plans.. Perhaps each business funds a \"\"whole life\"\" insurance account, and contributes vast amounts into that. Then you take a loan from your insurance account. Loans of course are not income, so not taxed. The third way is to create your own bank. Banks are required to have reserves of 9%. Meaning if I have $100 dollars, the FDIA allows me to loan $1,111. I then charge you 20% interest, or $222/yr. Now how much can I loan? ...well you can see how profitable that is. Sure you pay taxes, but when you print your own money who cares? Most of this is just gleamed from books, and government publications, but that was my general understanding of it. Feel free to correct the finer points.\"", "topk_rank": 15 }, { "id": "40276", "score": 0.6751158833503723, "text": "Hey, sole proprietorships called (don't those comprise roughly 50% of all businesses?) they want to know what corporate tax is. Hell, most of them want to know what payroll tax is. They just know it's not fun paying both halves of it. From my perspective over on the incorporated side: Oh HEY, I'm incorporated as an S-Corp or and LLC -remember those?- and they're going to suck out five percent MORE of my GROSS. I'll fax you my cash flows statement. It's going to look like a severed artery. For those lucky enough to be joining us from the C-Corp world, enjoy trying to retain your key employees without seeing your payroll costs go through the roof. If you have all your employees by the balls because they don't have the skills to easily transfer [if you think you do, hint: you don't] then I hope you have the stomach to watch them all falling further and further behind and into debt. I don't.", "topk_rank": 16 }, { "id": "599835", "score": 0.675110936164856, "text": "For 2014/15 it looks something like this: To make it a bit clearer, let's also plot the difference in net income for self-employment and a single person company compared to employment: Self-employment is slightly worse between £5885 and about £10,500 because Class 2 NI kicks in before the employed person starts paying any tax. After that, self-employment is better because you pay 9% Class 4 NI rather than 12% Class 1 NI. Once higher rate tax kicks in, the saving stops growing. The single-person company is most tax-efficient at all points, ignoring any accountancy costs it incurs. Strange things happen between £100k and about £135k because the withdrawal of the personal allowance kicks in at a different point when receiving dividends. We can also plot the percentage of income paid as tax for each case: The strange kink for self-employment below £10k is caused by Class 2 NI again. Employment and self-employment both gradually tend towards paying 47%, reaching 46.5% for £2m gross income. The company tends towards 44.44%, reaching 43.6% for £2m gross income.", "topk_rank": 17 }, { "id": "75920", "score": 0.6748809814453125, "text": "Yes, use a separate Form 8829 for each home used for business during the year. The top of 8829 includes that exact instruction.", "topk_rank": 18 }, { "id": "167494", "score": 0.674778401851654, "text": "\"I'm not an accountant, and you should probably get the advice of one to be sure about what to do. However, if the business is a sole-proprietorship, you'd complete a Schedule C for the business, and you'd end up with a loss at the end. If the investment you made in the business is considered to be entirely or partially \"\"at risk\"\" per the IRS definition, you'd get to claim all or part of the loss as a reduction in your income. If the business was an LLC, then you're beyond my already limited knowledge. There may be some other considerations based on whether this was really a business vs a hobby, and whether or not you're going to try to continue with the business, or whether you've shut it down. I'm not sure about those parts, but they'd be worth exploring with an accountant.\"", "topk_rank": 19 } ]
52	New vending route business, not sure how to determine taxes	[ { "id": "566417", "score": 0.7028246521949768, "text": "You're not paying taxes three times but you are paying three different taxes (or more). Sales tax is a business expense, just like costs of goods sold or interest on a loan. Then, depending on how you structure the business, the net income of the business just hits you personally and you pay income taxes. You can work with a tax person to lend some efficiency to this on a long term basis, but it's not like you pay all the taxes against your gross receipts. Whether or not you can make this profitable is a whole different issue." }, { "id": "125111", "score": 0.8062687516212463, "text": "\"Actually, calculating taxes isn't that difficult. You will pay a percentage of your gross sales to state and local sales tax, and as a single-owner LLC your profits (after sales taxes) should pass through to your individual tax tax return (according to this IRS article. They are not cumulative since they have different bases (gross sales versus net profit). That said, when determining if your future business is profitable, you need to ask \"\"what aspects of the business can I control\"\"? Can you control how much each item sells for? Increasing your prices will increase your gross margins, which should be higher than your fixed and variable costs. If your margins do not exceed your costs, then you will note be profitable. Note that as a vendor you are at a slight disadvantage to a retailer, since tax has to be baked in to your prices. A retailer can advertise the pre-tax price, and pass-through sales tax at the point of sale. However, people expect to pay more at a vending machine, so the disadvantage is very small (you aren't directly competing with retailers anyways).\"" } ]	[ { "id": "172745", "score": 0.7153024077415466, "text": "\"Re the business license - in California business licenses are given by the municipal/county governments, so you'll have to check that with your city hall or county office. Re taxes - yes, you'll have to pay taxes, as with any income. Services are considered \"\"imputed income\"\", and generally you'd recognize income to the extent they would be paying had they been paying the full price (or the actual cost of services provided, if more). Since this is a hobby and not a for-profit enterprise, your deductions may be limited by the actual income and the 2% AGI threshold. See more here.\"", "topk_rank": 0 }, { "id": "328853", "score": 0.7119725942611694, "text": "Its best you start this venture as a Business entity. Whatever the customer pays you is your income. Whatever you pay to the hotel will be your expenses. Apart from this there will be other expenses. So essentially difference between your income and expense will be the profit of the entity and tax will be on the profit. If you do not want to start an Business entity and pay as an individual then please add the country tag, depending on the country there may different ways to account for the funds.", "topk_rank": 1 }, { "id": "313361", "score": 0.7118266820907593, "text": "\"If this is truly hobby income (you do not intend to operate as a business and don't have a profit motive) then report the income on Line 21 (\"\"other income\"\") of form 1040. If this is a business, then the income and expenses belong on a Schedule C to form 1040. The distinction is in the treatment of profits and losses - your net profits on a business are subject to self-employment tax, while hobby income is not. Net losses on a business are deductible against other income; net losses on a hobby are miscellaneous itemized deductions in the \"\"2%\"\" box on Schedule A. From a tax point of view, selling apps and accepting donations are different. Arguably, donations are gifts; gifts are not taxable income. The hobby/business and income/gift distinctions are tricky. If the dollar amounts are small, nobody (including the IRS) really cares. If you start making or losing a lot of money, you'll want to get a good tax person lined up who can help you decide how to characterize these items of income and expens, how to put them on your return, and how to defend the return on audit if necessary.\"", "topk_rank": 2 }, { "id": "365456", "score": 0.7111450433731079, "text": "There are quite a few questions as to how you are recording your income and expenses. If you are running the bakery as a Sole Proprietor, with all the income and expense in a business account; then things are easy. You just have to pay tax on the profit [as per the standard tax bracket]. If you running it as individual, you are still only liable to pay tax on profit and not turnover, however you need to keep a proper book of accounts showing income and expense. Get a Accountant to do this for you there are some thing your can claim as expense, some you can't.", "topk_rank": 3 }, { "id": "547941", "score": 0.7110642194747925, "text": "\"These kinds of questions can be rather tricky. I've struggled with this sort of thing in the past when I had income from a hobby, and I wanted to ensure that it was indeed \"\"hobby income\"\" and I didn't need to call it \"\"self-employment\"\". Here are a few resources from the IRS: There's a lot of overlap among these resources, of course. Here's the relevant portion of Publication 535, which I think is reasonable guidance on how the IRS looks at things: In determining whether you are carrying on an activity for profit, several factors are taken into account. No one factor alone is decisive. Among the factors to consider are whether: Most of the guidance looks to be centered around what one would need to do to convince the IRS that an activity actually is a business, because then one can deduct the \"\"business expenses\"\", even if that brings the total \"\"business income\"\" negative (and I'm guessing that's a fraud problem the IRS needs to deal with more often). There's not nearly as much about how to convince the IRS that an activity isn't a business and thus can be thrown into \"\"Other Income\"\" instead of needing to pay self-employment tax. Presumably the same principles should apply going either way, though. If after reading through the information they provide, you decide in good faith that your activity is really just \"\"Other income\"\" and not \"\"a business you're in on the side\"\", I would find it likely that the IRS would agree with you if they ever questioned you on it and you provided your reasoning, assuming your reasoning is reasonable. (Though it's always possible that reasonable people could end up disagreeing on some things even given the same set of facts.) Just keep good records about what you did and why, and don't get too panicked about it once you've done your due diligence. Just file based on all the information you know.\"", "topk_rank": 4 }, { "id": "231841", "score": 0.7108295559883118, "text": "Any commercially distributed product needs to be taxed. Depending on country of residence and distribution, legislation varies widely, therefore the best place to ask would be your local small business counsel or even your local taxation office. Depending on the size of your business, you might need a license to sell them in the first place anyway and that comes with its own set of prerequisites.", "topk_rank": 5 }, { "id": "599876", "score": 0.7082954049110413, "text": "You are in business for yourself. You file Schedule C with your income tax return, and can deduct the business expenses and the cost of goods sold from the gross receipts of your business. If you have inventory (things bought but not yet sold by the end of the year of purchase), then there are other calculations that need to be done. You will have to pay income tax as well as Social Security and Medicare taxes (both the employee's share and the employer's share) on the net profits from this business activity.", "topk_rank": 6 }, { "id": "407540", "score": 0.70709228515625, "text": "Sales tax permits come from the state in which your business is operating. You need a business license first for them to issue you one. US sales taxes are collected by the business and remitted to the government, you need the permit in order to do this. A bigger question is whether it's legal for you to engage in business in the first place. What is your visa status?", "topk_rank": 7 }, { "id": "142623", "score": 0.7067323327064514, "text": "\"You need to hire a tax professional and have them sort it out for you properly and advise you on how to proceed next. Don't do it yourself, you're way past the stage when you could. You're out of compliance, and you're right - there are penalties that a professional might know how to mitigate, and maybe even negotiate a waiver with the IRS, depending on the circumstances of the case. Be careful of answers like \"\"you don't need to pay anything\"\" that are based on nothing of facts. Based on what you said in the question and in the comments, it actually sounds like you do have to pay something, and you're in trouble with the IRS already. It might be that you misunderstood something in the past (e.g.: you said the business had filed taxes before, but in fact that might never happened and you're confusing \"\"business filed taxes\"\" with \"\"I filed schedule C\"\") or it might be the actual factual representation of things (you did in fact filed a tax return for your business with the IRS, either form 1120 of some kind or 1065). In any case a good licensed (CPA or EA) professional will help you sort it out and educate you on what you need to do in the future.\"", "topk_rank": 8 }, { "id": "253210", "score": 0.7059889435768127, "text": "This may not exactly answer your question but, as a small business owner, I would highly recommend having a professional handle your taxes. It is worth the money to have it done correctly rather than doing something wrong and getting audited or worse having penalties assessed and owing more than you thought would be possible. I would recommend this especially if this is how you make your primary income, you can always write it off as a business expense.", "topk_rank": 9 }, { "id": "73891", "score": 0.7057920694351196, "text": "Disclaimer: I am not a tax specialist You probably need a sales tax permit if you're going to sell goods, since just about every state taxes goods, though some states have exemptions for various types of goods. For services, it gets tricker. There is a database here that lists what services are taxed in what states; in Wyoming, for example, cellphone services and diaper services are taxed, while insurance services and barber services are not. For selling over the internet, it gets even dicier. There's a guide on nolo.com that claims to be comprehensive; it states that the default rule of thumb is that if you have a physical presence in a state, such as a warehouse or a retail shop or an office, you must collect tax on sales in that state. Given your situation, you probably only need to collect sales tax on customers in Wyoming. Probably. In any event, I'd advice having a chat with an accountant in Wyoming who can help walk you through what permits may or may not be needed.", "topk_rank": 10 }, { "id": "78486", "score": 0.705410897731781, "text": "Given your clarifying points, it sounds like you are running both businesses as one combined business. As such, you should be able to get just a single HST number and use that. However, let me please urge you to contact a professional accountant and possibly a lawyer, as it is very unusual to be performing these services without a business license, and you may be exposing yourself to civil penalties and placing your personal assets (e.g. your house) at risk. Additionally, it may be beneficial for you to run these as businesses as you can likely write off (more of) your expenses.", "topk_rank": 11 }, { "id": "128861", "score": 0.7049592137336731, "text": "Such activity is normally referred to as bartering income. From the IRS site - You must include in gross income in the year of receipt the fair market value of goods or services received from bartering. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). If you failed to report this income, correct your return by filing a Form 1040X (PDF), Amended U.S. Individual Income Tax Return. Refer to Topic 308 and Amended Returns for information on filing an amended return.", "topk_rank": 12 }, { "id": "460325", "score": 0.7041614651679993, "text": "Recommend using quickbooks for account management. If you use the manufacturing and wholesale you can track POs from vendors, estimates, bill payment quotes and invoicing (there's an editor to customize your set up)Also, most accountants are very familiar with this platform so come tax time they'll be able to give you a hand no problem. For accepting payments I highly suggest asking for checks. If you do accept credit cards keep in mind most payment processors charge a percent (1.5-3%) depending on transaction amounts and quantities of transactions. So you'll want to mark up your products by at least that amount. Another area is sales tax. Since you are not the end user you should be able to avoid sales tax on the items you will be selling to customers. You then charge the customer this sales tax. Not sure about NJ but in Texas we are 8.25%. I then pay the state of Texas the taxes collected quarterly. Edit: also make sure you have separate finances for the LLC. Separate checking, separate credit card, separate everything! If you end up using an account that is tied to you personally then you run into the risk of losing the protective nature of an LLC from a legal standpoint. Edit2: by separate I mean using your IRS issued EIN number to open accounts with the LLC name. When you sign anything on behalf of the company make sure to add the name of the company next to it to show the company is making the signature not you. For instance u/sexlessnights Company name, LLC", "topk_rank": 13 }, { "id": "542213", "score": 0.7040525674819946, "text": "\"From the IRS perspective, there's no difference between \"\"your taxes\"\" and \"\"your sole proprietorship's taxes\"\", they're all just \"\"your taxes\"\". While I could see it being very useful and wise to track your business's activities separately, and use separate bank accounts and the like, this is just a convenience to help you in your personal accounting, and not something that needs to relate directly to how tax forms are completed or taxes are paid. When calculating your taxes, if you want to figure out how much \"\"you\"\" owe vs. how much \"\"your business\"\" owes, you'll have to do so yourself. One approach might be just to take the amount that your Schedule C puts as income on your return and multiply by your marginal tax rate. Another approach might be to have your tax software run the calculations as though you had no business income, and see what just \"\"your personal\"\" taxes would have been without the business. If you think of the business income as being \"\"first\"\" and should use up the lower brackets rather than your personal income, maybe do it the other way around and have your software run the calculations as though you had only the business income and no other personal/investment income, and see what the amount of taxes would be then. Once you've figured out a good allocation, the actual mechanics of paying some \"\"personal tax amount\"\" from your personal bank account and some \"\"business tax amount\"\" from your business bank account are up to you. I'd probably just transfer the money from my business account to my personal account and pay all the taxes from the personal account. Writing two separate checks, one from each account, that total to the correct amount, I'm sure would work just fine as well. You can probably make separate payments from each account electronically through Direct Pay or EFTPS as well. As long as all taxes are paid by the deadline, I don't think the IRS is too picky about the details of how many payments are made.\"", "topk_rank": 14 }, { "id": "516548", "score": 0.7027367353439331, "text": "The IRS defines income quite specifically. On the topic What is Taxable and Nontaxable Income, they note: You can receive income in the form of money, property, or services. This section discusses many kinds of income that are taxable or nontaxable. It includes discussions on employee wages and fringe benefits, and income from bartering, partnerships, S corporations, and royalties. Bartering, or giving someone wages (or similar) in something other than currency (or some other specifically defined things, like fringe benefits), is taxed at fair market value: Bartering Bartering is an exchange of property or services. You must include in your income, at the time received, the fair market value of property or services you receive in bartering. For additional information, Refer to Tax Topic 420 - Bartering Income and Barter Exchanges. Bartering is more specifically covered in Topic 420 - Bartering Income: You must include in gross income in the year of receipt the fair market value of goods or services received from bartering. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). If you failed to report this income, correct your return by filing a Form 1040X (PDF), Amended U.S. Individual Income Tax Return. Refer to Topic 308 for information on filing an amended return. More details about income in general beyond the above articles is available in Publication 525, Taxable and Nontaxable Income. It goes into great detail about different kinds of income. In your example, you'd have to calculate the fair market value of an avocado, and then determine how much cash-equivalent you were paid in. The IRS wouldn't necessarily tell you what that value was; you'd calculate it based on something you feel you could justify to them afterwards. The way I'd do it would be to write down the price of avocados at each pay period, and apply a dollar-cost-averaging type method to determine the total pay's fair value. While the avocado example is of course largely absurd, the advent of bitcoins has made this much more relevant. Publication 525 has this to say about virtual currency: Virtual Currency. If your employer gives you virtual currency (such as Bitcoin) as payment for your services, you must include the fair market value of the currency in your income. The fair market value of virtual currency (such as Bitcoin) paid as wages is subject to federal income tax withholding, Federal Insurance Contribution Act (FICA) tax, and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W-2, Wage and Tax Statement. Gold would be fundamentally similar - although I am not sure it's legal to pay someone in gold; assuming it were, though, its fair market value would be again the definition of income. Similarly, if you're paid in another country's currency, the US dollar equivalent of that is what you'll pay taxes on, at the fair market value of that currency in US dollars.", "topk_rank": 15 }, { "id": "283505", "score": 0.7027108669281006, "text": "If your net profit is $0, then no, you will not owe income tax as a result of providing this service. But there's a lot more to consider than just that... Before you begin you'll need to decide if this is a business or a hobby. Based on the fact that you don't intend to make a profit, you are probably going to be calling it a hobby for tax purposes. Regardless of whether it is a business or a hobby, since you will be accepting payments from people, you will need to report the income on your tax return. As both a business and a hobby you can deduct all of your expenses to bring your profit down to $0. (Assuming all the expenses are legitimate business/hobby expenses.) The main differences between business and hobby are: If you choose to run as a business you'll likely save quite a bit of money by avoiding the 2% rule, and also by being able to deduct any non-specific-customer expenses and take a loss. Be careful though that you don't go too many years with a business loss or the IRS may re-classify it as a hobby, which may include an audit. If you decide to run as a business you may need to charge a little more than just expenses to attempt to turn a profit, or at least break even.", "topk_rank": 16 }, { "id": "107584", "score": 0.7023774981498718, "text": "or just input it in my accounting software along with receipts, and then when I'm doing taxes this would go under the investment or loses (is it somewhere along that line)? Yes, this. Generally, for the long term you should have a separate bank account and charge card for your business. I started my business (LLC) by filing online, and paying a fee for a registration, and that makes it a business cost right? Startup cost. There are special rules about this. Talk to your tax adviser. For the amounts in question you could probably expense it, but verify.", "topk_rank": 17 }, { "id": "55500", "score": 0.702177107334137, "text": "If the business activities are closely related you could combine them into a single Schedule C, but in your case it sounds like it should be two separate Schedule C's. The loss from one will offset profit from the other, and your self-employment and income taxes will be based on the net of the two businesses. Any business can generate losses, make sure your expenses are reasonable and documented, there are plenty of resources out there for helping you decide which expenses are proper for each business. There is some truth to the warning that not showing profit in 2/5 of years can raise flags at the IRS, and they may deem your business a hobby, which disallows losses. That is not a hard rule, legitimate businesses can lose money for years on end without issue, if you're trying to make money at it, you'll likely be fine.", "topk_rank": 18 }, { "id": "576218", "score": 0.7018675208091736, "text": "If the money comes to you, then it's income. If the money goes out from you, it's an expense. You get to handle the appropriate tax documentation for those business transactions. You may also have the pleasure of filing 1099-MISC forms for all of your blogging buddies if you've paid them more than $600. (Not 100% sure on this one.) I was in a blog network that had some advertising deals, and we tried to keep the payments separate because it was cleaner that way. If I were you, I'd always charge a finder's fee because it is extra work for you to do what you're doing.", "topk_rank": 19 } ]
53	Finding a good small business CPA?	[ { "id": "84077", "score": 0.5844925045967102, "text": "Ask your colleagues! I know that sounds obvious, but just go to where people who do your sort of business hang out (or better, find some venture capital firms and ask their portfolio companies). It's not something people would keep secret from you..." }, { "id": "562798", "score": 0.6154426336288452, "text": "Check your local better business bureau. They can tell you who is in business, who's bonded, and who has had a lot of complaints levied against them for shoddy practices." }, { "id": "102362", "score": 0.558761715888977, "text": "People to ask: Granted I live in a small town, but when the same guy's name comes up more than once that's who you should hire..." }, { "id": "323269", "score": null, "text": "Ask for at least 10 references. Ask for 10 because it will be harder for them to refer you to ringer references like their family or friends." }, { "id": "119308", "score": 0.6907622218132019, "text": "I have had better experiences with accountants in smaller towns. It seems they are used to working with small businesses and their reputation is very important to them." }, { "id": "184852", "score": 0.7796489000320435, "text": "The first place to look for an accountant is the American Institute of Certified Public Accountants which has a directory of CPAs, accounting companies, and local accounting societies. I was also looking for one for my own small firm. It really helps." }, { "id": "119210", "score": 0.6600503921508789, "text": "Consult your local Small Business Administration office - they may have resources that can help you find what you're looking for." }, { "id": "176196", "score": 0.6457377672195435, "text": "Look for an accountant who brings not only expertise in number crunching, but consulting and business planning - a full package." } ]	[ { "id": "166977", "score": 0.6149874925613403, "text": "If you sell through an intermediate who sets up the shop for you, odds are they collect and pay the sales tax for you. My experience is with publishing books through Amazon, where they definitely handle this for you. If you can find a retailer that will handle the tax implications, that might be a good reason to use them. It looks like Etsy uses a different model where you yourself are responsible for the sales tax, which requires you to register with your state (looks like this is the information for New York) and pay the taxes yourself on a regular basis; see this link for a simple guide. If you're doing this, you'll need to keep track of how much tax you owe from your sales each month, quarter, or year (depending on the state laws). You can usually be a sole proprietor, which is the easiest business structure to set up; if you want to limit your legal liability, or work with a partner, you may want to look into other forms of business structure, but for most craftspeople a sole proprietorship is fine to start out with. If you do a sole proprietorship, you can probably file the income on a 1040 Schedule C when you do your personal taxes each year.", "topk_rank": 0 }, { "id": "26762", "score": 0.6149832010269165, "text": "If you are in need of a dependable financial advisor Dundee, then MMG Archbold Chartered Accountants can help you out. They have experienced advisors who provide expert guidance on business finance, plans and more. To find out more about this company and the services they have on offer, visit their website at http://mmgca.co.uk/.", "topk_rank": 1 }, { "id": "151554", "score": 0.6148493885993958, "text": "Given your needs, GNUcash will do swimmingly. I've used it for the past 3 years and while it's a gradual learning process, it's been able to resolve most stuff I've thrown at it. Schedule bills and deposits in the calendar view so I can keep an eye on cash flow. GNUcash has scheduled payments and receipts and reconcilation, should you need them. I prefer to keep enough float to cover monthly expenses in accounts rather than monitor potential shortfalls. Track all my stock and mutual fund investments across numerous accounts. It pulls stock, mutual and bond quotes from lots of places, domestic and foreign. It can also pull transaction data from your brokers, if they support that. I manually enter all my transactions so I can keep control of them. I just reconcile what I entered into Quicken based on the statements sent to me. I do not use Quicken's bill pay There's a reconciliation mode, but I don't use it personally. The purpose of reconcilation is less about catching bank errors and more about agreeing on the truth so that you don't incur bank fees. When I was doing this by hand I found I had a terrible data entry error rate, but on the other hand, the bayesian importer likes to mark gasoline purchases from the local grocery store as groceries rather than gas. I categorize all my expenditures for help come tax time. GNUcash has accounts, and you can mark expense accounts as tax related. It also generates certain tax forms for you if you need that. Not sure what all you're categorizing that's helpful at tax time though. I use numerous reports including. Net Worth tracking, Cash not is retirement funds and total retirement savings. Tons of reports, and the newest version supports SQL backends if you prefer that vs their reports.", "topk_rank": 2 }, { "id": "266567", "score": 0.6146987676620483, "text": "Let me offer an anecdote to this - I started helping a woman, widowed, retired, who had been paying $500/yr to get her taxes done. As I mentioned in my comment here, she got a checklist each year and provided the info requested. From where I sat, it seemed a clerk entered the info into tax software. As part of the transition to me helping her, I asked the prior guy (very nice guy, really) for a quick consult. She took the standard deduction, but also showed a nice annual donation. Didn't take advantage of the QCD, donate directly from an IRA (she was over 70-1/2) to save on the tax of this sum. That could have saved her $500. She was in the 15% bracket, with some room left for a Roth conversion. Converting just enough to 'fill' that bracket each year seemed a decent strategy as it would avoid the 25% rate as her RMDs rose each year and would push her to 25%. To both items the guy suggested that this was not his area, he was not a financial planner. Yes, I understand different expertise. With how simple her return was, I didn't understand the value he added. If you go with a professional, be sure you have an understanding of what he will and won't do for you.", "topk_rank": 3 }, { "id": "476632", "score": 0.6146315932273865, "text": "\"Rob - I'm sorry your first visit here has been unpleasant. What you are asking for is beyond the capability of most software. If you look at Fairmark.com, you find the standard deduction for married filing joint is $12,200 in 2012, and $12,400 in 2013. I offer this anecdote to share a 'deduction' story - The first year I did my MIL's taxes, I had to explain that she didn't have enough deductions to itemize. Every year since, she hands me a file full of paper substantiating medical deductions that don't exceed 7.5% of her income. In turn, I give her two folders back, one with the 5 or so documents I needed, and the rest labeled \"\"trash\"\". Fewer than 30% of filers itemize. And a good portion of those that do, have no question that's the right thing to do. e.g. my property tax is more than the $12K, so anything else I have that's a deduction adds right to the number. It's really just those people who are at the edge that are likely frustrated. I wrote an article regarding Standard Deduction vs Itemizing, in which I describe a method of pulling in one's deductible expenses into Odd years, reducing the number in Even years, to allow a bi-annual itemization. If this is your situation, you'll find the concept interesting. You also ask about filing status. Think on this for a minute. After pulling in our W2s (TurboTax imports the data right from ADP), I do the same for our stock info. The stock info, and all Schedule A deductions aren't assigned a name. So any effort to split them in search of savings by using Married Filing Separate, would first require splitting these up. TurboTax has a 'what-if' worksheet for this function, but when the 'marriage penalty' was lifted years ago, the change in status had no value. Items that phaseout over certain income levels are often lost to the separate filer anyway. When I got married, I found my real estate losses each year could not be taken, they accumulated until I either sold, or until our income dropped when the Mrs retired. So, while is respect your desire for these magic dials within the software, I think it's fair to say they would provide little value to most people. If this thread stays open, I'd be curious if anyone can cite an example where filing separately actually benefits the couple.\"", "topk_rank": 4 }, { "id": "413694", "score": 0.614324152469635, "text": "\"The \"\"hire a pro\"\" is quite correct, if you are truly making this kind of money. That said, I believe in a certain amount of self-education so you don't follow a pro's advice blindly. First, I wrote an article that discussed Marginal Tax Rates, and it's worth understanding. It simply means that as your income rises past certain thresholds, the tax rate also will change a bit. You are on track to be in the top rate, 33%. Next, Solo 401(k). You didn't ask about retirement accounts, but the combined situations of making this sum of money and just setting it aside, leads me to suggest this. Since you are both employer and employee, the Solo 401(k) limit is a combined $66,500. Seems like a lot, but if you are really on track to make $500K this year, that's just over 10% saved. Then, whatever the pro recommends for your status, you'll still have some kind of Social Security obligation, as both employer and employee, so that's another 15% or so for the first $110K. Last, some of the answers seemed to imply that you'll settle in April. Not quite. You are required to pay your tax through the year and if you wait until April to pay the tax along with your return, you will have a very unpleasant tax bill. (I mean it will have penalties for underpayment through the year.) This is to be avoided. I offer this because often a pro will have a specialty and not go outside that focus. It's possible to find the guy that knows everything about setting you up as an LLC or Sole Proprietorship, yet doesn't have the 401(k) conversation. Good luck, please let us know here how the Pro discussion goes for you.\"", "topk_rank": 5 }, { "id": "391463", "score": 0.6141570806503296, "text": "Short Answer: Go to the bank and ask them about your options for opening a business account. Talk to an attorney about the paperwork and company structure and taxes. Long Answer: You and your buddies jointly own an unincorporated business. This is called a partnership. Yes, there is paperwork involved in doing it properly and the fact that you guys are minors might complicate that paperwork a little bit. In terms of what type of account to open: A business account! Running a business through a personal account (joint or otherwise) is a sure way to get that account shut down. Your bank will want to know the structure of the business, and will require documentation to support that. For a partnership, they will probably want a copy of the partnership agreement. For an LLC, they'll probably want a copy of the filing with Ohio Secretary of State as well as the operating agreement etc. That said, pop into a local bank and ask a business banker directly what you should do. They deal with new businesses all the time, and would probably be best qualified to help you figure out the bank account aspect of it. Regarding business structure... this really impacts a lot more than just the type of bank account to open and how you file your taxes. It is something you guys should really discuss with an attorney. What happens if down the road one of you quits? What happens if you want to bring in a new partner later? What if there is a disagreement about something? These are all things that the attorney can help you address ahead of time - which is a heck of a lot easier (and cheaper) than trying to figure it out later. You're brining in enough that you should certainly be able to buy a couple hours of a lawyer's time. Getting the formation stuff right could save all of you a lot of money and heartache later.", "topk_rank": 6 }, { "id": "221281", "score": 0.6141037344932556, "text": "I've actually had the same problem several years running, and it's solved by filing my corporate taxes, then taking those schedules, and applying them to my 1040, along with a Schedule C You'll want to work with an accountant on this, but basically you're going to take the total set of business expenses as 1 chunk, then write them off your income (as one chunk). I always recommend an accountant for this, but that's the general idea that I've used, and for the last 10 years, it's worked great.", "topk_rank": 7 }, { "id": "352640", "score": 0.6139773726463318, "text": "I am surprised no one has mentioned the two biggest things (in my opinion). Or I should say, the two biggest things to me. First, 1099 have to file quarterly self employment taxes. I do not know for certain but I have heard that often times you will end up paying more this way then even a W-2 employees. Second, an LLC allows you to deduct business expenses off the top prior to determining what you pay in taxes as pass-through income. With 1099 you pay the same taxes regardless of your business expenses unless they are specifically allowed as a 1099 contractor (which most are not I believe). So what you should really do is figure out the expense you incur as a result of doing your business and check with an accountant to see if those expenses would be deductible in an LLC and if it offsets a decent amount of your income to see if it would be worth it. But I have read a lot of books and listened to a lot of interviews about wealthy people and most deal in companies not contracts. Most would open a new business and add clients rather than dealing in 1099 contracts. Just my two cents... Good luck and much prosperity.", "topk_rank": 8 }, { "id": "595090", "score": 0.6139156818389893, "text": "If you have complicated taxes (own a business, many houses, you are self employed, you are a contractor, etc etc) a person can make the most of your situation. If you are a w-2 single job, maybe with a family, the programs are going to be so close to spot on that the extra fees aren't worth it. I would never bother using HR Block or Liberty or those tax places that pop up. Use the software, or in my state sometimes municipalities put on tax help days at the library to assist in filling out the forms. If you have tough taxes, get a dedicated professional based on at least a few recommendations.", "topk_rank": 9 }, { "id": "120523", "score": 0.6137690544128418, "text": "I have fairly simple tax returns and my experience was that TurboTax software produced roughly the same result as human accountant and costs much less. The accountant was never able to find any deductions that the program couldn't find. Of course, if you have business, etc. you probably need an accountant to help you navigate all the rules, requirements, etc. But for simple enough cases I found that the additional pay is not justified.", "topk_rank": 10 }, { "id": "366349", "score": 0.6137396693229675, "text": "You're correct, there's always a conflict of interest in private professions whether you're a CPA, doctor or lawyer. There's always a possibility of backroom dealings. The only true response is that governmental bodies like the SEC, IRS and otherwise affiliated private organizations like the AICPA can take away your license to practice, send you to jail, or fine you thousands of dollars and ruin your life - if you're caught. I would personally draw a line between publicly traded corporations, amoral as you said, and public accounting. A CPA firm's responsibility is to the public even though they aren't a governmental body. Accounting records are required to do business with banks and the IRS. Without public confidence in the profession, CPA firms wouldn't exist. It's truly an incentive to do a good job and continually gain confidence. They incidentally make money along the way.", "topk_rank": 11 }, { "id": "297427", "score": 0.6136903762817383, "text": "First, determine the workload he will expect. Will you have to quit your other work, either for time or for competition? How much of your current business will be subsumed into his business, if any? Make sure to understand what he wants from you. If you make an agreement, set it in writing and set some clear expectations about what will happen to your business (e.g. it continues and is not part of your association with the client). Because he was a client for your current business, it can blur the lines. Second, if you join him, make sure there is a business entity. By working together for profit, you will have already formed a partnership for tax purposes. Best to get an entity, both for the legal protection and also for the clarity of law and accounting. LLCs are simplest for small ventures; C corps are useful if you have lots of early losses and owners that can't use them personally, or if you want to be properly formed for easy consumption by a strategic. Most VCs and super-angels prefer everybody be a straight C. Again, remember to define, as necessary, what you are contributing to be an owner and what you are retaining (your original business, which for simplicity may already be in an entity). As part of this process, make sure he defines the cap table and any outstanding loans. Auntie June and Cousin Steve might think their gifts to him were loans or equity purchases; best to clear this issue up early before there's any more money in it. Third, with regard to price, that is an intensely variable question. It matters what the cap table looks like, how early you are, how much work he's already done, how much work remains to be done, and how much it will pay off. Also, if you do it, expect to be diluted by other employees, angels, VCs, other investors, strategics, and so on. Luckily, more investors usually indicates a growing pie, so the dilution may not be at all painful. But it should still be on your horizon. You also need to consider your faith in your prospective partner's ability to run the business and to be a trustworthy partner (so you don't get Zuckerberg'd), and to market the business and the product to customers and investors. If you don't like the prospects, then opt for cash. If you like the business but want to hedge, ask for compensation plus equity. There are other tricks you could use to get out early, like forced redemption, but they probably wouldn't help either because it'd sour your relationship or the first VC or knowledgeable angel to come along will want you to relinquish that sort of right. It probably comes down to a basic question of your need for cash, his willingness to let you pursue outside work (hopefully high) and your appraisal of the business' prospects.", "topk_rank": 12 }, { "id": "528589", "score": 0.6134430170059204, "text": "Take a look at http://en.wikipedia.org/wiki/Comparison_of_accounting_software, in particular the rows with a market focus of 'personal'. This is probably one of the more complete lists available, and shows if they are web-based (like Mint) or standalone (like Quicken or Microsoft Money).", "topk_rank": 13 }, { "id": "137255", "score": 0.6133404970169067, "text": "The main things to ask about are going to revolve around the best way to structure your business. Know what your plans are for partnership. Know whether or not you'll need a lot of up front capital, and if you'll be subjected to an abnormal amount of risk in the course of day to day operations. If you'll be working with one or more partners, ask for help with an operating agreement. You'll find out whether or not you need an accountant throughout these discussions. Edit: Going through those points will enable your lawyer to help you file under the appropriate structure. Ask for help with anything you're unsure about.", "topk_rank": 14 }, { "id": "542213", "score": 0.6131431460380554, "text": "\"From the IRS perspective, there's no difference between \"\"your taxes\"\" and \"\"your sole proprietorship's taxes\"\", they're all just \"\"your taxes\"\". While I could see it being very useful and wise to track your business's activities separately, and use separate bank accounts and the like, this is just a convenience to help you in your personal accounting, and not something that needs to relate directly to how tax forms are completed or taxes are paid. When calculating your taxes, if you want to figure out how much \"\"you\"\" owe vs. how much \"\"your business\"\" owes, you'll have to do so yourself. One approach might be just to take the amount that your Schedule C puts as income on your return and multiply by your marginal tax rate. Another approach might be to have your tax software run the calculations as though you had no business income, and see what just \"\"your personal\"\" taxes would have been without the business. If you think of the business income as being \"\"first\"\" and should use up the lower brackets rather than your personal income, maybe do it the other way around and have your software run the calculations as though you had only the business income and no other personal/investment income, and see what the amount of taxes would be then. Once you've figured out a good allocation, the actual mechanics of paying some \"\"personal tax amount\"\" from your personal bank account and some \"\"business tax amount\"\" from your business bank account are up to you. I'd probably just transfer the money from my business account to my personal account and pay all the taxes from the personal account. Writing two separate checks, one from each account, that total to the correct amount, I'm sure would work just fine as well. You can probably make separate payments from each account electronically through Direct Pay or EFTPS as well. As long as all taxes are paid by the deadline, I don't think the IRS is too picky about the details of how many payments are made.\"", "topk_rank": 15 }, { "id": "277583", "score": 0.6129133105278015, "text": "Good tax people are expensive. If you are comfortable with numbers and computers, you can do it better yourself.", "topk_rank": 16 }, { "id": "78259", "score": 0.6125396490097046, "text": "Are there particular, established businesses that provide these services? Yes! There are many fee-based financial advisors that provide such services. These might help: http://www.ricedelman.com/galleries/default-file/how-to-choose-financial-advisor.pdf http://www.ricedelman.com/cs/education/article?articleId=990#.Us7cyPRDt1Y", "topk_rank": 17 }, { "id": "352136", "score": 0.6123817563056946, "text": "First of all, consult an accountant who is familiar with tax laws and online businesses. While most accountants know tax laws, fewer know how to handle online income like you describe although the number is growing. Right now, since you're a minor, this complicates things a bit. That's why you'll need a tax accountant to come up with the best business structure to use. You'll need to keep your own records to estimate your quarterly taxes. At the amount you're making, you'll want to do this since you'll pay a substantial penalty at the end of the year if you don't. You can use a small business accounting software package for this or just track everything using Excel or the like. As long as taxes are paid, you won't go to jail. But you need to pay them along with any penalties by April 15, 2013. If you don't do this, then the IRS will want to have a 'discussion' with you.", "topk_rank": 18 }, { "id": "296177", "score": 0.6123401522636414, "text": "You're going to have a hard time finding a legit investment planner that is willing to do things like take short-term positions in shorts, etc for a small investor. Doing so would put them at risk of getting sued by you for mismanagement and losing their license or affiliation with industry associations.", "topk_rank": 19 } ]
54	Taxable income on full-time job + business earnings	[ { "id": "590775", "score": 0.7550979256629944, "text": "In Australia, any income you earn is taxable despite where it came from. Using your example your taxable income is $70,000. Keep in mind that with a business even as a sole trader any business expenses that contribute to the earning of your business income is deductible, reducing the final amount of tax you'll have to pay. The ATO website has lots of good information and examples to look at including tax rates. If your total income is pushing into a higher tax bracket over 30c tax per $1 earned, it may be worth looking at shifting your business to operate under a company structure that just has a fixed tax rate around 30c per $1. That said, for me, I don't want the paperwork overhead of a company yet so I'm running my side business as a sole trader too. I'd rather do that and keep it easy for now while my business gets profitable that waste time on admin structures for tax reasons even if in the shortterm it may mean slightly higher tax. In the end, you only pay tax on profit (income minus expenses) as opposed to raw/gross income. For more info there are good books in the bookshops or local library (to read free) on starting a business on the side while still working. They discuss these issues too." }, { "id": "109546", "score": 0.7785876393318176, "text": "I'm not sure I am fully understanding the nuance of your question, but based on your answer in the comments you and your business are not separate legal entities. So your income is the full $70K, there is no distinct business to have income. If you clarify your question to include why you want to know this I might be able to give a more meaningful answer for your situation." }, { "id": "511651", "score": 0.646600067615509, "text": "Possible alternative: In my case, the part-time locksmithing is a small enough portion of my I come that I just submit it as hobby income, rather than trying to track it as a separate entity." } ]	[ { "id": "106149", "score": 0.6903583407402039, "text": "\"You're essentially asking the very common \"\"Do I Need to File a Tax Return?\"\" question. It's common enough that the IRS answers it right at the beginning of the Form 1040 Instructions, and it's answered fairly thoroughly here: http://www.irs.gov/individuals/article/0,,id=96623,00.html There's about 20 questions in that checklist which are mostly pretty specialized, but assuming you didn't have taxes withheld that you'd like to get back, and didn't have any retirement income/disbursements this year, the only interesting question is this: \"\"Were you self-employed with earnings of more than $400.00?\"\" Sounds like your losses outweighed your profits, and assuming you had no other income, I'd say you're fine not filing. Can't really speak to state law since that can vary so much, but your state's laws are likely similar to federal, and you can probably find a very similar answer near the beginning of the instructions of your state's income tax form.\"", "topk_rank": 0 }, { "id": "449816", "score": 0.6903173327445984, "text": "Yes, you do. Depending on your country's laws and regulations, since you're not an employee but a self employed, you're likely to be required to file some kind of a tax return with your country's tax authority, and pay the income taxes on the money you earn. You'll have to tell us more about the situation, at least let us know what country you're in, for more information.", "topk_rank": 1 }, { "id": "65095", "score": 0.6903163194656372, "text": "As an individual freelancer, you would need to maintain a book of accounts. This should show all the income you are getting, and should also list all the payments incurred. This can not only include the payments to other professionals, but also any hardware purchased, phone bills, any travel and entertainment bills directly related to the service you are offering. Once you arrive at a net profit figure, you would need to file this as your income. Consult a tax professional and he can help with how to keep the records of income and expenses. i.e. You would need to create invoices for payments, use checks or online transfers for most payments, segregate the accounts, one account used for this professional stuff, and another for your personal stuff, etc. In a normal course the Income Tax Department does not ask for these records, however whenever your tax returns get scrutinized on a random basis, they would ask for all the relevant documentations.", "topk_rank": 2 }, { "id": "360756", "score": 0.6902404427528381, "text": "No, do not file a Form 1099. You should not issue a form to yourself and you have no separate entity to issue one. The reporting obligation is Form 1040, plus Schedule C. You may have followed a wrong turn somewhere in the TurboTax questionnaire or it may not have picked up the subtleties of your situation. The business income is already yours. Some writers use vehicles to hold their royalties and pay themselves. The questionnaire may have been trying to get at this issue or may have wrongly assumed it. There are special rules around such entities, so getting an adviser is a good idea. For now, just file Schedule C, remember to deduct your costs (e.g. cost to print the books), and pay your self-employment tax.", "topk_rank": 3 }, { "id": "480472", "score": 0.6901947855949402, "text": "Of course not. You had another job for which you earned money. What does the corporation have to do with it? Corporation is a separate entity from your person, and since it was in no way involved in the transaction - there's no justification to funnel money through it. Doing so may pierce the corporate veil and expose you to liability which you created the corporation to shield yourself from. Not to mention the tax evasion, which is the reason you are asking the question to begin with....", "topk_rank": 4 }, { "id": "192888", "score": 0.690162181854248, "text": "Since you're not loaning the company the money, the correct category is Equity. It's not an income type account, rather it represents the balance of Assets - Liabilities = Owner's Equity So you'd put down £100 as the starting balance of Owner's Equity, and then a Cash Balance of £100 in a cash account.", "topk_rank": 5 }, { "id": "526714", "score": 0.6901621222496033, "text": "An update for anyone looking this up, I am still working through all the details but I can answer the question as far as Stack Exchange will go. In this situation the answer and processes involved greatly differs based on the personal circumstances of the person asking the question. Best to seek qualified tax advice than relying only on a forum as they are able to be more accurate and descriptive than any reply that you might receive.", "topk_rank": 6 }, { "id": "207997", "score": 0.6901415586471558, "text": "You can ask the client to pay you through the LLC. In that case you should invoice them from the LLC and have them pay the invoice. If they pay you personally, you can always make a capital contribution to the LLC and use that money to buy equipment. The tax implications for a single person LLC providing professional services are the same for you either way: income is income whether it's from your LLC or an employer. It's different for the employer if they are giving you a W2 vs a 1099. So it doesn't matter much for you. If the LLC is buying equipment, make sure you get enough revenue through the LLC to at least offset those expenses.", "topk_rank": 7 }, { "id": "11454", "score": 0.6901306509971619, "text": "\"Assuming U.S. law, there are \"\"safe harbor\"\" provisions for exactly this kind of situation. There are several possibilities, but the most likely one is that if your withholding and estimated tax payments for 2016 totaled at least as much as your tax bill for 2015 there's no penalty. For the full rules, see IRS Publication 17.\"", "topk_rank": 8 }, { "id": "221281", "score": 0.6901078224182129, "text": "I've actually had the same problem several years running, and it's solved by filing my corporate taxes, then taking those schedules, and applying them to my 1040, along with a Schedule C You'll want to work with an accountant on this, but basically you're going to take the total set of business expenses as 1 chunk, then write them off your income (as one chunk). I always recommend an accountant for this, but that's the general idea that I've used, and for the last 10 years, it's worked great.", "topk_rank": 9 }, { "id": "578970", "score": 0.6900659799575806, "text": "I found the answer I was looking for. Even though I don't have any capital gains to offset, I can deduct up to $3,000 of that loss against other kinds of income, including salary.", "topk_rank": 10 }, { "id": "72984", "score": 0.6900383830070496, "text": "What you need to do is register as a sole trader. This will automatically register you for self assessment so you don't have to do that separately. For a simple business like you describe that's it. Completing your self assessment will take care of all your income tax and national insurance obligations (although as mentioned in your previous question there shouldn't be any NI to pay if you're only making £600 or so a year).", "topk_rank": 11 }, { "id": "393354", "score": 0.6899768114089966, "text": "It's fine - if you are an employee, you will normally have all taxes deducted by the employer, and won't even need to complete a tax return. Even if you do, all the figures will be on the P60 you get at the end of the year. If that's your only income, it's pretty easy to do. Remember, your taxes and your girlfriends are totally separate. It also doesnt matter where the money goes - you could be paid in cash or into any account, it's the fact that you earn it makes it taxable.", "topk_rank": 12 }, { "id": "14065", "score": 0.6899272799491882, "text": "\"In 2014 the IRS announced that it published guidance in Notice 2014-21. In that notice, the answer to the first question describes the general tax treatment of virtual currency: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. As it's property like any other, capital gains if and when you sell are taxed. As with any capital gains, you're taxed on the \"\"profit\"\" you made, that is the \"\"proceeds\"\" (how much you got when you sold) minus your \"\"basis\"\" (how much you paid to get the property that you sold). Until you sell, it's just an asset (like a house, or a share of stock, or a rare collectible card) that doesn't require any reporting. If your initial cryptocurrency acquisition was through mining, then this section of that Notice applies: Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities? A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income. That is to say, when it was mined the market value of the amount generated should have been included in income (probably on either Line 21 Other Income, or on Schedule C if it's from your own business). At that point, the market value would also qualify as your basis. Though I doubt there'd be a whole lot of enforcement action for not amending your 2011 return to include $0.75. (Technically if you find a dollar bill on the street it should be included in income, but usually the government cares about bigger fish than that.) It sounds like your basis is close enough to zero that it's not worth trying to calculate a more accurate value. Since your basis couldn't be less than zero, there's no way that using zero as your basis would cause you to pay less tax than you ought, so the government won't have any objections to it. One thing to be careful of is to document that your holdings qualify for long-term capital gains treatment (held longer than a year) if applicable. Also, as you're trading in multiple cryptocurrencies, each transaction may count as a \"\"sale\"\" of one kind followed by a \"\"purchase\"\" of the other kind, much like if you traded your Apple stock for Google stock. It's possible that \"\"1031 like kind exchange\"\" rules apply, and in June 2016 the American Institute of CPAs sent a letter asking about it (among other things), but as far as I know there's been no official IRS guidance on the matter. There are also some related questions here; see \"\"Do altcoin trades count as like-kind exchanges?\"\" and \"\"Assuming 1031 Doesn't Apply To Cryptocurrency Trading\"\". But if in fact those exchange rules do not apply and it is just considered a sale followed by a purchase, then you would need to report each exchange as a sale with that asset's basis (probably $0 for the initial one), and proceeds of the fair market value at the time, and then that same value would be the basis of the new asset you're purchasing. Using a $0 basis is how I treat my bitcoin sales, though I haven't dealt with other cryptocurrencies. As long as all the USD income is being reported when you get USD, I find it unlikely you'll run into a lot of trouble, even if you technically were supposed to report the individual transactions when they happened. Though, I'm not in charge of IRS enforcement, and I'm not aware of any high-profile cases, so it's hard to know anything for sure. Obviously, if there's a lot of money involved, you may want to involve a professional rather than random strangers on the Internet. You could also try contacting the IRS directly, as believe-it-or-not, their job is in fact helping you to comply with the tax laws correctly. Also, there are phone numbers at the end of Notice 2014-21 of people which might be able to provide further guidance, including this statement: The principal author of this notice is Keith A. Aqui of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information about income tax issues addressed in this notice, please contact Mr. Aqui at (202) 317-4718\"", "topk_rank": 13 }, { "id": "176229", "score": 0.6898965835571289, "text": "Yes, you can have both. You'll need business income to contribute to a SEP IRA though.", "topk_rank": 14 }, { "id": "137171", "score": 0.689814031124115, "text": "As you have income from Business / Profession, you would need to use form ITR4S", "topk_rank": 15 }, { "id": "166977", "score": 0.6896778345108032, "text": "If you sell through an intermediate who sets up the shop for you, odds are they collect and pay the sales tax for you. My experience is with publishing books through Amazon, where they definitely handle this for you. If you can find a retailer that will handle the tax implications, that might be a good reason to use them. It looks like Etsy uses a different model where you yourself are responsible for the sales tax, which requires you to register with your state (looks like this is the information for New York) and pay the taxes yourself on a regular basis; see this link for a simple guide. If you're doing this, you'll need to keep track of how much tax you owe from your sales each month, quarter, or year (depending on the state laws). You can usually be a sole proprietor, which is the easiest business structure to set up; if you want to limit your legal liability, or work with a partner, you may want to look into other forms of business structure, but for most craftspeople a sole proprietorship is fine to start out with. If you do a sole proprietorship, you can probably file the income on a 1040 Schedule C when you do your personal taxes each year.", "topk_rank": 16 }, { "id": "410128", "score": 0.6896660923957825, "text": "In Canada I think you'd do it as a % of square footage. For example: Then you can count 20% of the cost of the of renting the apartment as a business expense. I expect that conventions (i.e. that what's accepted rather than challenged by the tax authorities) may vary from country to country.", "topk_rank": 17 }, { "id": "593111", "score": 0.6896587610244751, "text": "Ask the company if they can make an adjustment for the next paycheck. If they can't then do the following: Increase the number of Federal exemptions by 1. In 2014 a personal exemption reduces your apparent income by $3950. If you are in the 10 % tax bracket and you are paid every two weeks you will see the amount of taxes withheld drop by ($39500.10/26) or ~$15. The 13 Paychecks later change it back. If you are in the 15 % tax bracket and you are paid every two weeks you will see the amount of taxes withheld drop by ($39500.15/26) or ~$23. Then 9 Paychecks later change it back If you are in the 25 % tax bracket and you are paid every two weeks you will see the amount of taxes withheld drop by ($3950*0.10/26) or ~$38. Then 5 paychecks later change it back. Remember the money isn't gone, it has just been transferred prematurely to the federal treasury. You could also wait until you complete your taxes this spring, then see if you needed to make an adjustment to your exemptions. If you normally get a large refund then you should be increasing your exemptions anyway. If you are always writing a check to the IRS then you weren't getting enough withheld. Also make sure that payroll has the correct numbers. Most companies include the number of federal and state exemptions on the paycheck stub, or the pdf of the stub.", "topk_rank": 18 }, { "id": "462831", "score": 0.6896246075630188, "text": "In the US there's no significant difference between what a business can deduct and what an individual can deduct. However, you can only deduct what is an expense to produce income. Businesses are allowed to write off salaries, but individuals can't write off what they pay their gardener or maid (at least in the US) If you're a sole proprietor in the business of managing properties - you can definitely deduct payments to gardeners or maids. Business paying for a gardener on a private property not related to producing the income (like CEO's daughter's house) cannot deduct that expense for tax purposes (although it is still recorded in the business accounting books as an expense - with no tax benefit). Businesses are allowed to deduct utility expenses as overhead, individuals cannot Same thing exactly. I can deduct utility expenses for my rental property, but not for my primary residence. Food, shelter, clothing and medical care are fundamental human needs, but we still pay for them with after-tax money, and pay additional sales tax. Only interest (and not principal) on a mortgage is deductible in the US, which is great for people who take out mortgages (and helps banks get more business, I'm sure), but you're out of luck if you pay cash for your house, or are renting. Sales taxes are deductible. You can deduct sales taxes you paid during the year if you itemize your deduction. You can chose - you either deduct the sales taxes or the State income taxes, whatever is more beneficial for you. BTW in many states food and medicine are exempt from sales tax. Medical expenses are deductible if they're significant compared to your total income. You can deduct medical expenses in excess of 10% of your AGI. With the ACA kicking in - I don't see how would people even get to that. If your AGI is low you get subsidies for insurance, and the insurance keeps your expenses capped. For self-employed and employed, insurance premiums are pre-tax (i.e.: not even added to your AGI). Principle for mortgage is not deductible because it is not an expense - it is equity. You own an asset, don't you? You do get the standard deduction, even if your itemized (real) deductions are less - business don't get that. You also get an exemption amount (for your basic living needs), which businesses don't get. You can argue about the amounts - but it is there. In some States (like California) renters get tax breaks for renting, depending on the AGI. CA renters credit is phasing out at AGI of about $60K, which is pretty high.", "topk_rank": 19 } ]
57	How can I lookup the business associated with a FEIN?	[ { "id": "203633", "score": 0.6896634101867676, "text": "I think much of that info is hidden behind pay-walls. Here is one site I've found. http://www.feinsearch.com/ Another that is for non-profits only is guidestar. http://www.guidestar.org/rxg/products/nonprofit-data-solutions/product-information/guidestar-premium/advanced-nonprofit-search.aspx" }, { "id": "391403", "score": 0.7053225040435791, "text": "\"In most cases you cannot do \"\"reverse lookup\"\" on tax id in the US. You can verify, but for that you need to have more than just the FEIN/SSN. You should also have a name, and some times address. Non-profits, specifically, have to publish their EIN to donors, so it may be easier than others to identify those. Other businesses may not be as easy to find just by EIN.\"" }, { "id": "77818", "score": 0.6826184391975403, "text": "If the organization is a non-profit. You can search by EIN on Charity Navigator's website FOR FREE. https://www.charitynavigator.org/" }, { "id": "226530", "score": 0.6433907151222229, "text": "If it is Texas company, you can try doing a taxable entity search on the Texas Comptroller website." } ]	[ { "id": "161411", "score": 0.64382404088974, "text": "\"For US equities, Edgar Online is where companies post their government filings to the SEC. On Google Finance, you would look at the \"\"SEC filings\"\" link on the page, and then find their 10K and 10Q documents, where that information is listed and already calculated. Many companies also have these same documents posted on their Investor Relations web pages.\"", "topk_rank": 0 }, { "id": "390881", "score": 0.6425310373306274, "text": "I found the zephyr database, which does the job. Nonetheless if someone knows other (open) sources, be welcome to answer.", "topk_rank": 1 }, { "id": "537111", "score": 0.6411697864532471, "text": "I know of no free source for 10 years historical data on a large set of companies. Now, if it's just a single company or small number that interest you, contact Investor Relations at the company(ies) in question; they may be willing to send you the data for free.", "topk_rank": 2 }, { "id": "276574", "score": 0.6408928632736206, "text": "The Roth-IRA or for that matter a regular IRA is generally not connected to your place of employment. Now a 401(k) is linked to your place of employment. If the business no longer exists, they should have turned over the 401K. The US department of Labor has information regarding plans that have been abandoned. I suspect my plan is abandoned, but I have never received a notice of plan termination. How could I find out if a QTA has elected to terminate and wind up my 401(k) pension plan? EBSA has developed an Abandoned Plan searchable database to help participants and beneficiaries find out if a particular plan is in the process of being, or has been, terminated. The site is searchable by plan name or employer name and will provide the name and contact information for the QTA, if one exists. If you do not have access to a computer to conduct the search, you may contact one of EBSA’s Benefits Advisors to assist you by calling toll-free, 1.866.444.EBSA (3272).", "topk_rank": 3 }, { "id": "136283", "score": 0.640388548374176, "text": "\"Yahoo Finance: http://finance.yahoo.com/q/pr?s=VFINX+Profile Under \"\"Management Information\"\"\"", "topk_rank": 4 }, { "id": "138854", "score": 0.6403390765190125, "text": "You can also use ICS<GO> on Bloomberg and choose the right category (many subcategories, probably you'll start on home builders or something like that). If that doesn't work, press F1 twice and ask it to an analyst. I'm sure they have this info.", "topk_rank": 5 }, { "id": "562526", "score": 0.6396641135215759, "text": "Some governments offer business information search for corporations in their jurisdiction. The search results may show the director information for the company. If this information is made publicly available, keep in mind there are websites that make money from indexing publicly available information to show in Google search results. I don't mean to scare you as this is a likely a slim possibility. It really depends on the privacy practices in place at the jurisdiction you're in. But do keep in mind if you're planning on doing business on the side for a few years policies may change. I would call Service Ontario (or whichever province you're incorporating in) or Corporations Canada if federally incorporating and ask them if they offer a business search service and exactly what information they make public. You might be able to reach a Privacy Officer and find out what exactly their policy is.", "topk_rank": 6 }, { "id": "172840", "score": 0.6389203071594238, "text": "In general you cannot. Once the security is no longer listed on the exchange - it doesn't have to provide information to the exchange and regulators (unless it wants to be re-listed). That's one of the reasons companies go private - to keep their (financial and other) information private. If it was listed in 1999, and is no longer listed now - you can dig through SEC archives for the information. You can try and reach out to the company's investors' relations contact and see if they can help you with the specific information you're looking for.", "topk_rank": 7 }, { "id": "343964", "score": 0.6387641429901123, "text": "What you're looking for is the 'Transaction Report'. When you're looking at the report (it comes up empty), open the options and click on the first tab 'Accounts'. Here you can highlight multiple source accounts in the top pane, and filter by the Expense accounts that you are interested in the bottom pane. Here's an example that goes over the process (there are many examples online, I just included the first one that came up in a search).", "topk_rank": 8 }, { "id": "538005", "score": 0.6387205123901367, "text": "How do you find an ethical, honest practitioner of any business? One: Make a small transaction with them and see how they treat you. If they cheat you on something small, don't give them a chance with something big. Two: Ask family and friends for recommendations. Three: Get information from public sources, like web sites where people post reviews of businesses, consumer advocacy organizations, groups like the Better Business Bureau, etc. Personally I consider all these of questionable value as you're asking one stranger to advise you on the reliability of another stranger, but better than nothing.", "topk_rank": 9 }, { "id": "314898", "score": 0.6384626030921936, "text": "If you're researching a publicly traded company in the USA, you can search the company filings with the SEC. Clicking 'Filings' should take you here.", "topk_rank": 10 }, { "id": "147998", "score": 0.6371777653694153, "text": "The old school way would have been to identify some wealthy zip codes and cold call like a mofo. At present I would prefer to find some retiring advisor and buy his book (that may mean leaving your current firm).", "topk_rank": 11 }, { "id": "213991", "score": 0.6369573473930359, "text": "There's gotta be categories, right? Like boutiques, or gas stations, clothing stores, etc... Maybe not, I just thought with all the numbers out there, some website somewhere would have something to decipher what kind of store, and numbers in that category. Thanks for taking the time to answer though.", "topk_rank": 12 }, { "id": "110163", "score": 0.6366790533065796, "text": "Your best bet is to just look at comparative balance sheets or contact the company itself. Otherwise, you will need access to a service like PrivCo to get data.", "topk_rank": 13 }, { "id": "486964", "score": 0.6364163756370544, "text": "You need to understand the business and the books as an owner do it for your parents also the manager could be the issue but it could a lot of things I’d like to see the quarterlies for the last 3 Years and a few other things like monthly statements payrolls some accounts etc... to do the math. it could be a partner? The only way to know this is to follow the paper trail.", "topk_rank": 14 }, { "id": "416302", "score": 0.6361427903175354, "text": "In case you have no thought, [local business listing](http://come2ourdeals.com.au/) services is similar to phone book. Usually, when folks desire to find someone or something their first instinct is to search by way of the phone book. The yellow page contains not just the identify, deal with but also different ads of companies.", "topk_rank": 15 }, { "id": "94816", "score": 0.6354719400405884, "text": "\"I found your post while searching for this same exact problem. Found the answer on a different forum about a different topic, but what you want is a Cash Flow report. Go to Reports>Income & Expenses>Cash Flow - then in Options, select the asset accounts you'd like to run the report for (\"\"Calle's Checking\"\" or whatever) and the time period. It will show you a list of all the accounts (expense and others) with transactions effecting that asset. You can probably refine this further to show only expenses, but I found it useful to have all of it listed. Not the prettiest report, but it'll get your there.\"", "topk_rank": 16 }, { "id": "392329", "score": 0.6346935033798218, "text": "I already know of this method. I was creating a peer group and found 4-5 very similar companies, however one of them is a foreign public company with a subsidiary competing directly with a company I am trying to find the beta for. I guess I have to omit this company because it's strictly foreign? Also, what do I do if I can't find any public companies that are similar to the company I am trying to value?", "topk_rank": 17 }, { "id": "364672", "score": 0.6319963932037354, "text": "If you would like to find data on a specific industry/market sector, a good option is IBISworld reports. You can find their site here. You can find reports on almost any major US sector. The reports include historical data as well as financial ratios. In college projects, they were very useful for getting benchmark data to compare an individual business against an industry as a whole.", "topk_rank": 18 }, { "id": "526653", "score": 0.6315770149230957, "text": "Yep. Also, some research will help you understand which companies target which schools. Linkedin, Google, etc can show you if companies are HQed near certain schools, as well as where current employees went. Companies will also sponsor/host events on schools' campuses. Searching the school website would be useful. But networking helps a ton (easier to fact-check a butt-load of research someone else already did that they shared via conversation)", "topk_rank": 19 } ]
61	How to Deduct Family Health Care Premiums Under Side Business	[ { "id": "524134", "score": 0.6678668856620789, "text": "\"No, not on schedule C, better. Its an \"\"above the line\"\" deduction (line 29 on your 1040). Here's the turbo tax article on it. The instructions for this line set certain limitations that you must take into the account, and yes - it is limited to the net profit from the business. One of the following statements must be true. You were self-employed and had a net profit for the year. You were a partner with net earnings from self-employment. You used one of the optional methods to figure your net earnings from self-employment on Schedule SE. You received wages in 2011 from an S corporation in which you were a more-than-2% shareholder. Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2. The insurance plan must be established under your business. Your personal services must have been a material income-producing factor in the business. If you are filing Schedule C, C-EZ, or F, the policy can be either in your name or in the name of the business.\"" } ]	[ { "id": "541809", "score": 0.6344582438468933, "text": "\"No, your business cannot deduct your non-business expenses. You can only deduct from your business income those reasonable expenses you paid in order to earn income for the business. Moreover, for there to be a tax benefit, your business generally has to have income (but I expect there are exceptions; HST input tax credits come to mind.) The employment income from your full-time job wouldn't count as business income for your corporation. The corporation has nothing to do with that income – it's earned personally, by you. With respect to restaurant bills: These fall under a category known as \"\"meals & entertainment\"\". Even if the expense can be considered reasonable and business-related (e.g. meeting customers or vendors) the Canada Revenue Agency decided that a business can only deduct half of those kinds of expenses for tax purposes. With respect to gasoline bills: You would need to keep a mileage and expense log. Only the portion of your automobile expenses that relate to the business can be deducted. Driving to and from your full-time job doesn't count. Of course, I'm not a tax professional. If you're going to have a corporation or side-business, you ought to consult with a tax professional. (A point on terminology: A business doesn't write off eligible business expenses — it deducts them from business income. Write off is an accounting term meaning to reduce the value of an asset to zero. e.g. If you damaged your car beyond repair, one could say \"\"the car is a write-off.\"\")\"", "topk_rank": 0 }, { "id": "582864", "score": 0.6344183087348938, "text": "\"There are a couple of things that are missing from your estimate. In addition to your standard deduction, you also have a personal exemption of $4050. So \"\"D\"\" in your calculation should be $6300 + $4050 = $10,350. As a self-employed individual, you need to pay both the employee and employer side of the Social Security and Medicare taxes. Instead of 6.2% + 1.45%, you need to pay (6.2% + 1.45%) * 2 = 15.3% self-employment tax. In addition, there are some problems with your calculation. Q1i (Quarter 1 estimated income) should be your adjusted annual income divided by 4, not 3 (A/4). Likewise, you should estimate your quarterly tax by estimating your income for the whole year, then dividing by 4. So Aft (Annual estimated federal tax) should be: Quarterly estimated federal tax would be: Qft = Aft / 4 Annual estimated self-employment tax is: Ase = 15.3% * A with the quarterly self-employment tax being one-fourth of that: Qse = Ase / 4 Self employment tax gets added on to your federal income tax. So when you send in your quarterly payment using Form 1040-ES, you should send in Qft + Qse. The Form 1040-ES instructions (PDF) comes with the \"\"2016 Estimated Tax Worksheet\"\" that walks you through these calculations.\"", "topk_rank": 1 }, { "id": "71360", "score": 0.6344082355499268, "text": "As long as your total doesn't exceed the per-year limit, you should be able to deposit after-tax money into your Health Savings Account. Contact the HSA administrator for details. Note that unless your employer sets this up, you'd be sending them after-tax money, which goes in the same category as other non-reimbursed health expenses, so you may not get any immediate tax savings by doing this vs. just spending the money out of pocket. However, once there us enough reserve money in your HSA for you to invest it in the same way a 401k can be invested, it will grow tax-free. So if you're putting in significantly more than you expect to withdraw any time soon, this may still be a worthwhile thing to do. Definitely talk to HR about whether you can still get it set up pre-tax... though most employers don't allow midyear changes unless there has been a significant change in your family (new wife, new kids, that sort of thing).", "topk_rank": 2 }, { "id": "155847", "score": 0.6343251466751099, "text": "\"First, your employee needs to work out his contribution limit for the year. Because he was eligible for a few months, his limit will be prorated. See this post for details on how to calculate the prorated limit. Once he determines his contribution limit, you'll know how much needs to be taken out. You (or he) can do an excess contribution withdrawal to remove the extra contribution without penalty. See this post for more details. If he has already spent some or all of the extra contribution, talk to the HSA custodian. They may be able to reclassify some of his distributions as excess contribution withdrawals. You won't get the money back, but it will avoid the penalty. Your employee would then need to add the extra as \"\"other income\"\" on his tax return so he can pay tax on it. You have until April 15 to remove the excess HSA contributions. If you are unable to do it by then, the penalty to your employee is 6% (Source: Pub 969) on the excess that is not removed, in addition to the income tax.\"", "topk_rank": 3 }, { "id": "446553", "score": 0.6342167258262634, "text": "When your debt is forgiven, you have to consider the amount written off as an ordinary income item (with the exclusion of the debt originated from the purchase of primary home). If you're trying to write the debt off from your taxes - then it won't work. Even if you can expense the debt forgiveness, you will incur tax liability on your personal taxes side, and in addition you'll be out of cash in your business. So basically you'll end up paying it with after tax money, exactly the thing you're trying to avoid. In addition, you're dealing with related persons here, which means that the loss deduction might not be allowed (depends on the actual details of the transaction), so you might actually end up paying more taxes with this scheme that just paying off the loan directly (if your business pays taxes separately from your person). A loss on the sale or exchange of property between related persons is not deductible. This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. For the list of related persons, see Related persons next.", "topk_rank": 4 }, { "id": "298387", "score": 0.6341452598571777, "text": "\"This is called \"\"Net Operating Loss\"\", and it is in fact applicable for individuals as well. You can, under certain circumstances, have NOL even as an individual. But it is far more common in the corporate world. What happens is that you can carry it back or forward, and get refund on taxes paid or adjust income for taxes to pay. In your example, you could carry the $75 NOL back and deduct it from the prior year earnings, reducing the taxable income from $100 to $25, getting $18.75 of the $25 paid as taxes - back. The link is for individual NOL, corporate rules are different, but the principle is the same.\"", "topk_rank": 5 }, { "id": "128107", "score": 0.6340745687484741, "text": "\"You can (and definitely should) withdraw any part of the contribution that will put you over the contribution limit. You can (and should if you need to) withdraw to repay any medical payments you made from outside the account. You can (but should avoid at all costs) withdraw (distribute) from the HSA for non-medical reasons. Here's the IRS publication which covers this: https://www.irs.gov/publications/p969 Here's the bit about distributions that covers what you're trying to do: You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. You don’t have to make distributions from your HSA each year. It is better to pay from your checking and reimburse than to over-fund the HSA. Best route forward is to reduce your contributions for the rest of the year, especially if continuing them will cause excess contributions. Another nasty gotcha: Excess contributions. You will have excess contributions if the contributions to your HSA for the year are greater than the limits discussed earlier. Excess contributions aren’t deductible. Excess contributions made by your employer are included in your gross income. If the excess contribution isn’t included in box 1 of Form W-2, you must report the excess as \"\"Other income\"\" on your tax return. Generally, you must pay a 6% excise tax on excess contributions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. The excise tax applies to each tax year the excess contribution remains in the account. You may withdraw some or all of the excess contributions and avoid paying the excise tax on the amount withdrawn if you meet the following conditions. •You withdraw the excess contributions by the due date, including extensions, of your tax return for the year the contributions were made. •You withdraw any income earned on the withdrawn contributions and include the earnings in \"\"Other income\"\" on your tax return for the year you withdraw the contributions and earnings. If you will not be over your maximum contribution, let the contribution ride. Make sure your HSA balance is divided between cash, stock fund, bond fund. Much like your 401k. Because the part that you don't spend on medical expenses this year can be spent in future years' medical expenses, and if you have anything left when you retire you can spend it on whatever you want. And the funds, including growth, are not taxed until you distribute them. Bottom line: if the funds will not cause excess contribution, leave them in. Otherwise, take them out as soon as possible.\"", "topk_rank": 6 }, { "id": "478388", "score": 0.6338407397270203, "text": "You have a standard deduction of $12,600 (Married filing joint, MFJ) plus $8000 in exemptions. A total of $20,600 off the top. In other words, just under $10,000 taxable unless you have other income you haven't disclosed. For MFJ, you are at the 10% bracket up to $18,450 in taxable income. I would withdraw just enough to 'top off' the 10% bracket each year, whether or not you send it to pay down the card. You don't disclose the rate, but if you are able take a low interest loan to get to a sub 5% interest rate, I'd do that.", "topk_rank": 7 }, { "id": "292748", "score": 0.6338338851928711, "text": "\"I really have to use the business card for personal expenses, please assume that in your answer. This is very hard to believe. You must do that? Why not just have the company pay you $1600 each month? Then you can use that money for whatever you want. Why can't you do this? (I cannot think of a legitimate reason...) How to integrate the personal expenses in company? Anyway, to answer your question, what I've done when I accidentally used my corporate card for a personal expense is to code the expense as a payment to me similar to if a check had been written to me. If you aren't ever paying yourself, then you should just pay the company back the $1600 every month. As a side note, I highly recommend you don't do this. By doing this on a regular basis you are opening the door for piercing the corporate veil. This means that the financial protections provided by the LLC could potentially be stripped away since personal and corporate funds are being mixed. The unfortunate end result is that personal assets could end up being fair game too in a judgement against the company. Even if you aren't an owner, your relative could be considered to be \"\"using business money for personal expenses\"\", namely, letting a relative spend business funds for personal use. How to show more expenses and lessen the profit? If you're referring to the personal expenses, then you absolutely do not want to do this! That's illegal and worthy of stiff penalties, which possibly include jail time for tax evasion. Better to just have the company pay you and then the entire payment is deductible and reduces the profit of the company.\"", "topk_rank": 8 }, { "id": "60737", "score": 0.6338220834732056, "text": "\"According to the IRS, it appears there is no issue in a spouse under EE or EE+Child(ren) coverage contributing to an FSA while you contribute to an HSA under an EE Only HDHP account: https://www.irs.gov/pub/irs-drop/rr-05-25.pdf \"\"In Situation 1, H has HDHP self-only coverage and no other health coverage, is not enrolled in Medicare and may not be claimed as a dependent on another taxpayer’s return. Although W has non-HDHP family coverage, H is not covered under that health plan. H is therefore an eligible individual as defined in section 223(c)(1). The special rules for married individuals under section 223(b)(5) do not apply because W’s nonHDHP family coverage does not cover H. Thus, H remains an eligible individual and H may contribute up to $2,000 to an HSA (lesser of the HDHP deductible for self-only coverage or $2,650) for 2005. H may not make the catch-up contribution under section 223(b)(3) because H is not age 55 in 2005. W has non-HDHP coverage and is therefore not an eligible individual.\"\" Some more information directly from IRS form 969 published for 2015 tax returns: https://www.irs.gov/pub/irs-pdf/p969.pdf Qualifying for an HSA To be an eligible individual and qualify for an HSA, you must meet the following requirements. You must be covered under a high deductible health plan (HDHP), described later, on the first day of the month. You have no other health coverage except what is permitted under Other health coverage, later. You are not enrolled in Medicare. You cannot be claimed as a dependent on someone else's 2015 tax return. Under the last-month rule, you are considered to be an eligible individual for the entire year if you are an eligible individual on the first day of the last month of your tax year (December 1 for most taxpayers). If you meet these requirements, you are an eligible individual even if your spouse has non-HDHP family coverage, provided your spouse's coverage does not cover you.\"", "topk_rank": 9 }, { "id": "536849", "score": 0.6337217688560486, "text": "\"I've done various side work over the years -- computer consulting, writing, and I briefly had a video game company -- so I've gone through most of this. Disclaimer: I have never been audited, which may mean that everything I put on my tax forms looked plausible to the IRS and so is probably at least generally right, but it also means that the IRS has never put their stamp of approval on my tax forms. So that said ... 1: You do not need to form an LLC to be able to claim business expenses. Whether you have any expenses or not, you will have to complete a schedule C. On this form are places for expenses in various categories. Note that the categories are the most common type of expenses, there's an \"\"other\"\" space if you have something different. If you have any property that is used both for the business and also for personal use, you must calculate a business use percentage. For example if you bought a new printer and 60% of the time you use it for the business and 40% of the time you use it for personal stuff, then 60% of the cost is tax deductible. In general the IRS expects you to calculate the percentage based on amount of time used for business versus personal, though you are allowed to use other allocation formulas. Like for a printer I think you'd get away with number of pages printed for each. But if the business use is not 100%, you must keep records to justify the percentage. You can't just say, \"\"Oh, I think business use must have been about 3/4 of the time.\"\" You have to have a log where you write down every time you use it and whether it was business or personal. Also, the IRS is very suspicious of business use of cars and computers, because these are things that are readily used for personal purposes. If you own a copper mine and you buy a mine-boring machine, odds are you aren't going to take that home to dig shafts in your backyard. But a computer can easily be used to play video games or send emails to friends and relatives and lots of things that have nothing to do with a business. So if you're going to claim a computer or a car, be prepared to justify it. You can claim office use of your home if you have one or more rooms or designated parts of a room that are used \"\"regularly and exclusively\"\" for business purposes. That is, if you turn the family room into an office, you can claim home office expenses. But if, like me, you sit on the couch to work but at other times you sit on the couch to watch TV, then the space is not used \"\"exclusively\"\" for business purposes. Also, the IRS is very suspicious of home office deductions. I've never tried to claim it. It's legal, just make sure you have all your ducks in a row if you claim it. Skip 2 for the moment. 3: Yes, you must pay taxes on your business income. If you have not created an LLC or a corporation, then your business income is added to your wage income to calculate your taxes. That is, if you made, say, $50,000 salary working for somebody else and $10,000 on your side business, then your total income is $60,000 and that's what you pay taxes on. The total amount you pay in income taxes will be the same regardless of whether 90% came from salary and 10% from the side business or the other way around. The rates are the same, it's just one total number. If the withholding on your regular paycheck is not enough to cover the total taxes that you will have to pay, then you are required by law to pay estimated taxes quarterly to make up the difference. If you don't, you will be required to pay penalties, so you don't want to skip on this. Basically you are supposed to be withholding from yourself and sending this in to the government. It's POSSIBLE that this won't be an issue. If you're used to getting a big refund, and the refund is more than what the tax on your side business will come to, then you might end up still getting a refund, just a smaller one. But you don't want to guess about this. Get the tax forms and figure out the numbers. I think -- and please don't rely on this, check on it -- that the law says that you don't pay a penalty if the total tax that was withheld from your paycheck plus the amount you paid in estimated payments is more than the tax you owed last year. So like lets say that this year -- just to make up some numbers -- your employer withheld $4,000 from your paychecks. At the end of the year you did your taxes and they came to $3,000, so you got a $1,000 refund. This year your employer again withholds $4,000 and you paid $0 in estimated payments. Your total tax on your salary plus your side business comes to $4,500. You owe $500, but you won't have to pay a penalty, because the $4,000 withheld is more than the $3,000 that you owed last year. But if next year you again don't make estimated payment, so you again have $4,000 withheld plus $0 estimated and then you owe $5,000 in taxes, you will have to pay a penalty, because your withholding was less than what you owed last year. To you had paid $500 in estimated payments, you'd be okay. You'd still owe $500, but you wouldn't owe a penalty, because your total payments were more than the previous year's liability. Clear as mud? Don't forget that you probably will also owe state income tax. If you have a local income tax, you'll owe that too. Scott-McP mentioned self-employment tax. You'll owe that, too. Note that self-employment tax is different from income tax. Self employment tax is just social security tax on self-employed people. You're probably used to seeing the 7-whatever-percent it is these days withheld from your paycheck. That's really only half your social security tax, the other half is not shown on your pay stub because it is not subtracted from your salary. If you're self-employed, you have to pay both halves, or about 15%. You file a form SE with your income taxes to declare it. 4: If you pay your quarterly estimated taxes, well the point of \"\"estimated\"\" taxes is that it's supposed to be close to the amount that you will actually owe next April 15. So if you get it at least close, then you shouldn't owe a lot of money in April. (I usually try to arrange my taxes so that I get a modest refund -- don't loan the government a lot of money, but don't owe anything April 15 either.) Once you take care of any business expenses and taxes, what you do with the rest of the money is up to you, right? Though if you're unsure of how to spend it, let me know and I'll send you the address of my kids' colleges and you can donate it to their tuition fund. I think this would be a very worthy and productive use of your money. :-) Back to #2. I just recently acquired a financial advisor. I can't say what a good process for finding one is. This guy is someone who goes to my church and who hijacked me after Bible study one day to make his sales pitch. But I did talk to him about his fees, and what he told me was this: If I have enough money in an investment account, then he gets a commission from the investment company for bringing the business to them, and that's the total compensation he gets from me. That commission comes out of the management fees they charge, and those management fees are in the same ballpark as the fees I was paying for private investment accounts, so basically he is not costing me anything. He's getting his money from the kickbacks. He said that if I had not had enough accumulated assets, he would have had to charge me an hourly fee. I didn't ask how much that was. Whew, hadn't meant to write such a long answer!\"", "topk_rank": 10 }, { "id": "60441", "score": 0.6335740089416504, "text": "The big difference for me is that my contribution thorough a cafeteria plan also skips Social Security and Medicare taxes. That is a 6.2% (SS) + 1.45% (Medicare) tax on those contributions if done outside a cafeteria plan. Some companies make a contribution to a the HSA. If you handle your contributions outside of their channels they may see you as a non-participant, and not make any matching contributions. You might have to put a minimum amount into the company setup HSA. The non-company HSA may also charge fees that the company one doesn't. Regarding the taxes: If you contribute $3,000 to the HSA via post tax, your paychecks would have had an extra $229.50 paid into social security/Medicare. There is no mechanism to get this refunded.", "topk_rank": 11 }, { "id": "248761", "score": 0.6333412528038025, "text": "You can claim a deduction only if all of your business is conducted from the home, i.e. your home is your principal place of business - not just if you work from home sometimes. The CRA (Canada Revenue Agency) has pretty strict guidelines listed here, but once you're sure you qualify for a deduction, the next step would be to determine what portion of your home qualifies. You cannot attempt to deduct your entire mortgage simply because you run your business out of your home. The portion of your mortgage and other related & allowable home expense deductions has to be pro-rated to be equal to or less than the portion of your home you use for business. Simply put, if your business is operated out of a 120 sq-ft self-contained space, and your home's total square-footage is 2400 sq-ft, you can deduct 5% of your expenses (120/2,400 = 0.05). Hope this helps!", "topk_rank": 12 }, { "id": "414091", "score": 0.6332843899726868, "text": "If you have a software company, that can produce a box of software for $5, but the box sells for $100. (You have to make a profit and cover development costs) But then you give these boxes to charity, that is a cost of $5 each and a tax rebate of $100 x 40% = $40. A profit of $35 per donation of $5. Note: You can only do this if you have taxable profit to offset it against.", "topk_rank": 13 }, { "id": "525277", "score": 0.6332611441612244, "text": "You should not continue contributing, as you're no longer qualified for it. You can keep it, and use the money in it toward the current medical expenses, without a problem. There are specific examples in pub 969.", "topk_rank": 14 }, { "id": "386567", "score": 0.6332550644874573, "text": "Here in Germany there is a special case. I am studying (and working a little on the side) and still receiving child benefits from the state which is like 190€/m. Because I am getting this I don't have to pay tuition which is 1k/y. If my side income would get over the boundary (which is like 9k/y) I would lose those benefits (~3.3k) and would have to pay insurance myself (I dont know how much that would be. 50-100/m I guess.) So getting a raise from 8k to 10k sounds nice as it is a 25% raise, but it actually means getting less.", "topk_rank": 15 }, { "id": "553993", "score": 0.6330952644348145, "text": "1) When you apply for insurance you indicate your expected income, they figure the subsidy based on this. Note that while this data isn't checked it's only an estimate, any errors will be fixed at tax time so lying is just going to gain you an unpleasant tax bill come April 15. 2) It's not paid in installments, it's just a monthly premium. It's quite possible for someone to be on the ACA for only part of a year. 3) I can't address the issue of the fines. However, you are wrong on who it's for--it's for anyone who doesn't have employer-provided insurance, whatever the reason. I've been on it since it's inception because I have been self employed for most of that time--there's no employer to even offer me insurance.", "topk_rank": 16 }, { "id": "158409", "score": 0.6330556273460388, "text": "You do not need to file 1099-MISC to yourself if you're running as a sole proprietor - you are yourself. However, you do not deduct this amount from your business income and report it as royalties either. Your self-published book is your business income subject to SE tax. You can only deduct the actual costs of producing/writing, and the remaining amount is your Schedule C income.", "topk_rank": 17 }, { "id": "47260", "score": 0.6330553293228149, "text": "Typically you can only claim as business deductions those expenses which strictly relate to your business. In some cases, if you have a dedicated home office in your house, you can specify that expenses related to this space (furniture, etc.) are business expenses because it is a dedicated space. For example, I know of someone in sports broadcasting who claimed several TVs as a business expense, but these are for a room in his house that he uses only for watching games related to his work responsibilities, and never for entertaining, having friends over, etc. I think it will be difficult for you to count any portion of this type of installation as a business expense as it would relate to both your business as well as your residence. If you intend to try to get this deducted, I would strongly recommend consulting a CPA or tax attorney first. I think it will be difficult to prove that the only benefit is to your LLC if your electricity bills/credits are co-mingled with those for your residence. Best of luck!", "topk_rank": 18 }, { "id": "390368", "score": 0.6330517530441284, "text": "As a sole proprietor, the tax liability of your business is calculated based on combining your business income with your personal income together. It is good advice to keep all personal and business financial matters separate. This makes it easier to prove to the IRS that all your business expenses are actually business related. In this case however, the two items [tax payment for personal income vs tax payment for business income] are inseparable. What you can do, however, for your own personal records, is calculate how much of your tax payment relates to your business. I wouldn't get complicated about this; I would simply take the net income of your business as a % of your taxable income, and multiply that against your tax payment. ie: if your business net income is $10,000, and your total taxable income is $50,000, and you paid $6,000 in taxes, I would record that 20% of the $6k was related to business income. If you have a separate bank account for your sole proprietorship, you could make a transfer to your personal account of $1,200, and then make the $6k payment from your personal account. Remember that tax payments for either your sole proprietorship and your personal income will be treated the same: federal tax payments are not tax deductible, and state tax payments are tax deductible, whether they were paid for your sole proprietorship or the rest of your personal income. So even though this method is simplistic [for example, it doesn't factor in that different investment income types earned personally will have a lower rate than your sole proprietorship income], any difference wouldn't have an impact on any future tax liability. This would only be for your own personal record keeping.", "topk_rank": 19 } ]
62	Claiming car as a business expense in the UK	[ { "id": "34810", "score": 0.7955945730209351, "text": "\"I'm going to look just at purchase price. Essentially, you can't always claim the whole of the purchase price (or 95% your case) in the year (the accounting period) of purchase, but you get a percentage of the value of the car each year, called writing down allowance, which is a capital allowance. It is similar to depreciation, but based on HRMC's own formula. In fact, it seems you probably can claim 95% of the purchase price, because the value is less than £1000. The logic is a bit involved, but I hope you can understand it. You could also claim simplified expenses instead, which is just based on a rate per mile, but you can't claim both. Note, by year I mean whatever your account period is. This could be the normal financial year, but you would probably have a better idea about this. See The HMRC webpage on this for more details. The big idea is that you record the value of any assets you are claiming writing down allowance on in one of a number of pools, that attract the same rate of writing down allowance, so you don't need to record the value of each asset separately. They are similar to accounts in accounting, so they have an opening balance, and closing balance. If you use an asset for personal use, it needs a pool to itself. HRMC call that a single asset pool. So, to start with, look at the Business Cars section, and look at the Rates for Cars section, to determine the rate you can claim. Each one links to a further article, which gives more detail if you need it. Your car is almost certainly in the special rate category. Special rate is 8% a year, main rate is 18%, and First year allowance is essentially 100%. Then, you look at the Work out what you can claim article. That talks you through the steps. I'll go through your example. You would have a pool for your car, which would end the account period before you bought the vehicle at zero (step 1). You then add the value of the car in the period you bought it (Step 2). You would reduce the value of the pool if you dispose of it in the same year (Step 3). Because the car is worth less than £1,000 (see the section on \"\"If you have £1,000 or less in your pool\"\"), you would normally be able to claim the whole value of the pool (the value of the car) in the first accounting period, and reduce the value of the pool to zero. As you use the car for personal use, you only claim 95% of the value, but still reduce the pool to zero. See the section on \"\"Items you use outside your business\"\". This £1000 is adjusted if your accounting period lasts more or less than 12 months. Once the pool is down to zero that it you don't need to think about it any more for tax purposes, apart from if you are claiming other motoring expenses, or if you sell it. It gets more complicated if the car is more expensive. I'll go through an example for a car worth £2,000. Then, after Step 3, on the year of purchase, you would reduce the value of the pool by 8%, and claim 95% of the reduction. This would be a 160 reduction, and 95%*160 = 152 claim, leaving the value of 1860 in the pool. You then follow the same steps for the next year, start with 1840 in the pool, reduce the value by 8%, then claim 95% of the reduction. This continues until you sell or dispose of the car (Step 3), or the value of the pool is 1000 or less, then you claim all of it in that year. Selling the car, or disposing of the car is discussed in the Capital allowances when you sell an asset article. The basic idea is that if you have already reduced the value of the pool to zero, the price you sell the car for is added you your profits for that year (See \"\"If you originally claimed 100% of the item\"\"), if you still have anything in the pool, you reduce the value of the pool by the sale value, and if it reduces to below zero (to -£200, say), you add that amount (£200, in this case), to your profits. If the value is above zero, you keep applying writing down allowances. In your case, that seems to just means if you sell the car in the same year you buy it, you claim the difference (or 95% of it) as writing down allowance, and if you do it later, you claim the purchase price in the year of purchase, and add 95% of the sale price to your profits in the year you sell it. I'm a bit unclear about starting \"\"to use it outside your business\"\", which doesn't seem to apply if you use it outside the business to start with. You can claim simplified expenses for vehicles, if you are a sole trader or partner, but not if you claim capital allowances (such as writing down allowances) on them, or you include a separate expense in your accounts for motoring expenses. It's a flat rate of 45p a mile for the first 10,000 miles, and 25p per mile after that, for cars, and 24p a mile for motorcycles. See the HRMC page on Simplifed Mileage expenses for details. For any vehicle you decide to either claim capital allowances claim running costs separately, or claim simplified mileage expenses, and \"\"Once you use the flat rates for a vehicle, you must continue to do so as long as you use that vehicle for your business.you have to stick with that decision for that vehicle\"\". In your case, it seems you can claim 95% of the purchase price in the accounting period you buy it, and if you sell it you add 95% of the sale price to your profits in that accounting period. It gets more complicated if you have a car worth more than £1000, adjusted for the length of the accounting period. Also, if you change how you use it, consult the page on selling selling an asset, as you may have disposed of it. You can also use simplified mileage expenses, but then you can't claim capital allowances, or claim running costs separately for that car. I hope that makes sense, please comment if not, and I'll try to adjust the explanation.\"" } ]	[ { "id": "447231", "score": 0.755362331867218, "text": "You don't say what country you live in. If it's the U.S., the IRS has very specific rules for business use of a car. See, for starters at least, http://www.irs.gov/publications/p463/ch04.html. The gist of it is: If you use the car 100% for business purposes, you NEVER use it to drive to the grocery store or to your friend's house, etc, then it is a deductible business expense. If you use a car party for business use and partly for personal use, than you can deduct the portion of the expense of the car that is for business use, but not the portion that is for personal use. So basically, if you use the car 75% for business purposes and 25% for personal use, you can deduct 75% of the cost and expenses. You can calculate the business use by, (a) Keeping careful records of how much you spent on gas, oil, repairs, etc, tracking the percentage of business use versus percentage of personal use, and then multiplying the cost by the percentage business use and that is the amount you can deduct; or (b) Use the standard mileage allowance, so many cents per mile, which changes every year. Note that the fact that you paid for the car from a business account has absolutely nothing to do with it. (If it did, then everyone could create a small business, open a business account, pay all their bills from there, and all their personal expenses would magically become business expenses.) Just by the way: If you are going to try to stretch the rules on your taxes, business use of a car or personal computer or expenses for a home office are the worst place to do it. The IRS knows that cars and computers are things that can easily be used for either personal or business purposes and so they keep a special eye out on these.", "topk_rank": 0 }, { "id": "356884", "score": 0.753672182559967, "text": "If the UK is similar to Australia then you would not claim a virtual rent for the business portion but instead could claim a portion of the house expenses such as electricity use, property taxes, and yes a portion of the mortgage, and any repairs or renovations done to the work areas of the house. However, you should keep in mind that if you sell the place you may have to pay CGT on the portion you were claiming for business use.", "topk_rank": 1 }, { "id": "540395", "score": 0.7505400776863098, "text": "Alright, IRS Publication 463: Travel, Entertainment, Gift, and Car Expenses Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose. Example. You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense Obviously nothing helpful in the code. So I would use option 1, weight the maintenance-related mileage by the proportion of business use. Although if you use your car for business a lot (and perhaps have a spouse with a car), an argument could be made for 3. So I would consider my odds of being audited (even lower this year due to IRS budget cuts) and choose 1 or 3. And of course never throw anything away until you're room temperature.", "topk_rank": 2 }, { "id": "103405", "score": 0.7495400309562683, "text": "Only if your work on the side is making you at least £60,000 profit a year. The overheads are just not worth it if you make less. Working as a sole trader, you can still claim for expenses incurred in the course of your business. You can also claim a percentage of your computer costs, even though you may use the computer for gaming. This is not unreasonable as the computer is necessary for your work. The Inland Revenue accept the fact that some assets are part work-related. In your case, as a web and mobile phone developer, I expect the percentage to be at least half, if not a lot more. If you need to travel in the course of your work you can claim a percentage for your car. You can include other small expenses such as telephone, stationery, electricity etc but don't go overboard. The important point to remember is that you must be able to defend the expenses claimed as work-related, so long as you can do this there is no problem. Remember to keep good records of all your expenses. This is on-going throughout the year and is much more work than filling out your tax return. The software on the IR self-assessment site is excellent, so it's conceivable that you may not need an accountant if you are prepared to do your own tax return. However, if you feel unsure employ an accountant initially and take it from there.", "topk_rank": 3 }, { "id": "146388", "score": 0.7414292693138123, "text": "You've got two options. Deduct the business portion of the depreciation and actual expenses for operating the car. Use the IRS standard mileage rate of $.575/mile in 2015. Multiply your business miles by the rate to calculate your deduction. Assuming you're a sole proprietor you'll include a Schedule C to your return and claim the deduction on that form.", "topk_rank": 4 }, { "id": "154931", "score": 0.739253044128418, "text": "The best way to do this is to pay for the entire car, including gas, insurance, and repairs, from S-corp funds, then meticulously track how many miles are used for personal and how many miles for business. If you pay with S-corp funds, you will claim the personal miles as a taxable benefit from the S-corp on your personal return. The S-corp can then claim all the expenses and depreciation on the vehicle, reducing the S-corp's tax liability.", "topk_rank": 5 }, { "id": "403877", "score": 0.739065408706665, "text": "You should not open a company unless and until you want to continue operating your company for the longer term. If it is only for a year so so, refrain from opening a company. I am an IT contractor and operate through a limited company. Believe me it isn't that difficult to operate through a limited company. If you are afraid of doing your books, get an accountant and he will do it for you. Should not cost you more than a £1000 - 1500 or so. Regarding what you can claim as an expense, it depends on how you can confirm that the expenses you incurred are for the company. Your accountant can help you out on that. If you claim false expenses and are caught, you have to forgo a lot to the HMRC. Google is the best option, there are loads of sites which can help you on that.", "topk_rank": 6 }, { "id": "418999", "score": 0.7358250021934509, "text": "Not sure about the UK, but if it were in the US you need to realize the expenses can be claimed as much as the income. After having a mild heart attack when I did my business taxes the first time many years ago, a Small Business Administration adviser pointed it out. You are running the site from a computer? Deductible on an amortization schedule. Do you work from home? Electricity can be deducted. Do you drive at all? Did you pay yourself a wage? Any paperwork, fax communications, bank fees that you had to endure as work expenses? I am not an accountant, but chances are you legally lost quite a bit more than you made in a new web venture. Discuss it with an accountant for the details and more importantly the laws in your country. I could be off my rocker.", "topk_rank": 7 }, { "id": "183612", "score": 0.7350295782089233, "text": "Assuming you buy the services and products beforehand and then provide them to your clients. Should the cost of these products and services be deducted from my declared income or do I include them and then claim them as allowable expenses? You arrive at your final income after accounting for your incomings and outgoings ? regularly buys products and services on behalf of clients These are your expenses. invoice them for these costs after These are your earnings. These are not exactly allowable expenses, but more as the cost of doing your business, so it will be deducted from your earnings. There will be other business expenses which you need to deduct from your earnings and then you arrive at your income/profit. So before you arrive at your income all allowable expenses have been deducted. include on my invoices to clients VAT if you charge VAT. Any charges you require them to pay i.e. credit card charges etc. You don't need to inform clients about any costs you incur for doing your business unless required by law. If you are unsure about something browse the gov.uk website or obtain the services of an accountant. Accounting issues might be costly on your pocket if mistakes are committed.", "topk_rank": 8 }, { "id": "452248", "score": 0.7316765785217285, "text": "It is a great advice. I would suggest going to the Companies House (it's in London somewhere), picking up all of their leaflets regarding requirements for different forms of corporate entity, and deciding if you want to have that burden. It is not a lot of work, you can essentially claim VAT on all business purchases (the way roughly it works, is that your company invoices your client, your client has to pay the fee + VAT (usually that VAT is then deducted by your client from it's VAT, so no loss there), and you pay the VAT on the difference between the service sales price, and your costs (computers etc.) ) You have to be careful to avoid excessive double taxation (paying income tax on both corporate income, and then your personal income off said company), but it usually comes off in your favor. Essentially, if you're making more than 50% of your income from services rendered, it is to your advantage to render such services as a business entity.", "topk_rank": 9 }, { "id": "571062", "score": 0.725452184677124, "text": "If this is a business expense - then this is what is called reimbursement. Reimbursement is usually not considered as income since it is money paid back to you for an expense you covered for your employer with your after-tax money. However, for reimbursement to be considered properly executed, from income tax stand point, there are some requirements. I'm not familiar with the UK income tax law specifics, but I reason the requirements would not differ much from places I'm familiar with: before an expense is reimbursed to you, you should usually do this: Show that the expense is a valid business expense for the employer benefit and by the employer's request. Submit the receipt for reimbursement and follow the employer's procedure on its approval. When income tax agent looks at your data, he actually will ask about the £1500 tab. You and you'll employer will have to do some explaining about the business activity that caused it. If the revenue agent is not satisfied, the £750 that is paid to you will be declared as your income. If the required procedures for proper reimbursement were not followed - the £750 may be declared as your income regardless of the business need. Have your employer verify it with his tax accountant.", "topk_rank": 10 }, { "id": "494000", "score": 0.7198813557624817, "text": "Yes, you will be able to claim it as an expense on your taxes, but not all in the current year. It is split into three categories: Current Expenses - Assets purchased such as inventory would be able to be claimed in the current year. Assets - Vehicles, Buildings, and equipment can be depreciated over time based on the value you purchased them for and the CCA class. Goodwill - In tax terms this is the value of the business purchase that is not eligible in 1 or 2 and is called Eligible Capital Property. This can be expensed over time. From info at CRA website: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/lf-vnts/byng/menu-eng.html", "topk_rank": 11 }, { "id": "202645", "score": 0.7169825434684753, "text": "For stocks, bonds, ETF funds and so on - Taxed only on realised gain and losses are deductible from the gain and not from company's income. Corporate tax is calculated only after all expenses have been deducted. Not the other way around. Real estate expenses can be deducted because of repairs and maintenance. In general all expenses related to the operation of the business can be deducted. But you cannot use expenses as willy nilly, as you assume. You cannot deduct your subscription to Playboy as an expense. Doing it is illegal and if caught, the tours to church will increase exponentially. VAT is only paid if you claim VAT on your invoices. Your situation seems quite complicated. I would suggest, get an accountant pronto. There are nuances in your situation, which an accountant only can understand and help.", "topk_rank": 12 }, { "id": "560325", "score": 0.7168911099433899, "text": "Not sure if it is the same in the States as it is here in the UK (or possibly even depends on the lender) but if you have any amount outstanding on the loan then you wouldn't own the vehicle, the loan company would. This often offers extra protection if something goes wrong with the vehicle - a loan company talking to the manufacturer to get it resolved carries more weight than an individual. The laon company will have an army of lawyers (should it get that far) and a lot more resources to deal with anything, they may also throw in a courtesy car etc.", "topk_rank": 13 }, { "id": "338700", "score": 0.715385377407074, "text": "It sounds like something is getting lost in translation here. A business owner should not have to pay personal income tax on business expenses, with the caveat that they are truly business expenses. Here's an example where what you described could happen: Suppose a business has $200K in revenue, and $150K in legitimate business expenses (wages and owner salaries, taxes, services, products/goods, etc.) The profit for this example business is $50K. Depending on how the business is structured (sole proprietor, llc, s-corp, etc), the business owner(s) may have to pay personal income tax on the $50K in profit. If the owner then decided to have the business purchase a new vehicle solely for personal use with, say, $25K of that profit, then the owner may think he could avoid paying income tax on $25K of the $50K. However, this would not be considered a legitimate business expense, and therefore would have to be reclassified as personal income and would be taxed as if the $25K was paid to the owner. If the vehicle truly was used for legitimate business purposes then the business expenses would end up being $175K, with $25K left as profit which is taxable to the owners. Note: this is an oversimplification as it's oftentimes the case that vehicles are partially used for business instead of all or nothing. In fact, large items such as vehicles are typically depreciated so the full purchase price could not be deducted in a single year. If many of the purchases are depreciated items instead of deductions, then this could explain why it appears that the business expenses are being taxed. It's not a tax on the expense, but on the income that hasn't been reduced by expenses, since only a portion of the big ticket item can be treated as an expense in a single year.", "topk_rank": 14 }, { "id": "327002", "score": 0.7151275277137756, "text": "\"To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. (IRS, Deducting Business Expenses) It seems to me you'd have a hard time convincing an auditor that this is the case. Since business don't commonly own cars for the sole purpose of housing $25 computers, you'd have trouble with the \"\"ordinary\"\" test. And since there are lots of other ways to house a computer other than a car, \"\"necessary\"\" seems problematic also.\"", "topk_rank": 15 }, { "id": "88967", "score": 0.714985191822052, "text": "Unless you own a business and the car is used in that business you can't write off your auto repairs. If you start a sole-proprietorship in your own name there are all sorts of things you can write off as long as there is a reasonable expectation of profit. This includes a portion of your car repairs, a portion of your home expenses (assuming it's a home-based business), any tools used in the business, all kinds of stuff. The portion of your auto is based on total miles driven in the year vs. total miles driven for business purposes. Eligible auto expenses include repairs, gas/oil, insurance, parking, and interest on the auto loan. There are some things to remember: I'm no expert on California business law. Talk to a lawyer and an accountant if you wish to go this way. Many offer a half-hour free session for new clients.", "topk_rank": 16 }, { "id": "55200", "score": 0.7147526741027832, "text": "As I understand it... Generally housing can't be considered a business expense unless taken at your employer's explicit direction, for the good of the business rather than the employee. Temporary assignment far enough from you home office that commuting or occasional hotel nights are impractical, maybe. In other words, if they wouldn't be (at least theoretically) willing to let you put it on an expense account, you probably can't claim it here.", "topk_rank": 17 }, { "id": "42924", "score": 0.7138415575027466, "text": "If you mostly do work for businesses/individuals who are VAT registered it's a no-brainer to become VAT registered yourself... Although you will have to charge your customers VAT (and pass this on to HMRC) because they are VAT-registered they will reclaim the amount so it won't actually 'cost' them anything. At the same time, you can reclaim all the VAT you're currently being charged on your business expenditure (business equipment, tickets to business events, business software, accountancy/other business services you pay for, web hosting etc etc etc) However, if most of your clients are not VAT-registered it's not worth you registering. You would have to charge your customers an extra 20% (and they wouldn't be able to claim it back!) and you would have to pass this on to HMRC. Although you could still claim for goods and services you purchase for business use, essentially you'd just be another tax collector for HMRC. That said, at the end of the day it's up to you! VAT returns are quarterly and dead simple. Just keep a spreadsheet with your invoices (output tax) and receipts (input tax) and then do some basic maths to submit the final numbers to HMRC. No accountant required!", "topk_rank": 18 }, { "id": "472824", "score": 0.7133370637893677, "text": "You are either VAT registered or you are not VAT registered. If you are not VAT registered, then you are not allowed to charge customers VAT, and you cannot reclaim VAT that you are paying. You are however allowed to deduct the cost of goods including VAT from your expenses. So if you buy a computer for £1000 + £200 VAT, and you can deduct the computer as an expense to reduce your profits that you pay income tax for, then the expense is £1,200 and not just £1,000. If you are VAT registered, then you MUST charge every customer 20% VAT. Business customers don't mind at all, but private customers will be happier if you don't charge VAT because your bills will be a lot lower. You take all the VAT that you received, then subtract all the VAT that you paid for business expenses and that you have invoices for, and send the remainder to HMRC four times a year. (The reason that businesses don't mind paying VAT is because they can in turn deduct the VAT they pay you from the VAT that they received and for every pound they give you, they give one pound less to HMRC). Note that when you have expenses that are deductible from your profits, you can now only deduct the cost excluding VAT. On the other hand, the VAT you receive doesn't count as income and doesn't lead to profits that you need to pay income tax for. It's your decision whether you want to be VAT registered or not, unless your revenue exceeds some limit (somewhere between £70,000 and £80,000 per year) where you must register for VAT.", "topk_rank": 19 } ]
63	Do I need to keep paper records for my business?	[ { "id": "509617", "score": 0.7232428193092346, "text": "Scanned or electronic copies of invoices should be sufficient as long as they are accurate and you can deliver them during an audit. Also, if you have an accountant prepare your taxes you would either need to provide them a copy of the invoices or a summary of them with the corresponding amounts to be claimed. Personally I prefer to print out a paper copy and file that away with that quarter's and year's other tax documents. I do my own taxes and find paper copies handy as I can go through each invoice/receipt and make sure I have entered its information by ticking it. I find that when handling a large number of documents that paper copies are more easy to handle than electronic ones. In the end you will need to use a system that you feel comfortable with and are able to use effectively." } ]	[ { "id": "92819", "score": 0.6861160397529602, "text": "I was only able to find Maryland form 1 to fit your question, so I'll assume you're referring to this form. Note the requirement: Generally all tangible personal property owned, leased, consigned or used by the business and located within the State of Maryland on January 1, 201 must be reported. Software license (whether time limited or not, i.e.: what you consider as rental vs purchase) is not tangible property, same goes to the license for the course materials. Note, with digital media - you don't own the content, you merely paid for the license to use it. Design books may be reportable as personal tangible property, and from your list that's the only thing I think should be reported. However, having never stepped a foot in Maryland and having never seen (or even heard of) this ridiculous form before, I'd suggest you verify my humble opinion with a tax adviser (EA/CPA) licensed in the State of Maryland to confirm my understanding of this form.", "topk_rank": 0 }, { "id": "195207", "score": 0.6856549978256226, "text": "Do you have a separate bank account for your business? That is generally highly recommended. I have a credit card for my single-member LLC. I prefer it this way because it makes the separation of personal and business expenses very clear. Using a personal credit card, but using it for only business expenses seems to be a reasonable practice. You may be able to do one better though... For your sole proprietorship, you can file a DBA which establishes the business name. The details of this depend on your state. With a DBA, I believe you can open a bank account in the name of your business and you may also be able to open a credit card account in the name of the business. I'm not sure what practical difference it makes, but it does make the personal/business distinction clearer. Though, at that point, you might as well just do the LLC...", "topk_rank": 1 }, { "id": "520922", "score": 0.6856265664100647, "text": "You actually don't need an accountant. They'll be expensive and at this early a stage unnecessary - what you need is a good bookkeeper who can keep track of what comes in and what goes out. You'll need that to know if you're making money or not and to show the government at the end of the year. Get a copy of QuickBooks and pick up Bookkeeping for Dummies to at least get a sense for what's going on. Have you registered as a sole proprietorship? Make sure you have a vendor's permit so you can legally sell your services in Ontario. You may need to collect HST, in which case you'll need to register for an HST # and submit it on a quarterly basis. Whatever you do, don't fuck with the government - they can freeze your bank accounts to get money they're owed. You need to keep money on hand to pay for any taxes you might owe on the business, ESPECIALLY if it's a sole proprietorship where you'll be tempted to treat profit as income. You don't want to end up with nothing in the bank at the end of the year and $40k owing to the CRA. Get a separate bank account - don't mix personal and business, it's messy. Expense everything you reasonably can.", "topk_rank": 2 }, { "id": "76486", "score": 0.684623122215271, "text": "I am not a lawyer. I do however own an LLC. It's setup as a partnership with 50/50 ownership. You can do it as a sole proprietorship. In basic terms, if you separate your money and assets from the money and assets of the company then you are personally immune from lawsuit and thus your personal assets are safe. You have to set it up right (fairly cheap) and keep the records right (ie never mix personal and company assets ) but it provides a nice legal buffer and in some cases tax benefits. Do not construe this as legal or accountanting advice. Speak with pros to understand and get it set up right. But it's worth it.", "topk_rank": 3 }, { "id": "390368", "score": 0.6840152740478516, "text": "As a sole proprietor, the tax liability of your business is calculated based on combining your business income with your personal income together. It is good advice to keep all personal and business financial matters separate. This makes it easier to prove to the IRS that all your business expenses are actually business related. In this case however, the two items [tax payment for personal income vs tax payment for business income] are inseparable. What you can do, however, for your own personal records, is calculate how much of your tax payment relates to your business. I wouldn't get complicated about this; I would simply take the net income of your business as a % of your taxable income, and multiply that against your tax payment. ie: if your business net income is $10,000, and your total taxable income is $50,000, and you paid $6,000 in taxes, I would record that 20% of the $6k was related to business income. If you have a separate bank account for your sole proprietorship, you could make a transfer to your personal account of $1,200, and then make the $6k payment from your personal account. Remember that tax payments for either your sole proprietorship and your personal income will be treated the same: federal tax payments are not tax deductible, and state tax payments are tax deductible, whether they were paid for your sole proprietorship or the rest of your personal income. So even though this method is simplistic [for example, it doesn't factor in that different investment income types earned personally will have a lower rate than your sole proprietorship income], any difference wouldn't have an impact on any future tax liability. This would only be for your own personal record keeping.", "topk_rank": 4 }, { "id": "63422", "score": 0.6840063333511353, "text": "\"The short answer is \"\"it depends\"\", mainly on the type of record and how old it is. Most retained records should be organized by year first, then by type. Have a look at this: http://www.bankrate.com/finance/personal-finance/how-long-to-keep-financial-records.aspx Typically, you should do the following:\"", "topk_rank": 5 }, { "id": "231968", "score": 0.6835326552391052, "text": "Lots of business do work and buy products for their customers then invoice them later think of landscapers or IT professionals. They keep track of the work and products on post-its they stick on their desks. Need further help, contact QuickBooks Support team by visit our site - https://www.wizxpert.com/quickbooks-support-help-phone-number/", "topk_rank": 6 }, { "id": "140078", "score": 0.6822105050086975, "text": "\"The simple answer is...get everything you can. If you're closing the account then you want to have as complete a record as possible for yourself just for the sake of playing it safe. There's no such thing as having \"\"too much information\"\" when it comes to your financial records. You can never tell when something will come up that requires information from years past that you thought you'd never need, and if you don't have it, then what? This is a matter of being prudent, and while it make take some effort to obtain the records, it's better to be safe than sorry. Good luck!\"", "topk_rank": 7 }, { "id": "350839", "score": 0.6821604371070862, "text": "A computer is a special case because the IRS thinks that you might be using it for personal applications. You may need to keep a log, or be able to state that you also have another computer for non-business use. That said, if your schedule C shows a small profit then you don't need to itemize expenses, just state the total.", "topk_rank": 8 }, { "id": "537593", "score": 0.6808571219444275, "text": "Yes, it's a good idea to have a separate business account for your business because it makes accounting and bookkeeping that much easier. You can open a business checking account and there will be various options for types of accounts and fees. You may or may not want an overdraft account, for example, or a separate business credit card just so you can more easily separate those expenses from your personal cards. When I started my business, I opened a business checking account and met with my banker every year just to show them how the business was doing and to keep the relationship going. Eventually, when I wanted to establish a business line of credit, it was easier to set up because I they were already familiar with my business, its revenue, and needs for a line of credit. You can set up a solo 401k with your bank, too, and they'll be very happy to do so, but I recommend shopping around for options. I've found that the dedicated investment firms (Schwab, Fidelity, etc.) tend to have better options, fees, and features for investment accounts. Just because a specific bank handles your checking account doesn't mean you need to use that bank for everything. Lastly, I use completely different banks for my personal life and for my business. Maybe I'm paranoid, but I just don't want all my finances in the same place for both privacy reasons and to avoid having all my eggs in the same basket. Just something to consider -- I don't really have a completely sane reason for using completely different banks, but it helps me sleep.", "topk_rank": 9 }, { "id": "200023", "score": 0.6802527904510498, "text": "If you do business under your name, you don't need to register your business. Your business will be treated as a sole proprietorship. If your revenue exceeds 30,000 (or wish to collect GST for the government) then you will have to register with the CRA for a GST account, but that is free.", "topk_rank": 10 }, { "id": "365771", "score": 0.6802510023117065, "text": "If it was me, I would organize something along these lines. in large part because down the road when it comes time to purge stuff like small receipts, utility bills etc, you'll be doing it per year, at the 7 year point or something similar. Year first Under that major categories such as Mortgage, Utilities, Credit, Major Purchases, Home Improvement, Other I'd do a monthly breakdown for Other since it's likely to have a lot of little stuff, and bulking it up by month helps to organize it. But I'd not bother with that for the other items, since there's going to be limited items in each one. If you are scanning stuff on a regular basis, and using a decent naming convention for the receipts, then you could easily sort by date, or name, within any of the larger categories to see for example, all the electric bills. in order. You might also want to look at a cloud service such as DOXO as an alternative to storing this stuff at home (they also work with a number of companies to do electronic billing etc) In terms of retention, if you are a homeowner, save anything related to your mortgage and anything that goes towards the house, even little maintenance stuff, and any improvements, as all of that goes against the cost basis of the house when you sell. Generally, after 7 years, you are unlikely to need anything in the way of small receipts, utility bills, etc. in any case, be sure you have regular backups offsite, either by storing stuff in the cloud such as doxo, or via a regular backup service such as carbonite. you don't want to lose all your records to a house fire, natural disaster, or having your computer stolen etc.", "topk_rank": 11 }, { "id": "435835", "score": 0.6801595091819763, "text": "You can print them on any IRS-approved paper, you don't have to use pre-printed forms. The IRS publishes specifications for paper that is approved for use for these kinds of forms (109, W, etc). Here's the reason why it is important: Even the slightest deviation can result in incorrect scanning, and may affect money amounts reported for employees. Note that some portions of these forms are in different color (1099-MISC copy A). This is important, and using incorrect color will affect the IRS OCR mechanisms. Forms for individuals are less complicated with regards to technical specifications, because individuals must file them, and as such any complication will unnecessarily burden the citizenry. All the 109, W etc forms are not legally required to be filed by all citizens. You're only required to file them if you chose to do business, or chose to employ others. As such, using professional software and special forms is a cost of doing your business, and not a tax as it would be had it been mandatory to everyone. Mistakes in individual forms due to OCR failure or something else will be noticed by the taxpayers (less/more refund, etc) or through the internal matching and cross-check. However, forms 109* and W* feed that matching and cross-check system and are considered source of truth by it, and as such their processing must be much more reliable and precise.", "topk_rank": 12 }, { "id": "189994", "score": 0.680079460144043, "text": "To be on the safe side - you'll want to get the full invoice. You don't need to actually print them, you can save it as a PDF and make sure to make your own backups once in a while. Only actually print them when the IRS asks you to kill some trees and send them a paper response, and even then you can talk to the agent in charge and check if you can email the digital file instead. The IRS won't ask for this when you file your taxes, they will only ask for this if you're under audit and they will want to actually validate the numbers on your return. You'll know when you're under audit, and who is the auditor (the agent in charge of your case). You'll also want to have some representation when that happens.", "topk_rank": 13 }, { "id": "19794", "score": 0.6799833178520203, "text": "Systems to research that may help you out: Less Accounting and Wave are great because they can import data from banks / credit cards. I know you said your bank doesn't export it but it seems like something as a small business you would want.", "topk_rank": 14 }, { "id": "365456", "score": 0.6787617802619934, "text": "There are quite a few questions as to how you are recording your income and expenses. If you are running the bakery as a Sole Proprietor, with all the income and expense in a business account; then things are easy. You just have to pay tax on the profit [as per the standard tax bracket]. If you running it as individual, you are still only liable to pay tax on profit and not turnover, however you need to keep a proper book of accounts showing income and expense. Get a Accountant to do this for you there are some thing your can claim as expense, some you can't.", "topk_rank": 15 }, { "id": "547301", "score": 0.6776726841926575, "text": "\"Like you said, it's important to keep your personal assets and company assets completely separate to maintain the liability protection of the LLC. I'd recommend getting the business bank account right from the beginning. My wife formed an LLC last year (also as a pass-through sole proprietorship for tax purposes), and we were able to get a small business checking account from Savings Institute and Trust that has no fees (at least for the relatively low quantity of transactions we'll be doing). We wrote it a personal check for startup capital, and since then, the LLC has paid all of its own bills out of its checking account (with associated debit card). Getting the account opened took less than an hour of sitting at the bank. Without knowing exactly where you are in Kentucky, I note that Googling \"\"kentucky small business checking\"\" and visiting a few banks' web sites provided several promising options for no-fee business checking.\"", "topk_rank": 16 }, { "id": "98636", "score": 0.6776674389839172, "text": "\"Thirtyfive years ago, when buying checks through one's bank was the sole option, if you got a \"\"business\"\" account with a bank, you had to buy \"\"business\"\" checks. One difference between a \"\"business\"\" account and a personal account was that on the business account, the incorporated or unincorporated company (say Simply Wonderful Apps) had the option of changing from John Doe to Richard Roe as the Treasurer of Simply Wonderful Apps and the person signing the checks, whereas a personal account in John Doe's name could not be changed to allow Richard Roe signature authority over the account. For a self-employed person doing business as Simply Wonderful Apps, a personal checking account would do just as well, since the need to change the person responsible for signing checks might never arise. It was, of course, important to have a separate checking account for the business because it made book-keeping simpler and also separated business expenses deductible on Schedule C from personal expenses. But it was not necessary to have a business account or business checks to run a small business. In addition to the various advantages described in other answers, one advantage that I found for larger checks is that various money management programs could do things like print an address below the name on (computer-printable) checks so that after folding, the check could be put into a window envelope and mailed directly. For the one check to a page format, the programs could print additional information on the blank area below the check (e.g. explanations about the check, company logo etc. So, it was convenient if one had to write several checks each month. But if outgoing checks are infrequent and extra security is not much of an issue, there is less reason to spend a lot extra on business style checks rather than the personal style checks.\"", "topk_rank": 17 }, { "id": "369328", "score": 0.6772671341896057, "text": "It sounds like the items shipped directly from the vendor need to be recorded into your system when the order is confirmed, that way cost of goods sold and revenue don't get lost. You'll have a record of re-orders and cancels and other such things too.", "topk_rank": 18 }, { "id": "569812", "score": 0.6769369840621948, "text": "I'm trying to organize my financial papers as well. I have a Fujitsu ScanSnap and it's tearing through my papers like a hot knife through butter (i.e. awesome). Here's how I'm addressing organizing the paper. I'm organizing mine a little bit organically. Here are the main parts: So anyway, all that to say that it's not necessary to organize the files to the hilt. If you want to, that's fine too, but it's a tradeoff: up-front organization for possibly some time savings later. The search function available is decreasing the advantage of organizing your files carefully. If throwing all of your files in a digital pile makes your skin crawl, then I won't force you otherwise, but I'm not worried about it for the time being. What you're doing with the other tracking sounds fine to me. Others may have different insights there.", "topk_rank": 19 } ]
64	1040 Schedule A Un-Reimbursed Business Expense Reporting	[ { "id": "391619", "score": 0.6900588274002075, "text": "It would be unusual but it is possible that the expenses could be very high compared to your income. The IRS in pub 529 explains the deduction. You can deduct only unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary. The next part lists examples. I have cut the list down to highlight ones that could be large. You may be able to deduct the following items as unreimbursed employee expenses. Damages paid to a former employer for breach of an employment contract. Job search expenses in your present occupation. Legal fees related to your job. Licenses and regulatory fees. Malpractice insurance premiums. Research expenses of a college professor. Rural mail carriers' vehicle expenses. Tools and supplies used in your work. Work clothes and uniforms if required and not suitable for everyday use. Work-related education. If the term of employment was only part of the year, one or more of the these could dwarf your income for the year. Before deducting something that large be sure you can document it. I believe the IRS computers would flag the return and I wouldn't be surprised if they ask for additional proof." } ]	[ { "id": "487728", "score": 0.6555366516113281, "text": "I strongly recommend that you talk to an accountant right away because you could save some money by making a tax payment by January 15, 2014. You will receive Forms 1099-MISC from the various entities with whom you are doing business as a contractor detailing how much money they paid you. A copy will go to the IRS also. You file a Schedule C with your Form 1040 in which you detail how much you received on the 1099-MISC forms as well as any other income that your contracting business received (e.g. amounts less than $600 for which a 1099-MISc does not need to be issued, or tips, say, if you are a taxi-driver running your own cab), and you can deduct various expenses that you incurred in generating this income, including tools, books, (or gasoline!) etc that you bought for doing the job. You will need to file a Schedule SE that will compute how much you owe in Social Security and Medicare taxes on the net income on Schedule C. You will pay at twice the rate that employees pay because you get to pay not only the employee's share but also the employer's share. At least, you will not have to pay income tax on the employer's share. Your net income on Schedule C will transfer onto Form 1040 where you will compute how much income tax you owe, and then add on the Social Security tax etc to compute a final amount of tax to be paid. You will have to pay a penalty for not making tax payments every quarter during 2013, plus interest on the tax paid late. Send the IRS a check for the total. If you talk to an accountant right away, he/she will likely be able to come up with a rough estimate of what you might owe, and sending in that amount by January 15 will save some money. The accountant can also help you set up for the 2014 tax year during which you could make quarterly payments of estimated tax for 2014 and avoid the penalties and interest referred to above.", "topk_rank": 0 }, { "id": "182989", "score": 0.6550902128219604, "text": "Since you say 1099, I'll assume it's in the US. :) Think of your consulting operation as a small business. Businesses are only taxed on their profits, not their revenues. So you should only be paying tax on the $700 in the example you gave. Note, though, that you need to be sure the IRS thinks you're a small business. Having a separate bank account for the business, filing for a business license with your local city/state, etc are all things that help make the case that you're running a business. Of course, the costs of doing all those things are business expenses, and thus things you can deduct from that $1000 in revenue at tax time.", "topk_rank": 1 }, { "id": "194308", "score": 0.6549649238586426, "text": "Well, if you were a business, and your food and rent and travel expenses were business expenses, and you paid out less money than you earned, you would get a refund. If you can prove that an expense is tax deductible, then that's just what it is. For businesses, a net operating loss is tax deductible.", "topk_rank": 2 }, { "id": "251649", "score": 0.654880940914154, "text": "\"The Form 1040 (U.S. tax return form) Instructions has a section called \"\"Do You Have To File?\"\". Below a certain income, you are not required to file a tax return and pay any tax. This amount of income at which you are required to file depends on several things, including your dependency status (you are a dependent of your parents), your marital status, and other factors. The instructions have charts that show what these numbers are. You would fall under Chart B. Assuming that you are under age 65, unmarried, and not blind, you only have to file when you reach the following conditions: Your unearned income was over $1,050. Your earned income was over $6,300. Your gross income was more than the larger of— $1,050, or Your earned income (up to $5,950) plus $350. (Note: Income from YouTube would count as \"\"earned income\"\" for the purposes above.) However, if you are producing your own videos and receiving revenue from them, you are technically self-employed. This means that the conditions from Chart C also apply, which state: You must file a return if any of the five conditions below apply for 2015. As a self-employed person, you can deduct business expenses (expenses that you incur in producing your product, which is this case is your videos). Once your revenue minus your expenses reach $400, you will need to file an income tax return.\"", "topk_rank": 3 }, { "id": "72209", "score": 0.6547684669494629, "text": "\"1099's and other official tax forms are often reported to the IRS by the issuer, whether or not you include a copy in your return. You should not neglect to include this income in your 2016 return in an attempt to balance out the two tax years. It's up to you whether or not you feel like filing an amended 2015 return to recover over-payment of taxes from that tax year. You have up to three years to amend tax returns using form 1040X. Since you couldn't have furnished a 1099 for this when you filed your 2015 return (otherwise you wouldn't be in receipt of it for tax year 2016), I'm assuming you reported it simply as \"\"Other Income\"\" and therefore would have been [over] taxed your marginal rate on it. From irs.gov: When to amend a return. You should file an amended return if you need to correct your filing status, number of dependents, total income, tax deductions or tax credits. The instructions for Form 1040X, Amended U.S. Individual Income Tax Return, list additional reasons to amend a return.\"", "topk_rank": 4 }, { "id": "118615", "score": 0.6547354459762573, "text": "Every bill you write counts as income (if the bill doesn't get paid, you would count that as an expense). In cases where you don't write bills, I think the payment you receive would count as income, but you might check that on the HMRC website. So to record your income, you can basically record the payments that you receive. Anything you pay out for your business is an expense. You keep a receipt for every expense - if you don't have a receipt, you can't count it as an expense, so keeping all the receipts is very, very important. An exception are investments, for example buying a computer that should last multiple years; there you can count a percentage of the investment as expense every year. All income, minus all expenses, is your profit. You pay tax and National Insurance contributions according to your profit. You can do whatever you like with the profit. Notice that I didn't mention any salary. Self employed means you have no salary, you have profits and do with them whatever you like. On the other hand, you pay taxes on these profits almost exactly as if they were income. If you have this blog but are also employed, you'll add the profits to your normal income statement.", "topk_rank": 5 }, { "id": "467108", "score": 0.6546602249145508, "text": "I'd say you have a couple options that differ by the amount of time required. Option 1: Export your checking/credit card ledgers from your banks for the unaccounted for periods you mention then import them into GNUcash. They won't be categorized, but it's a fairly simple task to go through and categorize the main ones. Anything else can be categorized in an 'unaccounted for' account and either properly categorized over time at a later date or just left unaccounted for. Option 2: Make one entry in each of your liabilities and assets that is also part of the 'unaccounted for' expense account, but contains the number required to balance your accounts now. This is by far the easiest and will allow you to start with a clean slate now but keep your prior records in the same ledger. Option 3: Start a new ledger with the same account/expense structure as your previous ledger. From here on out, you'd open this GNUCash file and start fresh. Also quick and easy but there is no way to look at the old ledger and run reports unless you open that separately. I actually do this every couple of years as a way to force me to clear out obsolete accounts and trim the fat since GNUcash can take a long time to open when the ledger contains many years of transactions.", "topk_rank": 6 }, { "id": "369816", "score": 0.6545847654342651, "text": "i cannot directly tell from the provided information if it is already included in Net A/R but if there is a balance sheet you can check yourself if the Total Cash Flow matches the difference between cash position year 0&1 and see if it is net or still to be included.", "topk_rank": 7 }, { "id": "285493", "score": 0.6545811295509338, "text": "Well you've got to think about the process, but first make sure the thing you want to pay for is actually a qualified dependent care expense. Here is a list of eligible expenses from a national FSA administrator. This process will tie up your money for some amount of time. Your deduction will come out like clockwork. But there is a time-delay of potentially months between your deduction and receipt of a reimbursement. Dependent care plans are money-in money-out. You can only file a reimbursement on funds that have actually been contributed, which is different than a medical FSA. Additionally, you can only file a claim on expenses that have actually been incurred. Dependent care FSA elections can be changed through the year on an as needed basis. This would add an administrivia burden to the person running your payroll, and if there is a payroll vendor in place, likely an actual cost. The administrator in this situation would likely be the company. In the formalities of employee benefits there must always be a named administrator. If your employer currently offers no benefits you should press healthcare first. Paying healthcare premiums pretax would likely save you more money and be less administration than this. Additionally, if your employer is paying for or reimbursing you for your individual health insurance that's currently illegal under the ACA.", "topk_rank": 8 }, { "id": "97548", "score": 0.654481053352356, "text": "In Singapore, this is sufficiently common that the Singapore IRS has a page on their website dedicated to informing employers of how to properly pay this under Responsibilites of an Employer. Specifically, tax paid by employer is taxable income for the employee (as it's really the employee's responsibility), so they must pay tax for that tax. A tax-on-tax is computed for the tax paid, which also would be owed by the employer if they were paying the full tax rate for the employee. As a clarification, this is not the employer being truly responsible for the employee's income; this is the employer compensating the employee further to offset their taxable income. This is effectively a fringe benefit, although it may be particularly useful in countries where either tax evasion is common (and thus an employer must compete with employers willing to pay under the table) or where employers are competing with others in nearby countries with lower tax rates. It is not the same thing as the employer making your income nontaxable, though, and has implications for your tax filing. Significantly, it is likely that if you have additional income beyond income from that employer, it is likely to be taxed at your highest tax rate, as the employer will likely calculate the tax due based on their income being the only income you have in that year. *Edit based on emphasis in question: I'm not from Singapore nor am I a lawyer, but based on my reading of the IRAS website, it looks like you do not have to file if you have no other source of income, because they have a No-Filing Service which takes income information from your employer automatically and generates a tax bill, which presumably would be fully paid in your case. This only aplies if you have no other sources of income, however; you still have to file if you have other sources of income since your employer would not know about them. If you are eligible for this service, you should get a letter informing you as such. They also have a tool to check your filing status on their website.", "topk_rank": 9 }, { "id": "562904", "score": 0.6544097065925598, "text": "From the instructions: If you do not need to make any adjustments to the basis or type of gain or loss (short-term or long-term) reported to you on Form 1099-B (or substitute statement) or to your gain or loss for any transactions for which basis has been reported to the IRS (normally reported on Form 8949 with box A checked), you do not have to include those transactions on Form 8949. Instead, you can report summary information for those transactions directly on Schedule D. For more information, see Exception 1, later. However, in case of ESPP and RSU, it is likely that you actually do need to make adjustments. Since 2014, brokers are no longer required to track basis for these, so you better check that the calculations are correct. If the numbers are right and you just summarized instead of reporting each on a separate line, its probably not an issue. As long as the gains reported are correct, no-one will waste their time on you. If you missed several thousand dollars because of incorrect calculations, some might think you were intentionally trying to hide something by aggregating and may come after you.", "topk_rank": 10 }, { "id": "209997", "score": 0.6543012261390686, "text": "For the purpose of personal finance, treating $500 as Interest Expense is sufficient. For business accounting, it involves making the $500 a contra-liability and amortizing it as interest expense over the course of life of the loan.", "topk_rank": 11 }, { "id": "291460", "score": 0.6541699171066284, "text": "I went through this too. There's a safe-harbor provision. If you prepay as estimated tax payments, 110% of your previous year's tax liability, there's no penalty for underpayment of the big liquidity-event tax liability. https://www.irs.gov/publications/p17/ch04.html That's with the feds. Your state may have different rules. You would be very wise indeed to hire an accountant to prepare your return this year. If I were you I'd ask your company's CFO or finance chief to suggest somebody. Congratulations, by the way.", "topk_rank": 12 }, { "id": "18889", "score": 0.6539987325668335, "text": "Yes. The S-Corp can deduct up to the amount it actually incurred in expenses. If your actual expenses to build the carport were $1000, then the $1000 would be deductible, and your business should be able to show $1000 in receipts or inventory changes. Note you cannot deduct beyond your actual expenses even if you would normally charge more. For example, suppose you invoiced the non-profit $2000 for the carport, and once the bill was paid you turned around and donated the $2000 back to the non-profit. In that case you would be deducting $1000 for your cost + $2000 donation for a total of $3000. But, you also would have $2000 in income so in the end you would end up with a $1000 loss which is exactly what your expenses were to begin with. It would probably be a good idea to be able to explain why you did this for free. If somehow you personally benefit from it then it could possibly be considered income to you, similar to if you bought a TV for your home with company funds. It would probably be cleaner from an accounting perspective if you followed through as described above- invoice the non-profit and then donate the payment back to them. Though not necessary, it could lesson any doubt about your motives.", "topk_rank": 13 }, { "id": "320579", "score": 0.6539005041122437, "text": "\"I think you may have a significant misunderstanding here. You have been renting your property out for two years, now. There is no special \"\"roommate\"\" clause in the tax code; roommates are renters, and the rent they pay is rental income. (If they were roommates in a property you both rented from a third party, that would be different.) See publication 527, chapter 4 for more details on the subject (search on \"\"Renting Part of Property\"\"). You should be: You may also consider \"\"Not renting for profit\"\" section, which may be closer to what you're actually thinking - of changing from \"\"Renting not for profit\"\" to \"\"Renting for profit\"\". Not rented for profit means you can report on your 1040 as opposed to filing Schedule E, but it does mean you have to actually not make a profit (and remember, some of the money that goes to paying the mortgage is not deductible on this side of things since it's your property and you'll get that money back, presumably, when you sell it). If that is what you're asking about, it sounds like it's just a matter of money. Are you going to start making money? Or, are you going to start making enough significant upgrades/etc. to justify the tax deduction? You should consider the actual, specific numbers carefully, probably with the help of a CPA who is familiar with this sort of situation, and then make the decision that gives you the best outcome (keeping in mind that there may be long-term impacts of switching from not-for-profit to for-profit rental treatment).\"", "topk_rank": 14 }, { "id": "360723", "score": 0.6534010767936707, "text": "It sounds like they want to enter you into a contract in which they are allowed to charge a flat fee for filing contingent on money saving results from a tax review service, paid in full. Like those who answered before I have no legal experience. IRS Circular 230 defines the ethics for tax practitioners and the definition of a tax practitioner is broad enough (effective Aug 2011) to include those who are not EAs, CTRPs, CPAs as long as the person is compensated to prepare or assist in a substantial part of the preparation of a document pertaining to a taxpayer's liability for submission to the IRS. Section 10.27 Fees: (b)(2)A practitioner may charge a contingent fee for services rendered in connection with the Service’s examination of, or challenge to — (i) An original tax return Paragraph c defines what a contingent fee is basically a fee that depends on the specific result attained, in this case saving you money. In the section above 'Service's examination' is an audit in plain speak. If your 2013 return has not been submitted and you have not received a written notice for examination, H&R block can not charge a contingent fee, period. Furthermore, H&R Block cannot hold your tax documents, upon your request, they must return all original tax documents like W2s and 1099s ( they don't have to return the tax forms an employee prepared). Like I said above, I'm not a lawyer, unless I missed a key detail, I don't believe they were permitted to charge you a filing fee contingent on saving you money.", "topk_rank": 15 }, { "id": "444246", "score": 0.6533202528953552, "text": "If you have a one-time event, you are allowed to make a single estimated payment for that quarter on Form 1040-ES. People seem to fear that if they make one such payment they will need to do it forevermore, and that is not true. The IRS instructions do kind of read that way, but that's because most people who make estimated payment do so because of some repeating circumstance like being self-employed. In addition, you may qualify for one or more waivers on a potential underpayment penalty when you file your Form 1040 even if you don't make an estimated payment, and you may reduce or eliminate any penalty by annualizing your income - which is to say breaking it down by quarter rather than the full year. Check on the instructions for Form 2210 for more detail, including Schedule AI for annualizing income. This is some work, but it might be worthwhile depending on your situation. https://www.irs.gov/instructions/i2210/ch02.html", "topk_rank": 16 }, { "id": "427202", "score": 0.6532811522483826, "text": "If i am not wrong, any business activities such should be declared on Year End Tax filing. If your friend is going to own that website either it is commercial or nonprofit, he has to declare in the year end taxation.", "topk_rank": 17 }, { "id": "581265", "score": 0.6532533168792725, "text": "\"In the US tax system, you cannot \"\"write-off\"\" capital assets. You have to depreciate them, with very specific exceptions. So while you may be purchasing $4500 of equipment, your deduction may be significantly less. For example, computers are depreciated over the period of 5 years, so if you bought a $1000 computer - you write off $200/year until it is completely depreciated, not $1000 at once. There are exceptions however, for example - IRC Sec. 179 is one of them. But you should talk to a tax adviser (EA/CPA licensed in your State) about whether it is applicable to the specific expense you want to \"\"write off\"\" and to what extent. Also, keep in mind that State laws may not conform to the Federal IRC. While you may be able to use Sec. 179 or other exceptions and deduct your expenses on your Federal return, you may end up with a whole different set of deductions on your State return. And last but not least: equipment that you depreciated or otherwise \"\"wrote off\"\" that is later sold - is income to you, since depreciation/deduction reduces basis. Ah, and keep in mind - the IRS frowns upon Schedule C business that consistently show losses. If you have losses for more than 3 in the last 5 years - your business may be classified as \"\"hobby\"\", and deductions may be disallowed. But the bottom line is that yes, it is possible to end up with 0 tax liability with business income offset by business deductions. However, not for prolonged periods of time (not for years consistently, but first year may fly). Again - you should talk to a licensed tax adviser (EA/CPA licensed in your State). It is well worth the money. Do not rely on answers on free Internet forums as a tax advice - it is not.\"", "topk_rank": 18 }, { "id": "563033", "score": 0.6531766653060913, "text": "If your friend is paying you same amount as the charge, there should be no problem. If the friend is paying you an amount in excess of the ticket (or in excess of the club tab in the 2nd example), you need to report the excess amount as income. I would keep the receipts for the purchases, credit card statements, bank statements, and checks/or electronic receipt show your payment of the credit card. If the IRS does question these, you tell them what happened and be able to prove that you made no money off the transaction by providing the statements and receipts.", "topk_rank": 19 } ]
65	Why do banks require small businesses to open a business bank account instead of a cheaper personal one?	[ { "id": "580624", "score": 0.7872974276542664, "text": "The bank won't let you because: Differences in required account features — Business accounts have different features (many of them legal features) that are required by businesses. For instances: Do you want to be able to deposit cheques that are written out to your business name? You need a business account for that. Your business could be sold. Then it wouldn't be your business, so it wouldn't make sense to put the business account under your personal name. The bank account and the cash it holds is a business asset and should be owned by the business, so when the business is sold the account goes with it. This is especially the case for a corporation that has shareholders, and not a sole proprietorship. For a business, you could also, in theory, assign other people as signing authorities on the business account (e.g. your corporate treasurer), and the individuals performing that role could change over time. Business accounts allow for this kind of use. Market segmentation — The bank has consciously undertaken to segment their product offerings in order to maximize their profit. Market segmentation helps the bottom line. Even if there were zero legal reasons to have separate personal vs. business accounts, banks would still make it their policy to sell different account types according to use because they can make more money that way. Consider an example in another industry: The plain-old telephone company also practices segmentation w.r.t. personal/business. Do you want a telephone line for a business and listed as such in the phone book? You need a business line. Do you want a phone line hooked up at a non-residential address? You need a business line. Here it's clear it is less of a legal issue than with the bank account, and it doesn't matter that the technical features of the phone line may be identical for the basic product offerings within each segment. The phone company has chosen to segment and price their product offerings this way. Q. Why do companies choose to charge some kinds of customers more than others for essentially the same underlying service? A. Because they can." }, { "id": "109203", "score": 0.7285729050636292, "text": "You could, but the bank won't let you... If you're a sole proprietor - then you could probably open a personal account and just use it, and never tell them that is actually a business. However, depending on your volume of operations, they may switch you on their own to business account by the pattern of your transactions. For corporations, you cannot use a personal account since the corporation is a separate legal entity that owns the funds. Also, you're generally required to separate corporate and personal funds to keep the limited liability protection (which is why you have the corporation to begin with). Generally, business accounts have much higher volumes and much more transactions than personal accounts, and it costs more for the banks to run them. In the US, some banks offer free, or very low-cost, business accounts for small businesses that don't need too many transactions. I'm sure if you shop around, you'll find those in Canada as well." } ]	[ { "id": "147343", "score": 0.7178560495376587, "text": "Nope. Credit Unions are for the customers. Since the customers own them, the credit union does what is best for the members. They aren't giving you money, they are loaning it to you for for interest. Furthermore then judged you like any other bank would. High horse moment: I believe the only reason you have to open an account, is because the banking industry didn't want to compete and got legislation to limit the size and reach of a credit union. The credit union wants your business, and they want to work for you, but they are required to have these membership requirements because their lobby isn't as powerful as regular banks.", "topk_rank": 0 }, { "id": "231614", "score": 0.7151080369949341, "text": "\"Credit unions require you to open an account because of their history. A credit union is just that: a union. Only instead of a union of workers collectively bargaining for better pay or worker's comp, they are lending each other money. They are chartered to offer their services to members of the union, rather than the public at large. For that reason, credit unions historically had targeted niche memberships (ie, employees at a specific company, or property with a specific hobby such as fishing). Most credit unions these days attempt to skirt the issue, by claiming to serve members of a specific geographic area. Anyway, membership is defined a owning a stake in the union, which is usually termed a share. By opening the account and \"\"purchasing a share,\"\" you are becoming both an owner and member of the union, and are eligible for their services. That's why the account is required before you can have a loan.\"", "topk_rank": 1 }, { "id": "176172", "score": 0.7143546342849731, "text": "Most transactions that the bank performs for you are electronic ACH transactions, so the costs to them are minimal in the long run. Most banks do it now to keep up with the competition. Almost every bank does it now, so they have to do it to attract new business and keep existing customers. Also, the more you rely on the bank and use them to pay bills, the more they learn about you over time and can use that data in overall marketing plans. It's easier for them to record it into their system if it is all electronic to begin with.", "topk_rank": 2 }, { "id": "135196", "score": 0.7089793682098389, "text": "\"Checks sold as \"\"business checks\"\" are larger than checks sold as \"\"personal checks\"\". Personal checks are usually 6\"\" x 2 1/2\"\" while business checks are 8 1/2 \"\" x 3 to 4 \"\". Also, business checks typically have a tear-off stub where you can write who the check was made out to and what it was for. In this computer age that seems pretty obsolete to me, I enter the check into the computer, not write it on a stub, but I suppose there are still very small businesses out there that doesn't use a computerized record-keeping system. These days business checks are often printed on 8 1/2 by 11\"\" paper -- either one per sheet with a big tear-off or 3 per sheet with no tear off -- so you can feed them through a computer printer easily. Nothing requires you to use \"\"business checks\"\" for a business account. At least, I've always used personal checks for my business account with no problem. These days I make almost all payments electronically, I think I write like one paper check a year, so it's become a trivial issue. Oh, and I've never had any problem getting a check printer to put my business name on the checks or anything like that.\"", "topk_rank": 3 }, { "id": "537593", "score": 0.7086594104766846, "text": "Yes, it's a good idea to have a separate business account for your business because it makes accounting and bookkeeping that much easier. You can open a business checking account and there will be various options for types of accounts and fees. You may or may not want an overdraft account, for example, or a separate business credit card just so you can more easily separate those expenses from your personal cards. When I started my business, I opened a business checking account and met with my banker every year just to show them how the business was doing and to keep the relationship going. Eventually, when I wanted to establish a business line of credit, it was easier to set up because I they were already familiar with my business, its revenue, and needs for a line of credit. You can set up a solo 401k with your bank, too, and they'll be very happy to do so, but I recommend shopping around for options. I've found that the dedicated investment firms (Schwab, Fidelity, etc.) tend to have better options, fees, and features for investment accounts. Just because a specific bank handles your checking account doesn't mean you need to use that bank for everything. Lastly, I use completely different banks for my personal life and for my business. Maybe I'm paranoid, but I just don't want all my finances in the same place for both privacy reasons and to avoid having all my eggs in the same basket. Just something to consider -- I don't really have a completely sane reason for using completely different banks, but it helps me sleep.", "topk_rank": 4 }, { "id": "384192", "score": 0.708232045173645, "text": "Technically, it's only when you need to pass money through. However consider that the length the account has been open builds history with the financial institution, so I'd open ASAP. Longer history with the bank can help with getting approved for things like business credit lines, business cards, and other perks, though if you're not making money with that business, seek out a bank that does not charge money to have a business account open with them.", "topk_rank": 5 }, { "id": "591416", "score": 0.7077451944351196, "text": "\"No functional difference. Only impression/convenience. \"\"Business checks\"\" are checks in larger format (8\"\" instead of the regular 5\"\" checks), they can be from your personal account just as well. I didn't have any problem using the small \"\"individual\"\"-standard checks for my company (I actually did get them for free from Wells Fargo, but that was a gesture, not by policy).\"", "topk_rank": 6 }, { "id": "121071", "score": 0.7075550556182861, "text": "Another reason for banks to push this is sitckyness. Once you have all of your bills setup, its more trouble to change banks. This reduces the customer turnover rate, which lowers their costs.", "topk_rank": 7 }, { "id": "387573", "score": 0.705333411693573, "text": "Many of the Financial intermediaries in the business, have extraordinary high requirements for opening an account. For example to open an account in Credit Suisse one will need 1 million US dollars.", "topk_rank": 8 }, { "id": "596549", "score": 0.7044004201889038, "text": "You actually don't have to open a business account with your bank, you can have a personal account with the bank and have your business funds go into it, whether it be from cheques or from Eftpos\\Credit Card Facilities. You just have to get your customers to make the cheque out under your name (the same name used for your bank account). If you are trading as a sole trader and you trade under a name other than your own name, then officially you are supposed to register that name with Fair Trading in your state. However, if you are trading using another name and it is not registered, Fair Trading will only become aware of it if someone (usually one of your customers) makes a compliant about you, and they will then ask you to either stop using that name as your trading name or have it registered (if not already registered by someone else).", "topk_rank": 9 }, { "id": "310103", "score": 0.7032662630081177, "text": "\"It's generally not possible to open a business account in the UK remotely. It's even difficult (near impossible) for a non-resident (even if a citizen) to open a business or personal bank account while visiting the UK. A recent report says that it may be possible to open an account via Barclays Offshore in the Isle of Man. This requires a large deposit, and probably lots of paperwork and fees (most offshore locations have stricter \"\"know your customer\"\" rules than major countries). Note that while the Isle of Man is inside the UK banking system (for sort codes, account numbers), it is a separate territory that doesn't have the same deposit guarantees as the UK. There is no legal reason why a UK company has to bank within the UK banking system, although many companies paying the company would expect it or require it, and an account in anything other than sterling would complicate the accounts. It could have an account in your home country. It's not even a legal requirement that the company has an account in its own name at all. Some people use a (separate) personal account for this purpose. There are plenty of reasons why this is a bad idea (for example it's unclear who/what owns the money in the account, and can give the appearance of director's loans), but it's a work-around. Most inbound electronic payments only require a sort code and account number, the account owner name is not checked. The UK does have a much simpler and cheaper company registry than most European countries, but the near-impossibility of opening a bank account for a business in the UK as a non-resident has made it an unsuitable place to register a small international company.\"", "topk_rank": 10 }, { "id": "547301", "score": 0.702777624130249, "text": "\"Like you said, it's important to keep your personal assets and company assets completely separate to maintain the liability protection of the LLC. I'd recommend getting the business bank account right from the beginning. My wife formed an LLC last year (also as a pass-through sole proprietorship for tax purposes), and we were able to get a small business checking account from Savings Institute and Trust that has no fees (at least for the relatively low quantity of transactions we'll be doing). We wrote it a personal check for startup capital, and since then, the LLC has paid all of its own bills out of its checking account (with associated debit card). Getting the account opened took less than an hour of sitting at the bank. Without knowing exactly where you are in Kentucky, I note that Googling \"\"kentucky small business checking\"\" and visiting a few banks' web sites provided several promising options for no-fee business checking.\"", "topk_rank": 11 }, { "id": "405996", "score": 0.702501654624939, "text": "I have always assumed that there is a regulation that either prohibits, or makes noncompetitive, internet bank business accounts. All of the 1%+ savings accounts offered at the banks listed are internet only. If you broaden the search to include other internet only banks like Capital One 360, American Express Savings, Goldman Sachs Savings, Discover Savings, you'll find they all also only offer accounts to individuals (some may allow a trust to own the account) not businesses.", "topk_rank": 12 }, { "id": "85517", "score": 0.702054500579834, "text": "Early on, one might not be able to get credit for their business. For convenience, and the card perks, it makes sense to use the personal card. But for sake of a clean paper trail, I'd choose 1 card and use it exclusively, 100% for the business. Not one card here, one card there.", "topk_rank": 13 }, { "id": "137572", "score": 0.7016288638114929, "text": "Why do savings accounts for businesses offer less yield than bank accounts for individuals? The money held in savings account on a collective average substantial amount stays with the Bank. The Bank is better able to predict and thus invest this money in individual savings account in market to make more money. Money held in Business accounts are unpredictable and can get withdrawn, the Bank is thus not able to predict the behaviour and hence not able to invest this better to get good returns, hence the interest offered is low. Most Banks have special products for Businesses that would give better return but come with some kind of lock-in or minimum balances.", "topk_rank": 14 }, { "id": "229436", "score": 0.7012118697166443, "text": "Typically you give a loan to the company from yourself as a private person, and when the company makes money the company pays it back to you. Then the company pays for all the expenses with the money from the loan. Even if you don't want a business account yet, you can probably ask your bank for a second account (mine in the UK did that without any problems).", "topk_rank": 15 }, { "id": "469738", "score": 0.6993274688720703, "text": "I don't know if it's legal but your talking about arbitraging the rates between a personal savings account and a business account. I also don't know those rates but will venture to guess that they are not materially different, after taking into account the cost of setting up and registering an LLC, for it to be worth the time and effort.", "topk_rank": 16 }, { "id": "535817", "score": 0.6992073059082031, "text": "Another reason is that the amount of unused credit you have is a positive factor on your credit score. It's generally easier to open several different accounts for $X dollars each with different banks than to get your current bank to raise your limit severalfold in a single go. Your current bank has to worry about why you suddenly are asking for a large additional amount of credit; while other banks will be willing to offer you smaller amounts of credit in the hope that you transfer your business from your current bank to them.", "topk_rank": 17 }, { "id": "195207", "score": 0.6989615559577942, "text": "Do you have a separate bank account for your business? That is generally highly recommended. I have a credit card for my single-member LLC. I prefer it this way because it makes the separation of personal and business expenses very clear. Using a personal credit card, but using it for only business expenses seems to be a reasonable practice. You may be able to do one better though... For your sole proprietorship, you can file a DBA which establishes the business name. The details of this depend on your state. With a DBA, I believe you can open a bank account in the name of your business and you may also be able to open a credit card account in the name of the business. I'm not sure what practical difference it makes, but it does make the personal/business distinction clearer. Though, at that point, you might as well just do the LLC...", "topk_rank": 18 }, { "id": "48840", "score": 0.6984994411468506, "text": "You don't have much choice other than to open an account in your business name, then do a money transfer, as @DJClayworth says. You will not without providing your name and street address and possibly other information that you may consider to be of a private nature. This is due to laws about fraud, money laundering and consumer protection. I'm not saying that's what you have in mind! But without accountability of the sort provided by names and street addresses, banks would be facilitating crimes of many sorts, which is why regulatory agencies enforce disclosure requirements.", "topk_rank": 19 } ]
66	How to treat miles driven to the mechanic, gas station, etc when calculating business use of car?	[ { "id": "397608", "score": 0.8175756335258484, "text": "I contacted Stephen Fishman, J.D., the author of Home Business Tax Deductions, to let him know that this question was missing from his book. He was kind enough to send a reply. My original phrasing of the question: If your car is used for both business and personal use, and you deduct via the actual expense method, do trips to the mechanic, gas station, and auto parts store to service or repair the car count as business miles, personal miles, or part-business-part-personal miles? What about driving the newly-purchased car home from the dealership? And his response: Good question. I can find nothing about this in IRS publication or elsewhere. However, common sense would tell us that the cost of driving to make car repairs should be deductible. If you use your car for business, it is a business expense, just like transporting any other piece of business equipment for repairs is a business expense. This should be so whether you use the standard mileage rate or actual expense method. You should probably reduce the amount of your deduction by the percentage of personal use of the car during the year. The same goes for driving a car home from the dealer." }, { "id": "540395", "score": 0.8056948781013489, "text": "Alright, IRS Publication 463: Travel, Entertainment, Gift, and Car Expenses Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose. Example. You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense Obviously nothing helpful in the code. So I would use option 1, weight the maintenance-related mileage by the proportion of business use. Although if you use your car for business a lot (and perhaps have a spouse with a car), an argument could be made for 3. So I would consider my odds of being audited (even lower this year due to IRS budget cuts) and choose 1 or 3. And of course never throw anything away until you're room temperature." }, { "id": "405412", "score": 0.8325802087783813, "text": "Since you are using the percentage method to determine the home/business use split, I would think that under most circumstances the distance driven to get your car from the dealership to home, and from home to mechanic and back would be less than 1% of the total miles driven. This is an acceptable rounding error. When refueling, I typically do that on my way to another destination and therefore it's not something I count separately. If your miles driven to attend to repair/refueling tasks are more than 1% of the total miles driven, split them as you feel comfortable in your above examples. I'd calculate the B/P percentages as total miles less maintenance miles, then apply that split to maintenance miles as well." } ]	[ { "id": "154931", "score": 0.7763317227363586, "text": "The best way to do this is to pay for the entire car, including gas, insurance, and repairs, from S-corp funds, then meticulously track how many miles are used for personal and how many miles for business. If you pay with S-corp funds, you will claim the personal miles as a taxable benefit from the S-corp on your personal return. The S-corp can then claim all the expenses and depreciation on the vehicle, reducing the S-corp's tax liability.", "topk_rank": 0 }, { "id": "447231", "score": 0.7651969790458679, "text": "You don't say what country you live in. If it's the U.S., the IRS has very specific rules for business use of a car. See, for starters at least, http://www.irs.gov/publications/p463/ch04.html. The gist of it is: If you use the car 100% for business purposes, you NEVER use it to drive to the grocery store or to your friend's house, etc, then it is a deductible business expense. If you use a car party for business use and partly for personal use, than you can deduct the portion of the expense of the car that is for business use, but not the portion that is for personal use. So basically, if you use the car 75% for business purposes and 25% for personal use, you can deduct 75% of the cost and expenses. You can calculate the business use by, (a) Keeping careful records of how much you spent on gas, oil, repairs, etc, tracking the percentage of business use versus percentage of personal use, and then multiplying the cost by the percentage business use and that is the amount you can deduct; or (b) Use the standard mileage allowance, so many cents per mile, which changes every year. Note that the fact that you paid for the car from a business account has absolutely nothing to do with it. (If it did, then everyone could create a small business, open a business account, pay all their bills from there, and all their personal expenses would magically become business expenses.) Just by the way: If you are going to try to stretch the rules on your taxes, business use of a car or personal computer or expenses for a home office are the worst place to do it. The IRS knows that cars and computers are things that can easily be used for either personal or business purposes and so they keep a special eye out on these.", "topk_rank": 1 }, { "id": "196463", "score": 0.7221275568008423, "text": "As a general rule, you must choose between a mileage deduction or an actual expenses deduction. The idea is that the mileage deduction is supposed to cover all costs of using the car. Exceptions include parking fees and tolls, which can be deducted separately under either method. You explicitly cannot deduct insurance costs if you claim a mileage deduction. Separately, you probably won't be able to deduct the deductible for your car as a casualty loss. You first subtract $100 from the deductible and then divide it by your Adjusted Gross Income (AGI) from your tax return. If your deductible is over 10% of your AGI, you can deduct it. Note that even with a $1500 deductible, you won't be able to deduct anything if you made more than $14,000 for the year. For most people, the insurance deductible just isn't large enough relative to income to be tax deductible. Source", "topk_rank": 2 }, { "id": "338545", "score": 0.7175559997558594, "text": "Assuming your country is the United States there is. See schedule C line 9 and the corresponding instructions. There are many rules associated with this, in some cases the entire purchase can be written off but typically if the truck is only used for business. Most people write off partial usage in the form of credits for mileage. You are best to consult with a CPA once your business earns a profit. Good luck.", "topk_rank": 3 }, { "id": "552845", "score": 0.71392822265625, "text": "I agree with Rich Seller. Avoiding a trip to the store is a benefit. Not only do you save the time and hassle, but there's real money saved if a car trip is avoided: I maintain a spreadsheet for all of my car expenses – depreciation, maintenance, insurance, license & registration, gas, etc. Combined with starting & ending odometer readings for the year, I can see exactly what it costs me to drive one kilometre. Granted, some costs are fixed simply by virtue of having the car, but gasoline is a variable cost avoided when a trip is avoided.", "topk_rank": 4 }, { "id": "97719", "score": 0.7085313200950623, "text": "\"Disclaimer: This should go without saying, but this answer is definitely an opinion. (I'm pretty sure my current accountant would agree with this answer, and I'm also pretty sure that one of my past accountants would disagree.) When I started my own small business over 10 years ago I asked this very same question for pretty much every purchase I made that would be used by both the business and me personally. I was young(er) and naive then and I just assumed everything was deductible until my accountant could prove otherwise. At some point you need to come up with some rules of thumb to help make sense of it, or else you'll drive yourself and your accountant bonkers. Here is one of the rules I like to use in this scenario: If you never would have made the purchase for personal use, and if you must purchase it for business use, and if using it for personal use does not increase the expense to the business, it can be fully deducted by the business even if you sometimes use it personally too. Here are some example implementations of this rule: Note about partial expenses: I didn't mention partial deductions above because I don't feel it applies when the criteria of my \"\"rule of thumb\"\" is met. Note that the IRS states: Personal versus Business Expenses Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part. At first read that makes it sound like some of my examples above would need to be split into partial calulations, however, I think the key distinction is that you would never have made the purchase for personal use, and that the cost to the business does not increase because of allowing personal use. Partial deductions come into play when you have a shared car, or office, or something where the business cost is increased due to shared use. In general, I try to avoid anything that would be a partial expense, though I do allow my business to reimburse me for mileage when I lend it my personal car for business use.\"", "topk_rank": 5 }, { "id": "172736", "score": 0.7035391926765442, "text": "There are a few factors I like to consider when I'm reasoning financially over my households cars. How many KMs will the car travel each year because I like to factor in how often tires will need to be changed, how much tires for my models cost as well as how gas efficient they are. Knowing how much the car is driven and in what environmental/road conditions is also important factors to know because that will help guestimate possible repairs cost. Also possible taxes should be taken in to consideration. For example a few years ago I had a diesel Citroen C5 that had yearly taxes of roughly 500$. The replacement costs only 150$ a year in taxes. So switching cars 3 years early would have saved me 1050$ in taxes. So some information on possible taxes, how far you drive each year, what environmental conditions, type of driving (daily long rides or just short etc..) as well as the fuel efficiency of both cars would help to better calculate your costs for say three scenarios. Car change in 12, 24 and 32 months respectively.", "topk_rank": 6 }, { "id": "88967", "score": 0.7024368643760681, "text": "Unless you own a business and the car is used in that business you can't write off your auto repairs. If you start a sole-proprietorship in your own name there are all sorts of things you can write off as long as there is a reasonable expectation of profit. This includes a portion of your car repairs, a portion of your home expenses (assuming it's a home-based business), any tools used in the business, all kinds of stuff. The portion of your auto is based on total miles driven in the year vs. total miles driven for business purposes. Eligible auto expenses include repairs, gas/oil, insurance, parking, and interest on the auto loan. There are some things to remember: I'm no expert on California business law. Talk to a lawyer and an accountant if you wish to go this way. Many offer a half-hour free session for new clients.", "topk_rank": 7 }, { "id": "362069", "score": 0.7010526657104492, "text": "\"The short answer is yes you can, but you have to make sure you do it correctly. If you are employed by a tech company that does contract work at a separate location and you don't get reimbursed by your employer for travel expenses, you can claim the mileage between your home and location B as a business expense, but there's a catch - you have to subtract the mileage between your home and location A (your employer). So if it's 20 miles from your house to your employer (location A), and 30 miles from your house to the business you're contracting at (location B), you can only claim 10 miles each way (so 20 miles total). Obviously if the distance to location B is closer than your employer (location A), you're out of luck. You will have to itemize to take this deduction, by filling out a Schedule A for itemized deductions and Form 2106 to calculate how much of a deduction for travel expenses you can take. Google \"\"should i itemize\"\", if you're unsure whether to take the Standard Deduction or Itemize. Sources:\"", "topk_rank": 8 }, { "id": "561282", "score": 0.7008492946624756, "text": "I don't see how anyone could give you a hard-and-fast formula, unless they know where to get some applicable statistics. Because several factors here are not a straight calculation. If you don't replace the tires but keeping driving the car, what is the increased probability that you will get into an accident because of the bald tires? How much will bald tires vs new tires affect the selling price of the car? Presumably the longer you drive the car after getting new tires, the less increase this will give to the market value of the car. What's the formula for that? If you keep the car, what's the probability that it will have other maintenance problems? Etc. That said, it's almost always cheaper to keep your current car than to buy a new one. Even if you have maintenance problems, it would have to be a huge problem to cost more than buying a new car. Suppose you buy a $25,000 car with ... what's a typical new car loan these days? maybe 5 years at 5%? So your payments would be about $470 per month. If you compare spending $1000 for new tires versus paying $470 per month on a new car loan, the tires are cheaper within 3 months. The principle is the same if you buy with cash. To justify buying a new car you have to factor in the value of the pleasure you get from a new car, the peace of mind from having something more reliable, etc, mostly intangibles.", "topk_rank": 9 }, { "id": "52532", "score": 0.7006341814994812, "text": "Hard to say in general. It depends on the actual numbers. First you need to check the suggested retail price of a new car, and the price that you can actually get it for. The difference between these prices is between non-existing and huge, depending on the car. Some dealers will sell you a car that has done 50 miles for a huge rebate - that means they can't sell their cars at full price but don't want to reduce the price. Used cars can be quite expensive compared to a new car or not, also depending on the brand. Estimate that a brand new car should drive 12 years and 200,000 miles without major repairs (go for a car with generous warranty or check reviews to make sure you are buying a long lasting car). Calculate the cost per year. Since you prefer driving a nicer new car, increase the cost for the first four years and reduce the cost for the last four years. With that information, check what the used car costs and if that is reasonable. Assuming 12 years life, a six your old car should be quite a bit less than 50% of a new one. You can improve your cost a bit: If your annual mileage is low, you might find a rather new car with huge mileage quite cheap which will still last many years. Or if your annual mileage is excessively high, you can look for a car that is a bit older with low mileage. Anyway, paying 70% of the price of a new passenger car for a used car that is six years old (you say <7 years, so I assume six years) seems excessive; it would mean the first user effectively paid 30% of the new price to drive the car for six years, and you pay 70% to drive another six years (estimated). You'd be much much better off buying a new car and selling it for 70% after six years.", "topk_rank": 10 }, { "id": "487016", "score": 0.6976312398910522, "text": "Keep up on routine maintenance. That's the best way to prolong the life of your car, and it'll save you money in the long run because you won't have to replace your car as often. Accelerate gently. The harder you push the gas pedal, the more gas you use. Coast to a stop rather than using your brakes. If you can avoid stopping by slowing down well before a red light so that by the time you actually get to the light it is green again, do so. Avoid high-speed driving. At highway speeds, wind resistance plays a big part in how much gas your car uses. If you can plan your trips to take slower routes, do so. Don't be the guy driving 55 in the left lane on the highway, though. Avoid stop-and-go traffic. Keeping to a constant speed is the most efficient. Plan your trips to avoid areas with lots of traffic, lots of curb-cuts and intersections, etc. Leave lots of space in front of you so you have time to anticipate other drivers intentions and slow down rather than having to slam on your brakes at the last second. Avoid short trips. Cars work best when they can get all the way up to operating temperature, and stay there for a while. If you're just going two miles, ride your bike. Live close to work and a grocery store, so you can walk or ride your bike rather than driving. Use your car for road trips and your quarterly trips to CostCo to restock the larder. If you can get away with not owning a car, sell it. Ride your bike, use public transit, or walk. If you can share a car with a significant other and only one of you has a long car commute, there's no sense in you both owning a car.", "topk_rank": 11 }, { "id": "226519", "score": 0.6967431306838989, "text": "I would take each of these items and any others and consider how you would count it as an expense in the other direction. If you have an account for parking expenses or general transportation funds, credit that account for a refund on your parking. If you have an account for expenses on technology purchases, you would credit that account if you sell a piece of equipment as you replace it with an upgrade. If you lost money (perhaps in a jacket) how would you account for the cash that is lost? Whatever account would would subtract from put a credit for cash found.", "topk_rank": 12 }, { "id": "417981", "score": 0.6962214112281799, "text": "\"While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do I quantify the travel expenses? Generally, \"\"necessary and ordinary\"\" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say \"\"no\"\" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000 miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (\"\"pleasure\"\") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is \"\"business\"\" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the property? Although, again, the \"\"necessary and ordinary\"\" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA).\"", "topk_rank": 13 }, { "id": "55666", "score": 0.6949078440666199, "text": "I don't think there's much you can do. Losses from the sale of personal-use automobiles (used for pleasure, commuting, etc) are not deductible as capital losses. See IRS Tax Topic 409, end of the first paragraph. The expenses you incurred in owning and operating the car (insurance, fuel, maintenance, service plans, etc) are not deductible either. If you used it partly for business, then some of your expenses might be deductible; see IRS Tax Topic 510. This includes depreciation (decline in value), but only according to a standard schedule; you don't generally just get to deduct the difference between your buying and selling price. Also, you'd need to have records to verify your business use. But anyway, these deductions would apply (or not) regardless of whether you sell the car. You don't get your sales tax refunded when you resell the vehicle. That's why it's a sales tax, not a value-added tax. Note, however, that if you do sell it, the sales tax on this new transaction will be the buyer's responsibility, not yours. You do have the option on your federal income tax return to deduct the state sales tax you paid when you bought the car; in fact, you can deduct all the sales taxes you paid in that year. (If you have already filed your taxes for that year, you can go back and amend them.) However, this takes the place of your state income tax deduction for the year; you can't deduct both. See Tax Topic 503. So this is only useful if your sales taxes for that year exceeded the state income tax you paid in that year. Also, note that state taxes are not deductible on your state income tax return. Again, this deduction applies whether you sell the car or not.", "topk_rank": 14 }, { "id": "34810", "score": 0.694210410118103, "text": "\"I'm going to look just at purchase price. Essentially, you can't always claim the whole of the purchase price (or 95% your case) in the year (the accounting period) of purchase, but you get a percentage of the value of the car each year, called writing down allowance, which is a capital allowance. It is similar to depreciation, but based on HRMC's own formula. In fact, it seems you probably can claim 95% of the purchase price, because the value is less than £1000. The logic is a bit involved, but I hope you can understand it. You could also claim simplified expenses instead, which is just based on a rate per mile, but you can't claim both. Note, by year I mean whatever your account period is. This could be the normal financial year, but you would probably have a better idea about this. See The HMRC webpage on this for more details. The big idea is that you record the value of any assets you are claiming writing down allowance on in one of a number of pools, that attract the same rate of writing down allowance, so you don't need to record the value of each asset separately. They are similar to accounts in accounting, so they have an opening balance, and closing balance. If you use an asset for personal use, it needs a pool to itself. HRMC call that a single asset pool. So, to start with, look at the Business Cars section, and look at the Rates for Cars section, to determine the rate you can claim. Each one links to a further article, which gives more detail if you need it. Your car is almost certainly in the special rate category. Special rate is 8% a year, main rate is 18%, and First year allowance is essentially 100%. Then, you look at the Work out what you can claim article. That talks you through the steps. I'll go through your example. You would have a pool for your car, which would end the account period before you bought the vehicle at zero (step 1). You then add the value of the car in the period you bought it (Step 2). You would reduce the value of the pool if you dispose of it in the same year (Step 3). Because the car is worth less than £1,000 (see the section on \"\"If you have £1,000 or less in your pool\"\"), you would normally be able to claim the whole value of the pool (the value of the car) in the first accounting period, and reduce the value of the pool to zero. As you use the car for personal use, you only claim 95% of the value, but still reduce the pool to zero. See the section on \"\"Items you use outside your business\"\". This £1000 is adjusted if your accounting period lasts more or less than 12 months. Once the pool is down to zero that it you don't need to think about it any more for tax purposes, apart from if you are claiming other motoring expenses, or if you sell it. It gets more complicated if the car is more expensive. I'll go through an example for a car worth £2,000. Then, after Step 3, on the year of purchase, you would reduce the value of the pool by 8%, and claim 95% of the reduction. This would be a 160 reduction, and 95%*160 = 152 claim, leaving the value of 1860 in the pool. You then follow the same steps for the next year, start with 1840 in the pool, reduce the value by 8%, then claim 95% of the reduction. This continues until you sell or dispose of the car (Step 3), or the value of the pool is 1000 or less, then you claim all of it in that year. Selling the car, or disposing of the car is discussed in the Capital allowances when you sell an asset article. The basic idea is that if you have already reduced the value of the pool to zero, the price you sell the car for is added you your profits for that year (See \"\"If you originally claimed 100% of the item\"\"), if you still have anything in the pool, you reduce the value of the pool by the sale value, and if it reduces to below zero (to -£200, say), you add that amount (£200, in this case), to your profits. If the value is above zero, you keep applying writing down allowances. In your case, that seems to just means if you sell the car in the same year you buy it, you claim the difference (or 95% of it) as writing down allowance, and if you do it later, you claim the purchase price in the year of purchase, and add 95% of the sale price to your profits in the year you sell it. I'm a bit unclear about starting \"\"to use it outside your business\"\", which doesn't seem to apply if you use it outside the business to start with. You can claim simplified expenses for vehicles, if you are a sole trader or partner, but not if you claim capital allowances (such as writing down allowances) on them, or you include a separate expense in your accounts for motoring expenses. It's a flat rate of 45p a mile for the first 10,000 miles, and 25p per mile after that, for cars, and 24p a mile for motorcycles. See the HRMC page on Simplifed Mileage expenses for details. For any vehicle you decide to either claim capital allowances claim running costs separately, or claim simplified mileage expenses, and \"\"Once you use the flat rates for a vehicle, you must continue to do so as long as you use that vehicle for your business.you have to stick with that decision for that vehicle\"\". In your case, it seems you can claim 95% of the purchase price in the accounting period you buy it, and if you sell it you add 95% of the sale price to your profits in that accounting period. It gets more complicated if you have a car worth more than £1000, adjusted for the length of the accounting period. Also, if you change how you use it, consult the page on selling selling an asset, as you may have disposed of it. You can also use simplified mileage expenses, but then you can't claim capital allowances, or claim running costs separately for that car. I hope that makes sense, please comment if not, and I'll try to adjust the explanation.\"", "topk_rank": 15 }, { "id": "35434", "score": 0.692979633808136, "text": "Edmunds.com has a really cool guide that calculates some of these intangibles for a wide swath of cars under their True Cost to Own Ratings section. I highly recommend it.", "topk_rank": 16 }, { "id": "389718", "score": 0.688340425491333, "text": "\"You seem to be on the right track. I feel, though, that it's worth addressing your maintenance budget. Even if both cars described in your question are from the same model year, one has been in service 2x more; one car has been on the road, in weather, twice as much as the other. I'm not sure what's being represented in the $6k of maintenance, but a whole host of systems can require maintenance or replacement at 200k+ miles. A/C compressor, all sorts of rubber parts (seals, hoses, belts, bushings), computer systems, stereo, window regulators, the list goes on. I don't know at what point the battery on a hybrid needs to be replaced, or what that replacement entails, but likely the battery or the hybrid recharge system will require something after 200k miles of service. I would learn more about what actual maintenance a high mileage prius can experience. To answer your question though, at this level of \"\"used\"\" I don't think the dealership adds anything to the equation. When you're buying certified pre-owned, the dealership/manufacturer relationship and warranty can be meaningful. When you're buying a 100k+ miles car from a random small used car lot it might as well be a stranger on craigslist...\"", "topk_rank": 17 }, { "id": "235048", "score": 0.6874868869781494, "text": "\"30 minutes of driving times 5 days is 2.5 hours of driving. Average 40mph is 100 miles per week. Guess of 25mpg on your car is 4 gallons of gas. 4 times 3 bucks a gallon is 12 dollars. Say 3 hours per week of your time, times 9/10 dollars per hour is 27/30 dollars per week. 12 plus 27 is 39. So I'd say around 40 dollars per week seems fair. You could do 50 but it is playing with a doggy for a couple hours. Unless it's a giant (or tiny) pain in the ass, it's hardly \"\"work\"\" but that's just me. $40/week sounds fair. Hope you work it out pal.\"", "topk_rank": 18 }, { "id": "173212", "score": 0.6854718327522278, "text": "\"I would say to only bother keeping the ones you know you'll use for itemized deductions. This includes any unreimbursed business expenses and vehicle licensing fees. There are a lot of other itemized tax deductions possible, but those are two common ones. Also, keep track of your business mileage (mileage before and after the trip, and commuting doesn't count as \"\"business mileage\"\"). You may also want to keep receipts of all out-of-state purchases if your state is one of those that tries to collect state tax on out-of-state purchases. Ensure your supported charities are 501(c)(3), and they'll give you a receipt at the end of the year. Don't bother keeping fast food or gas receipts (unless they're business expenses).\"", "topk_rank": 19 } ]
67	value of guaranteeing a business loan	[ { "id": "370815", "score": 0.7910479307174683, "text": "The guarantee's value to you is whatever you have to pay to get the guarantee, assuming that you don't decide it's too expensive and look for another guarantor or another solution entirely. How much are you willing to pay for this loan, not counting interest and closing costs? That's what it's worth. See past answers about the risks of co-signing for a realistic view of how much risk your guarantor would be accepting and why they should hold out for a very substantial reimbursement for this service." }, { "id": "294864", "score": 0.8061169385910034, "text": "The standard goal of valuing anything is to seek the fair price for that thing in the open market. Depending on what is being valued, that may or may not be an easy task. eg: to value your home, get a real estate appraiser, who will look at recent market sales in your area, and adjust for nuances of your property. To value your loan guarantee, you would need to figure out what it is actually worth to the business, which may be difficult. In a perfect world, you would be able to ask the bank to tell you the interest rate you would have to pay, if the loan was not guaranteed. This would show you the value you are providing to the business by guaranteeing it. ie: if the interest would be $100k a year unguaranteed, but is only $40k a year guaranteed, you are saving the business $60k a year. If the loan is to last 5 years, that's a total of $300k. Of course, it is likely the bank simply won't offer you an unguaranteed loan at all. This makes the value quite difficult to determine, and highlights the underlying transaction you are considering: You are taking on personal risk of loan default, to profit the business. If you truly can't find an equitable way to value the guarantee, consider whether you understand the true risk of what you are doing. If you are able to determine an appropriate value for the loan, consider whether increasing your equity is fair compensation. There are other methods of compensation available, such as having the company pay you directly, or decrease the amount of capital you need to invest for this new set of equity. In the end, what is fair is what the other shareholders agree to. If you go to the shareholders with anything less than professional 3rd party advice (and stackexchange does not count as professional), then they may be wary of accepting your 'fee', no matter how reasonable." }, { "id": "18792", "score": 0.6980555057525635, "text": "\"You are confining the way you and the other co-founders are paid for guaranteeing the loan to capital shares. Trying to determine payments by equity distribution is hard. It is a practice that many small companies particularly the ones in their initial stage fall into. I always advise against trying to make payments with equity, weather it is for unpaid salary or for guaranteeing a loan such as your case. Instead of thinking about a super sophisticated algorithm to distribute the new shares between the cofounders and the new investors, given a set of constraints, which will most probably fail to make the satisfactory split, you should simply view the co-founders as debt lenders for the company and the shareholders as a capital contributor. If the co-founders are treated as debt lenders, it will be much easier to determine the risk compensation for guaranteeing the loan because it is now assessed in monetary units and this compensation is equal to the risk premium you see fit \"\"taking into consideration the probability of default \"\". On the other hand, capital contributors will gain capital shares as a percentage of the total value of the company after adding SBA loan.\"" }, { "id": "511571", "score": 0.7307422757148743, "text": "You should ask the bank supplying the SBA loan about the % of ownership that is required to personally guarantee the loan. Different banks give different figures, but I believe the last time I heard about this it was 20% or more owners must personally guarantee the loan. Before you spend a lot of money on legal fees drawing up a complicated scheme of shares, ask the bank what they require. Make sure you speak with an underwriter since many service people don't know the rules." } ]	[ { "id": "365963", "score": 0.7157163619995117, "text": "On a personal Loan Yes. On a business loan, it would depend on the Bank and they would like to understand the purpose of the loan and need it to be secured. They may not even grant such kind of business loan.", "topk_rank": 0 }, { "id": "282291", "score": 0.7136291861534119, "text": "You'd probably need to prove you can run the business if you want a loan. The best proof you can have is to run the business. Unfortunately that also means that the price of the alley could go up. OP needs to start thinking about a negotiation strategy soon.", "topk_rank": 1 }, { "id": "599411", "score": 0.7059321403503418, "text": "Assuming there are no other liabilities... The enterprise value is $5mm. $1mm loan + $4mm equity. The proforma enterprise value will be the same, but the equity will now represent all of it at $5mm. Your 4% will now be 3.2%, but equal the same value; $160,000.", "topk_rank": 2 }, { "id": "104221", "score": 0.7041653990745544, "text": "I think in such situations a good rule of thumb may be - if you are asked to pay significant sums of money upfront before anything is done, stop and ask yourself, what would you do if they don't do what they promised? They know who you are, but usually most you know is a company name and phone number. Both can disappear in a minute and what are you left with? If they said they'd pay off the debt and issue the new loan - fine, let them do it and then you pay them. If they insist on having money upfront without delivering anything - unless it's a very big and known and established company you probably better off not doing it. Either it's a scam or in the minuscule chance they are legit you still risking too much - you're giving money and not getting anything in return.", "topk_rank": 3 }, { "id": "92938", "score": 0.7028491497039795, "text": "gnasher729's answer is fundamentally correct and deserves the checkmark, but I'd like to give an economic explanation for how this economically functions. The key point from gnasher729's answer's that the interest rate is 49.9% for one company. While this may be much higher than the equilibrium rate, the true market interest rate, it is not completely unreasonable because of the risk. For credit to be continually produced, default risk must be compensated because this is a cost to the lender. Most are not in business to lose money, so making loans to borrowers that default 40% of the time would make this interest rate reasonable. For UK citizens, this would not be such a problem because the lender can usually pursue the borrower for the balance, but if the borrower can disavow the loan and leave the legal reach of the UK creditors, the collection rate is 0%. The guarantee by the foreign persons not present in the UK is incidental and probably more of a regulatory requirement since the inability to collect from them is just as unlikely. One should always look for the lowest price with at least minimum quality when shopping for anything, but you are right to be apprehensive legally. Read every line and be sure that you yourself understand every clause before signing. If alternative cheaper financing is available, it is probably superior.", "topk_rank": 4 }, { "id": "397027", "score": 0.7027872204780579, "text": "If it's a small one person business he will have to sign a personal guarantee no matter what he does with respect to incorporating. Not saying your idea isn't worth looking into but no bank will lend him money without a personal guarantee.", "topk_rank": 5 }, { "id": "73652", "score": 0.7021881937980652, "text": "The precise answer depends on the terms and conditions of the loan, and whether you can reasonably expect to meet them. For example, if you keep the loan, make no payments, there is a good chance that - eventually - you will trigger a clause in the contract, and suddenly be charged fees or a significant interest rate. If you don't need to pay anything for a time, odds are you will forget to monitor the loan (after all it is not costing you anything) and suddenly get hit with an unexpected expense. Most loan contracts are structured - by professionals - to benefit the loan provider. The purpose of a loan provider is to make a profit. They do that by encouraging you to pay more - up front, over the longer term, or both. Personally, I would never take out a zero-interest loan. It is specifically designed to appear like a gift from the loan provider, while actually (and almost covertly) costing more at some point. If I was in your position (i.e. if I had taken out such a loan) I'd pay off the loan as fast as possible. If you have more than one loan, however, prioritise by working out which actually costs you more over time. And pay the worst ones first. You'll have to look closely at the terms and conditions - possibly with the help of a professional - to work out which is actually work.", "topk_rank": 6 }, { "id": "94497", "score": 0.6979619264602661, "text": "\"Is there any way through this? Yes, but you're not going to like it. If your friend has guaranteed the loans, then it's your friend's obligation to pay them when the brother-in-law is not cooperating. That's what it means to guarantee a loan. (Obligatory: \"\"Before lending your friends or family money, ask yourself which you need more.\"\")\"", "topk_rank": 7 }, { "id": "207483", "score": 0.6965934038162231, "text": "\"The thing to recall here is that auto-pay is a convenience, not a guarantee. Auto-pay withdrawals, notices that a bill is due, all of these are niceties that the lender uses to try to make sure you consistently pay your bill on time, as all businesses enjoy steady cash flows. Now, what all of these \"\"quality of life\"\" features don't do is mitigate your responsibility, as outlined when you first took out the loan, to pay it back in a timely manner and according to the terms and conditions of the loan. If your original contract for the loan states you shall make \"\"a payment of $X.XX each calendar month\"\", then you are required to make that payment one way or another. If auto-pay fails, you are still obligated to monitor that and correct the payment to ensure you meet your contractual obligation. It's less than pleasant that they didn't notify you, but you were already aware you had an obligation to pay back the loan, and knew what the terms of the loan were. Any forgiveness of interest or penalties for late fees is entirely up to the CSR and the company's internal policies, not the law.\"", "topk_rank": 8 }, { "id": "513580", "score": 0.6945597529411316, "text": "There's a bit of truth to that, except in reality when you ask for business loan the bank most definitely looks at the background of the owners (assuming it's a small business). You might have some luck fooling investors as a way to get some capital, but that's doubtful as well if you have a history of starting companies that later fail.", "topk_rank": 9 }, { "id": "139654", "score": 0.6940816044807434, "text": "The value of a company is, simplified, the sum of the value of the equity and the value of the debt. There are some other things to add/subtract to that, but just think about those for now. You could also say the value of a company is the value of its assets, or more precisely the value of the net cash flows those assets will generate in the future. So let's say you want to start a company, so you want to buy some assets. Maybe you want to buy a $200 asset. Well, you only have $100, so you take out a loan (debt) for $100 for the remainder. You buy the asset and start generating income. Let's say after a month you get bored and decide to sell the company. Let's assume the value of the assets hasn't changed. Your equity is worth $100, and you find a buyer who is willing to pay $100 for your company. Great! Right? Well there's still the $100 loan you owe, so you have to pay that back. And suddenly you now have $0. So in fact, you should have negotiated $200 with the buyer, because that's what the assets are actually worth. Then you can pay back the loan and still have the $100 in equity you deserve. (Alternatively, you could have negotiated the buyer to assume responsibility for the loan; same outcome for you.) Did that help?", "topk_rank": 10 }, { "id": "221431", "score": 0.6934592723846436, "text": "As per my comments, I think this is up to you and how much work you want to put forth. I do not feel it is trivial to provide documentation even with 90% of it will be the same among lenders. See this question: First answer, third and fourth paragraphs. You need to go as far as understanding the total cost of the loan, you probably need a good faith estimate. I would also compare a minimum of three lenders.", "topk_rank": 11 }, { "id": "216356", "score": 0.6929276585578918, "text": "The loan is private, so the business is more of a red-herring. The fact that you're closing it and lost a lot of money explains the loan, but is rather irrelevant otherwise as the loan is personal. Do consider potential tax benefits on writing off a loss, talk to a local tax adviser on that. Pros: Cons: I'm sure there are more considerations, of course, and I'm not familiar with the Canadian social safety nets to understand how much of a damage con #1 would be.", "topk_rank": 12 }, { "id": "69753", "score": 0.6912945508956909, "text": "Yes this would be the same as when a corporation sells bonds. If it is the same as you describe. A product page would make it possible to give you a definitive answer. Also I strongly advice against taking out this type of loan if not for investment", "topk_rank": 13 }, { "id": "366231", "score": 0.6907891631126404, "text": "What you are describing does not sound like an investment; it sounds like a loan. An investment involves you putting up a stake and sharing in the profits or losses of the business - there is no guarantee you will get your money back. A loan involves you putting up money for which you will receive interest and principal repayment in accordance with an agreed schedule - you get this irrespective of how the business is performing. Also, is the arrangement with your friend or his company? They are different legal entities and your risk profile is different in both cases. Whatever the arrangement you need to sign a contract which details all the terms and conditions - how much you will pay, to whom and when; how much you will get back, from whom and when; a method for resolving disputes; what happens in the event of insolvency or bankruptcy; what happens if someone breaks the terms of the contract; if your payout depends on the value of the business at some future date, how it is to be valued; etc. etc. Two points: I am not a lawyer, I am not your lawyer.", "topk_rank": 14 }, { "id": "107699", "score": 0.6888307332992554, "text": "What if you felt you were cheated by the bank? What if you had something terrible unexpected happen to you financially? Also a loan is not a promise. A loan is a contract. The contract has outs for all parties. I never understood why people felt a loan was a promise. Many people were sold home mortgages that they did not understand. Of course it is their fault for not understanding what they were getting into.", "topk_rank": 15 }, { "id": "135017", "score": 0.6887081861495972, "text": "\"You can hire a good CPA for a really low price. They can advise you on how to do exactly what you said and many other aspects of your business. Mine does this as a courtesy with the filing of my taxes. And the filing of my taxes is not all that much. It is great value for the money. Recently I had to make a decision that is a potential audit situation and can go badly if not properly documented. It was not hard to document (with the CPA's help), but now that it is so I don't lose mental energy on if I am going to get \"\"caught\"\" by the IRS. Let them come, I have the necessary documentation. Beyond the IRS, I really like the documentation that you are trying to put behind this loan. Having this in writing helps smooth this potentially bad situation between you and the BIL. I would go above and beyond writing conditions and contingencies down in order to keep this relationship happy. With these kinds of things, cover the applicable 5 \"\"Ds\"\" of partnership agreements: However, I would add another: Boom. What happens if your business takes off? Perhaps there should be a clause to retire the loan prior to you expanding beyond a certain level. Please understand I am not suggesting that any of these bad things are going to happen to you (except the Boom, I really hope that happens to you), but it is a way to communicate contingent actions if one of the risks of small business materializes. Having agreements ahead of time helps avoid crisis.\"", "topk_rank": 16 }, { "id": "573617", "score": 0.6883840560913086, "text": "\"The \"\"guaranteed minimum future value\"\" isn't really a guarantee so much as the amount they will charge you at the end of the agreement if you want to keep the car. In this sense it might better be considered a \"\"guaranteed maximum future cost\"\". If the car has fallen below that value at that point, then you can just hand back the car and you won't owe anything extra. If it turns out to be worth more, you end up in profit - though only if you either actually pay for the car, or if you roll over into a new PCP deal. So the finance company has an incentive to set it at a sensible value, otherwise they'll end up losing money. Most new cars lose a lot of value quickly initially, and then the rate of loss slows down. But given that it's lost £14k in 2 years, it seems pretty likely it'll lose much more than another £1k in the next 2 years. So it does sound like that in this case, they estimated the value badly at the start of the deal and will end up taking a loss on the deal when you hand it back at the end. It appears you also have the legal right to \"\"voluntary termination\"\" once you have paid off half the \"\"Total Amount Payable\"\". This should be documented in the PCP agreement and if you're half way into the deal then I'd expect you'll be about there. If that doesn't apply, you can try to negotiate to get out of the deal early anyway. If they look at it rationally, they should think about the value of your payments over the next two years minus the loss they will end up with at the end of those two years. But there's no guarantee they will. Disclaimer: Despite living in the UK, I hadn't heard of these contracts until I read this question, so my answer is based entirely on web searches and some inferences. The two most useful sources I found on the general subject were this one and this one.\"", "topk_rank": 17 }, { "id": "381617", "score": 0.6878131031990051, "text": "Well, if you can get a loan for 3.8% and reliably invest for 7% returns, then you should borrow as much as you possibly can - the whole employment/existing loan situation doesn't even enter into it! But as they say, if something is too good to be true, it probably isn't (true). The 7-8% return are not guaranteed at all, but the 3.8% interest is. And while we're at it, 3.8% for an unsecured loan sounds pretty damn low, I would be really doubtful about that. I mean, why would the bank do that if they could instead invest the money for 7-8%?", "topk_rank": 18 }, { "id": "26263", "score": 0.6871097087860107, "text": "Get in touch with a reliable company if you are looking for a range of small business financing solutions. Such companies offer consolidation loans to help smaller businesses take care of their previous obligations and this way manage their finances better", "topk_rank": 19 } ]
69	Deducting business expenses paid for by gift card	[ { "id": "378484", "score": 0.878789484500885, "text": "To quote the answer you linked to: Perhaps the simplest way to think about this is you can only deduct an expense that you actually incur. In other words, the expense should show up on a bank or CC statement. So, if your business purchased the $1000 gift card for $800, you should see a $800 charge appearing on a business CC or bank statement. You would therefore be able to deduct the $800, but not the full $1000 of items that you purchase with it. Side Notes:" } ]	[ { "id": "245447", "score": 0.777845561504364, "text": "\"For simplicity, let's start by just considering cash back. In general, cash back from credit cards for personal use is not taxable, but for business use it is taxable (sort of, I'll explain later). The reason is most personal purchases are made with after tax dollars; you typically aren't deducting the cost of what you purchased from your personal income, so if you purchase something that costs $100 and you receive $2 back from the CC company, effectively you have paid $98 for that item but that wouldn't affect your tax bill. However, since businesses typically deduct most expenses, that same $100 deduction would have only been a $98 deduction for business tax purposes, so in this case the $2 should be accounted for. Note, you should not consider that $2 as income though; that would artificially inflate your revenue. It should be treated as a negative expense, similar to how you would handle returning an item you purchased and receiving a CC refund. Now for your specific questions: Part 1: As a small business owner, I wish to attend an annual seminar to improve my business. I have enough credit card reward points to cover the airfare, hotel, and rental car. Will those expenses still be deductible at the value displayed on the receipt? Effectively no, these expenses are not deductible. If you deduct them they will be completely counter-acted by the \"\"refund\"\" you receive for the payments. Part 2: Does it matter if those points are accrued on my personal credit card, rather than a business credit card? This is where it gets hairy. Suppose your company policy is that employees make purchases with their own personal credit cards and submit receipts for reimbursement. In this case the employer can simply reimburse and would not know or care if the employee is racking up rewards/points/cashback. The trick is, as the employee, you must always purchase business related items normally so you have receipts to show, and if you receive cashback on the side there seems to be a \"\"don't ask, don't tell\"\" rule that the IRS is OK with. It works the same way with heavy business travelers and airline miles- the free vacations those users get as perks are not treated as taxable income. However, I would not go out of my way to abuse this \"\"loophole\"\". Typically, things like travel (airfare, hotel, car rental, meals) are expected. But I wouldn't go purchase 100 company laptops on your personal card and ask the company to reimburse you. The company should purchase those 100 laptops on a company card and effectively reduce the sale price by the cashback received. (Or more realistically, negotiate a better discount with your account rep and just cut them a check.) Part 3: Would there be any difference between credit card points and brand-loyalty points? If the rental car were paid for with points earned directly on the rental car company's loyalty system (not a CC), would that yield a different result? There is no difference. Perhaps the simplest way to think about this is you can only deduct an expense that you actually incur. In other words, the expense should show up on a bank or CC statement. This is why when you volunteer and work 10 hours for a charity, you can't call that a \"\"donation\"\" of any amount of money because there is no actual payment made that would show up on a bank statement. Instead you could have billed the charity for your 10 hours of work, and then turned around and donated that same amount back to them, but it ends up being a wash.\"", "topk_rank": 0 }, { "id": "354716", "score": 0.7741003632545471, "text": "Credit card fees on a credit card used for personal expenses are not tax deductible. Credit card fees on a business credit card are deductible on schedule C (or whatever form you're using to report business income and expenses). If you are using the same card for both business and personal ... well, for starters, this is a very bad idea, because it creates exactly the question you're asking. If that's what you're doing, stop, and get separate business and personal cards. If you have separate business and personal cards -- and use the business card only for legitimate business expenses -- then the answer is easy: You can claim a schedule C deduction for any service charges on the business card, and you cannot claim any deduction for any charges on the personal card. In general, though, if you have an expense that is partly business and partly personal, you are supposed to figure out what percentage is business, and that is deductible. In an admittedly brief search, I couldn't find anything specifically about credit cards, but I did find this similar idea on the IRS web site: Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part. For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you can deduct 70% of the interest as a business expense. The remaining 30% is personal interest and is not deductible. Refer to chapter 4 of Publication 535, Business Expenses, for information on deducting interest and the allocation rules. (https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses) So, PROBABLY, you could add up all the charges you made on the card, figure out how much was for business and how much for personal, calculate the business percentage, and then deduct this percentage of the service fees. If the amount involved is not trivial, you might want to talk to an accountant or a lawyer.", "topk_rank": 1 }, { "id": "154774", "score": 0.7731375098228455, "text": "For case 1, there is no tax due as you sold the book for less than your cost basis. If you had sold for more than $100, then you would have had a profit. For case 2, that depends on the value of the gift card with respect to the value of your fare. Most likely that gift card is less than the cost of the fare. And in that case it would generally be treated as a reduction in the purchase price. The same way that rebates and cash back on credit card are treated. Note if for some reason a 1099 was generated that would change the situation and you would need to consult a tax professional. Since that would indicate that the other party to the transaction had a different view of the situation.", "topk_rank": 2 }, { "id": "201546", "score": 0.7725913524627686, "text": "\"According to this discussion, there was a Tax Court ruling that likened deductibility for charitable giving by credit card to business expenses incurred by businesses operating under cash-basis accounting. (The point is made by Larry Hess on that site.) Short answer: According to this argument, you can claim the deduction when the charge is incurred. You don't have to wait until you pay it back. (Again this is for cash basis.) Publication 538 states that \"\"under the cash method of accounting, you generally deduct business expenses in the tax year you pay them.\"\" I think the ruling above was meant to clarify when the expense is \"\"paid\"\". In my totally unofficial opinion, I suppose this makes sense. If I go to Office Depot to buy a box of envelopes, I walk out with the envelopes at the same time regardless of whether I paid cash or swiped a credit card. I wouldn't walk out thinking: \"\"HA! I haven't actually paid for these yet.\"\" If the shoplifting alarm went off at the door and I was asked if I had bought those, I'd say yes, right? If this doesn't convince you, you can always get professional tax advice.\"", "topk_rank": 3 }, { "id": "274721", "score": 0.7598956227302551, "text": "If your business is a Sole Proprietorship and meets the criteria, then you would file form Schedule C. In this case you can deduct all eligible business expenses, regardless of how you pay for them (credit/debit/check/cash). The fact that it was paid for using a business credit card isn't relevant as long as it is a true business expense. The general rules apply: Yes - if you sustain a net loss, that will carry over to your personal tax return. Note: even though it isn't necessary to use a business credit card for business expenses, it's still an extremely good idea to do so, for a variety of reasons.", "topk_rank": 4 }, { "id": "130631", "score": 0.7563714385032654, "text": "\"In the US you are not required to have a corporation to use business expenses to offset your income. The technical term you need is \"\"deducting business expenses\"\", and in matters of taxes it's usually best to go straight to the horse's mouth: the IRS's explanations Deducting Business Expenses Business expenses are the cost of carrying on a trade or business. These expenses are usually deductible if the business operates to make a profit. What Can I Deduct? Cost of Goods Sold, Capital Expenses, Personal versus Business Expenses, Business Use of Your Home, Business Use of Your Car, Other Types of Business Expenses None of this requires any special incorporation or tax arrangements, and are a normal part of operating a business. However, there is a bit of a problem with your scenario. You said you \"\"invested\"\" into a business, but you mentioned buying specific things for the business which is not generally how one accounts for investment. If you are not an owner/operator of the business, then the scenario is not so straight-forward, as you can't simply claim someone else's business expenses as your own because you invested in it. Investments are taxed differently than expenses, and based upon your word choices I'm concerned that you could be getting yourself into a bit of a pickle. I would strongly advise you to speak with a professional, such as a Certified Public Accountant (CPA), to go over your current arrangement and advise you on how you should be structuring your ongoing investment into this shared business. If you are investing you should be receiving equity to reflect your ownership (or stock in the company, etc), and investments of this sort generally cannot be deducted as an expense on your taxes - it's just an investment, the same as buying stock or CDs. If you are just buying things for someone else's benefit, it's possible that this could be looked upon as a personal gift, and you may be in a precarious legal position as well (where the money is, indeed, just a gift). And gifts of this sort aren't deductible, either. Depending on how this is all structured, it's possible that you should both consider a different form of legal organization, such as a formal corporation or at least an official business partnership. A CPA and an appropriate business attorney should be able to advise you for a nominal (few hundred dollars, at most) fee. If a new legal structure is advisable, you can potentially do the work yourself for a few hundred dollars, or pay to have it done (especially if the situation is more complex) for a few hundred to a few thousand. That's a lot less than you'd be on the hook for if this business is being accounted for improperly, or if either of your tax returns are being reported improperly!\"", "topk_rank": 5 }, { "id": "18850", "score": 0.7558935284614563, "text": "The IRS Guidance pertaining to the subject. In general the best I can say is your business expense may be deductible. But it depends on the circumstances and what it is you want to deduct. Travel Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses. Taxpayers are considered “traveling away from home” if their duties require them to be away from home substantially longer than an ordinary day’s work and they need to sleep or rest to meet the demands of their work. The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced record keeping requirements. Regardless of the method used, meal deductions are generally limited to 50 percent as stated earlier. Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation. Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable. More information is available in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Entertainment Expenses for entertaining clients, customers or employees may be deducted if they are both ordinary and necessary and meet one of the following tests: Directly-related test: The main purpose of the entertainment activity is the conduct of business, business was actually conducted during the activity and the taxpayer had more than a general expectation of getting income or some other specific business benefit at some future time. Associated test: The entertainment was associated with the active conduct of the taxpayer’s trade or business and occurred directly before or after a substantial business discussion. Publication 463 provides more extensive explanation of these tests as well as other limitations and requirements for deducting entertainment expenses. Gifts Taxpayers may deduct some or all of the cost of gifts given in the course of their trade or business. In general, the deduction is limited to $25 for gifts given directly or indirectly to any one person during the tax year. More discussion of the rules and limitations can be found in Publication 463. If your LLC reimburses you for expenses outside of this guidance it should be treated as Income for tax purposes. Edit for Meal Expenses: Amount of standard meal allowance. The standard meal allowance is the federal M&IE rate. For travel in 2010, the rate for most small localities in the United States is $46 a day. Source IRS P463 Alternately you could reimburse at a per diem rate", "topk_rank": 6 }, { "id": "573523", "score": 0.7540349960327148, "text": "\"I'll assume United States as the country; the answer may (probably does) vary somewhat if this is not correct. Also, I preface this with the caveat that I am neither a lawyer nor an accountant. However, this is my understanding: You must recognize the revenue at the time the credits are purchased (when money changes hands), and charge sales tax on the full amount at that time. This is because the customer has pre-paid and purchased a service (i.e. the \"\"credits\"\", which are units of time available in the application). This is clearly a complete transaction. The use of the credits is irrelevant. This is equivalent to a customer purchasing a box of widgets for future delivery; the payment is made and the widgets are available but have simply not been shipped (and therefore used). This mirrors many online service providers (say, NetFlix) in business model. This is different from the case in which a customer purchases a \"\"gift card\"\" or \"\"reloadable debit card\"\". In this case, sales tax is NOT collected (because this is technically not a purchase). Revenue is also not booked at this time. Instead, the revenue is booked when the gift card's balance is used to pay for a good or service, and at that time the tax is collected (usually from the funds on the card). To do otherwise would greatly complicate the tax basis (suppose the gift card is used in a different state or county, where sales tax is charged differently? Suppose the gift card is used to purchase a tax-exempt item?) For justification, see bankruptcy consideration of the two cases. In the former, the customer has \"\"ownership\"\" of an asset (the credits), which cannot be taken from him (although it might be unusable). In the latter, the holder of the debit card is technically an unsecured creditor of the company - and is last in line if the company's assets are liquidated for repayment. Consider also the case where the cost of the \"\"credits\"\" is increased part-way through the year (say, from $10 per credit to $20 per credit) or if a discount promotion is applied (buy 5 credits, get one free). The customer has a \"\"tangible\"\" item (one credit) which gets the same functionality regardless of price. This would be different if instead of \"\"credits\"\" you instead maintain an \"\"account\"\" where the user deposited $1000 and was billed for usage; in this case you fall back to the \"\"gift card\"\" scenario (but usage is charged at the current rate) and revenue is booked when the usage is purchased; similarly, tax is collected on the purchase of the service. For this model to work, the \"\"credit\"\" would likely have to be refundable, and could not expire (see gift cards, above), and must be usable on a variety of \"\"services\"\". You may have particular responsibility in the handling of this \"\"deposit\"\" as well.\"", "topk_rank": 7 }, { "id": "427469", "score": 0.7446569204330444, "text": "If significant amounts are involved, that would be a good time to consult a tax professional (EA/CPA licensed in your state). Generally, sale of a business is an ordinary income and you can only deduct tangible expenses, as Joe said. That would be laptops, bills, expenses per receipt, of course they must all be directly attributable to the business. You will need to be able to show that the laptops has only been used in business, recapture depreciation, etc. Same with all the rest of the expenses. If you're incorporated (i.e.: you hold this software under an S-Corp), then you're selling stocks, not business, and the tax treatment may be different, but I'm guessing this is not the case for you.", "topk_rank": 8 }, { "id": "140966", "score": 0.7439350485801697, "text": "You can only deduct (with the 2% AGI threshold) expenses that: You've actually incurred. I.e.: you actually paid for equipment or services provided and can show receipts for the payment. At the request of the employer. I.e.: you didn't just decide on your own to buy a new book or take a class, your employer told you to. With business necessity. I.e.: it was in order for you to do your job. And you were not reimbursed by your employer. I.e.: you went somewhere and spent your after tax money on something employer explicitly told you to pay for, and you didn't get reimbursed for that. From your story - these conditions don't hold for you. As I said in the comments - I strongly suggest you talk to a lawyer. Your story just doesn't make any sense, and I suspect your employer is doing something very fishy here.", "topk_rank": 9 }, { "id": "153520", "score": 0.7411404848098755, "text": "Assuming that it's not inventory that is sold in the following year or a depreciable asset, you can deduct it when you make the purchase. The courts have ruled that credit cards balances are considered debt. It's treated the same way as if you went to the bank, got a loan, and used cash or a check to purchase the items. On your accounting books, you would debit the expense account and credit the credit card liability account. This is only for credit cards, which are considered loans. If you use a store charge card, then you cannot deduct it until you pay. Those are considered accounts payable. I'm an IRS agent and a CPA.", "topk_rank": 10 }, { "id": "292748", "score": 0.7408621311187744, "text": "\"I really have to use the business card for personal expenses, please assume that in your answer. This is very hard to believe. You must do that? Why not just have the company pay you $1600 each month? Then you can use that money for whatever you want. Why can't you do this? (I cannot think of a legitimate reason...) How to integrate the personal expenses in company? Anyway, to answer your question, what I've done when I accidentally used my corporate card for a personal expense is to code the expense as a payment to me similar to if a check had been written to me. If you aren't ever paying yourself, then you should just pay the company back the $1600 every month. As a side note, I highly recommend you don't do this. By doing this on a regular basis you are opening the door for piercing the corporate veil. This means that the financial protections provided by the LLC could potentially be stripped away since personal and corporate funds are being mixed. The unfortunate end result is that personal assets could end up being fair game too in a judgement against the company. Even if you aren't an owner, your relative could be considered to be \"\"using business money for personal expenses\"\", namely, letting a relative spend business funds for personal use. How to show more expenses and lessen the profit? If you're referring to the personal expenses, then you absolutely do not want to do this! That's illegal and worthy of stiff penalties, which possibly include jail time for tax evasion. Better to just have the company pay you and then the entire payment is deductible and reduces the profit of the company.\"", "topk_rank": 11 }, { "id": "528564", "score": 0.7400553822517395, "text": "I think you might be missing something important here. If you are running a business, then any expenses that your business incurs are deductible. Yes, Kickstarter would report the full amount. The IRS requires them to report everything that you raised. However, the Kickstarter and Amazon fees would be a business expense. Your cost on the backer rewards are deductible business expenses as well. Legal fees, accounting fees: deductible. Money that you spend on equipment may not be deductible all in one year; you may have to depreciate it over multiple years. This is where the accountant that you are paying accounting fees to will come in handy. People who do an iOS app Kickstarter campaign for $5000 might have a few things going on that you don't:", "topk_rank": 12 }, { "id": "540325", "score": 0.7387658357620239, "text": "You need to report the interest expense, assuming the loans were for your business: You need to report interest expense (only interest, principle is not an expense just as the loan proceeds are not income). The interest expense goes to the appropriate line on your Schedule C or E (depending on whether you used the loan for the online business or the rental). People whom you borrowed from must also report the interest as income to them on their Schedule B. You cannot deduct the interest expense if they don't report it as interest income. If you didn't take the loans for your business then the interest is not deductible. You don't need to report anything. People who lent you money still have to report the interest you paid to them as income on Schedule B. If you paid no interest (free loan) or below/above market interest to a related party (family member), then the imputed interest is considered income to them and gift to you. They need to report it on their Schedule B, and depending on amounts - on a gift tax return. For $1K to $10K loans there probably will be no need in gift tax returns, the exemption is for $14K per year per person. If the imputed interest rules may apply to you, better talk to a licensed tax adviser on how to proceed.", "topk_rank": 13 }, { "id": "571711", "score": 0.7385013103485107, "text": "I'm not an expert, but here's my $0.02. Deductions for business expenses are subject to the 2% rule. In other words, you can only deduct that which exceeds 2% of your AGI (Adjusted Gross Income). For example, say you have an AGI of $50,000, and you buy a laptop that costs $800. You won't get a write-off from that, because 2% of $50,000 is $1,000, and you can only deduct business-related expenses in excess of that $1,000. If you have an AGI of $50,000 and buy a $2,000 laptop, you can deduct a maximum of $1,000 ($2,000 minus 2% of $50,000 is $2,000 - $1,000 = $1,000). Additionally, you can write off the laptop only to the extent that you use it for business. So in other words, if you have an AGI of $50,000 and buy that $2,000 laptop, but only use it 50% for business, you can only write off $500. Theoretically, they can ask for verification of the business use of your laptop. A log or a diary would be what I would provide, but I'm not an IRS agent.", "topk_rank": 14 }, { "id": "381151", "score": 0.7369831204414368, "text": "Chris, since you own your own company, nobody can stop you from charging your personal expenses to your business account. IRS is not a huge fan of mixing business and personal expenses and this practice might indicate to them that you are not treating your business seriously, and it should classify your business as a hobby. IRS defines deductible business expense as being both: ordinary AND necessary. Meditation is not an ordinary expense (other S-corps do not incur such expense.) It is not a necessary expense either. Therefore, you cannot deduct this expense. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses", "topk_rank": 15 }, { "id": "447231", "score": 0.7365975379943848, "text": "You don't say what country you live in. If it's the U.S., the IRS has very specific rules for business use of a car. See, for starters at least, http://www.irs.gov/publications/p463/ch04.html. The gist of it is: If you use the car 100% for business purposes, you NEVER use it to drive to the grocery store or to your friend's house, etc, then it is a deductible business expense. If you use a car party for business use and partly for personal use, than you can deduct the portion of the expense of the car that is for business use, but not the portion that is for personal use. So basically, if you use the car 75% for business purposes and 25% for personal use, you can deduct 75% of the cost and expenses. You can calculate the business use by, (a) Keeping careful records of how much you spent on gas, oil, repairs, etc, tracking the percentage of business use versus percentage of personal use, and then multiplying the cost by the percentage business use and that is the amount you can deduct; or (b) Use the standard mileage allowance, so many cents per mile, which changes every year. Note that the fact that you paid for the car from a business account has absolutely nothing to do with it. (If it did, then everyone could create a small business, open a business account, pay all their bills from there, and all their personal expenses would magically become business expenses.) Just by the way: If you are going to try to stretch the rules on your taxes, business use of a car or personal computer or expenses for a home office are the worst place to do it. The IRS knows that cars and computers are things that can easily be used for either personal or business purposes and so they keep a special eye out on these.", "topk_rank": 16 }, { "id": "399199", "score": 0.7340502738952637, "text": "I'm a CPA and former IRS agent and manager. Whether you are a cash or accrual basis taxpayer, you get to deduct the expense when your card is charged. Think of it this way: You are borrowing from the credit card company or bank that issued the credit card. You take that money to make a purchase of a product or service. You now have an expense and a liability to a third party. When you pay off the liability, you do not get to take a deduction. Your deduction is when you pay for the expense. Depending on what you purchased, you may have to capitalize it.", "topk_rank": 17 }, { "id": "107213", "score": 0.7299109101295471, "text": "\"The answer is \"\"Yes\"\", You can deduct them. As long as you showed that you put in effort to make a profit then you can deduct business expenses.\"", "topk_rank": 18 }, { "id": "231279", "score": 0.7291319966316223, "text": "All of this assumes that this relationship isn't as employer-employee relationship, which would require you to withhold taxes. If you send them a small token of appreciation, and you are unable to record it as a business expense, or some other deductible expense, you don't have to be concerned about how they claim it. They decide if they want to risk claiming it was a gift, or if they want to record it as an expense. Even if you say some magic phrase that you think will impress the IRS, the recipient can still decide declare it as income. To have any hope of being able to treat it as a gift they would have to be able to demonstrate that there is a non-business relationship. If you can claim it as a business expense, or a deductible expense, they will have to also claim it as income; because your documentation could point the IRS to their lack of documentation. Giving them a check or sending the payment electronically will require them to claim it as an income, since an audit could require them to explain every line on their bank statements.", "topk_rank": 19 } ]
70	Car as business expense, but not because of driving	[ { "id": "327002", "score": 0.7562398314476013, "text": "\"To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. (IRS, Deducting Business Expenses) It seems to me you'd have a hard time convincing an auditor that this is the case. Since business don't commonly own cars for the sole purpose of housing $25 computers, you'd have trouble with the \"\"ordinary\"\" test. And since there are lots of other ways to house a computer other than a car, \"\"necessary\"\" seems problematic also.\"" } ]	[ { "id": "501892", "score": 0.7180973887443542, "text": "There is nothing illegal about a vehicle being in one person's name and someone else using it. An illegal straw purchase usually applies to something where, for example, the purchaser is trying to avoid a background check (as with firearms) or is trying to hide assets, so they use someone else to make the purchase on their behalf to shield real ownership. As for insurance, there's no requirement for you to own a vehicle in order to buy insurance so that you can drive someone else's vehicle. In other words, you can buy liability coverage that applies to any vehicle you're operating. The long and short of it here is that you're not doing anything illegal or otherwise improper,but I give you credit for having the good morals for wanting to make sure you're doing the right thing.", "topk_rank": 0 }, { "id": "584106", "score": 0.7175435423851013, "text": "If you want the new car, pay cash for it. Here's why: By paying cash for the car, you immediately save $2,500 off the price of the car. That is not insignificant, it's 8.3% off. By paying cash, you'll never be upside down on the car, and you can sell the car anytime you want. You said that all you need to do is beat the 0.9% interest rate with your investment to come out ahead. That doesn't take into account the discount you would have gotten by paying cash. $30,000 invested for 5 years at 1.6% (rough estimate) would get you $2,500 (the discount), so the rate you need to beat to come out ahead is actually 2.5%. Still doable, but it is much less of a sure thing on a 5 year investment, and much less worth the trouble. New cars are an expensive luxury. If you are wealthy enough, a new car certainly can be appropriate for you. However, if you don't like the idea of paying $30k in cash all at once, that is a strong indication that perhaps the new car is a luxury you aren't in a position to buy at this time. Borrowing the money and paying for it over time makes it psychologically easier to over spend on transportation.", "topk_rank": 1 }, { "id": "392607", "score": 0.7174717783927917, "text": "Most companies that have employee discounts have policies to prevent exactly this. Sometimes they will say that you can only use the company discount for products that you intend to use yourself, they'll specifically ban buying things for friends. Of course enforcing such a rule can be difficult, but a car is a big enough purchase that if they have such a rule, they're likely to pay attention. Other times they try to discourage letting friends use your discount by having rules that make it awkward. Like I used to work for a furniture company that said you had to pick up the furniture personally at the office where you worked. So if you wanted to buy a sofa for your brother who lived in another state, you'd have to pay to ship it, and probably wipe out most of the savings from the employee discount. My daughter's employer says you have to show your employee ID when you make the purchase and then they deduct it from your next paycheck. So you'd have to get your friend to pay you back, maybe loan them your ID if they want to pick it out, which would get awkward. Etc. Assuming the company doesn't care if you buy with an employee discount and re-sell, or their rules are lax enough that you can get away with it, I'm not aware of any law that would stop you. In general there aren't any laws against you re-selling things you've bought. People have garage sales and sell used cars and the like all the time. (There are specific exceptions. Like you can't re-sell prescription drugs.)", "topk_rank": 2 }, { "id": "205817", "score": 0.716766357421875, "text": "Welcome to Money.SE. It appears there's public transportation to get you to work? And the area by your house is walkable? i.e. you and your wife can get groceries and other needs by walking. If it will take 5 years to pay the loans even without a car, how long if you get one? Will you even be able to afford the payments? There's not enough detail here except to say that all purchases aside from true needs have a cost/reward to consider. Whatever the car's total cost is, will it add that much pleasure to your life? People in cities with great transportation save quite a bit on the expenses a car brings. Personal anecdote - Mom lives in a city. She never drives out of the city. Ever. Between insurance, maintenance, and gas, even with low miles, she spends $3000/yr. Once per week, she drives 1500 ft (.3mi) each way to the grocery store. Once every month or 2 to a mall 6 miles away. She can walk and groceries delivered for free. In the end, she spends $250/mo for the feeling of freedom. I get that. When I am 70+, as she is, I will gladly pay car service the $20 to drive me around. You are young, and need to sit with your partner (your wife is your partner in the business of running the family finances, or so I hope) and decide if the benefit is worth the cost. How does she take the kids to a doctor? How do you go out to dinner?", "topk_rank": 3 }, { "id": "491897", "score": 0.7165704369544983, "text": "\"You can greatly reduce the risk if you can line up a buyer prior to purchasing the car. That kind of thing is common in business, one example is drop shipping. Also there are sales companies that specialize in these kinds of things bringing manufacturers of goods together with customers. The sales companies never take delivery of the product, just a commission on the sales. From this the manufacturers are served as they have gained a customer for their goods. The buying company is served as they can make a \"\"better\"\" end product. The two parties may have not been brought together had it not been for the sales company so on some level both are happy to pay for the service. Can you find market inequalities and profit from them? Sure. I missed a great opportunity recently. I purchased a name brand shirt from a discount store for $20. Those shirts typically sell on ebay for $80. I should have cleaned out that store's inventory, and I bet someone else did as by the time I went back they were gone. That kind of thing was almost risk-less because if the shirts did not sell, I could simply return them for the full purchase price. That and I can afford to buy a few hundred dollars worth of shirts. Can you afford to float 45K CDN? What if it takes a year to sell the car? What if the economy goes sour and you are left \"\"holding the bag\"\"? Why are not car dealers doing exactly what you propose? Here in the US this type of thing is called \"\"horse trading\"\" and is very common. I've both lost and made money on these kind of deals. I would never put a significant amount of my net worth at risk.\"", "topk_rank": 4 }, { "id": "516631", "score": 0.7161417603492737, "text": "I might be missing something, but I always understood that leasing is about managing cash-flow in a business. You have a fixed monthly out-going as opposed to an up-front payment. My accountant (here in Germany) recommended: pay cash, take a loan (often the manufactures offer good rates) or lease - in that order. The leasing company has to raise the cash from somewhere and they don't want to make a loss on the deal. They will probably know better than I how to manage that and will therefore be calculating in the projected resale value at the end of the leasing period. I can't see how an electric car would make any difference here. These people are probably better informed about the resale value of any type of car than I am. My feeling is to buy using a loan from the manufacturer. The rates are often good and I have also got good deals on insurance as a part of that package. Here in Germany the sales tax (VAT) can be immediately claimed back in full when the loan deal is signed.", "topk_rank": 5 }, { "id": "513362", "score": 0.7151708006858826, "text": "Yes, the business can count that as an expense but you will need to count that as income because a computer = money.", "topk_rank": 6 }, { "id": "334407", "score": 0.7146703004837036, "text": "\"Short answer: Absolutely not, unless you're comfortable with putting years of your labor into a depreciating asset that will incur hefty maintenance costs over its remaining life. i.e. consider your 10K gone forever once you buy the car, and then some. Some comments on your reasons: \"\"Keeping up with spoiled brats\"\" is a losing proposition, and is a mindset counterproductive to financial independence. I'd encourage you to find a way to not care about how the spoiled brats live their lives. It won't be easier when you're older and you see your peers driving fancy cars and living fantasy lifestyles that you are tempted to emulate. Break the impulse to \"\"keep up\"\" and you'll be in a much better place. A used BMW may not be a piece of junk at first, but once you hit 100K miles, everything will suddenly fall apart and need repair. Been there myself. Still have the car after 7 years, only because very few people want to buy a high-mileage German sport sedan with recurring maintenance issues. See #2. It will be a good drive for a while, then it will own you. This is not so bad when you have a decent amount of savings, but when you have nothing, it's very hard to truly enjoy the car while knowing that any problems not covered by warranty will be financially devastating. Are you prepared to ride the bus for 4 weeks while saving enough income from work to replace a bad clutch? I had to do this, and it's not something I brag about.\"", "topk_rank": 7 }, { "id": "189642", "score": 0.7144895195960999, "text": "I would suggest at least getting a personal card that you only use for business expenses, even if you don't opt for a business card. It makes it very clear that expenses on that card are business expenses, and is just more professional. The same goes for a checking account, if you have one of those. It makes it easier to defend if you are ever audited, and if you use an accountant or tax preparer.", "topk_rank": 8 }, { "id": "406036", "score": 0.7135436534881592, "text": "\"Convenience, and of course money. In case of an event, you'll have to spend the full worth of money to fix/replace, while if you're insured - you get the insurance to pay for it. It is up to you to decide, if the money saved on the lower premiums worth the risk of paying much more in case of an event. Of course, the cheaper the car the more it makes sense not to pay the premiums. Many people do that. Regarding the bargaining power, I actually think that you would pay less if it is not going through insurance than the bill the insurance pays. I fixed a nasty dent for like $300 at one shop, while at the other they said \"\"It's $1200, but what do you care, your insurance will cover it\"\" (I had $500 deductible, so in the end it was cheaper for me to pay $300 without the insurance at all).\"", "topk_rank": 9 }, { "id": "261585", "score": 0.7129982113838196, "text": "The only time it makes sense to take out a loan is: The drawbacks of these 2 points are: Otherwise it's better to pay for the car up front. You have not mentioned whether you need the car to earn income. A car will incur other costs such as insurance and maintenance.", "topk_rank": 10 }, { "id": "181749", "score": 0.7129798531532288, "text": "So you will be saving $450 + price of commuting gas - cost of transportation + cost of commuting maintenance - the cost of recreational car rentals if decide to go without a car. For some people that cost is not enough to forego the convenience of owning a car. One factor you have not alluded too is your current financial goals. Are you attempting to live a spartan lifestyle in order to dramatically change your net worth? Give up the car. There really is more then the math you are presenting so the decision is very much based upon your behavior and your goals in life. It is very likely that owning the car will be more expensive, but it will also be less convenient. Is that cost great enough to forego the convenience? Only you can decide.", "topk_rank": 11 }, { "id": "559529", "score": 0.7124356627464294, "text": "Prior to having children we did exactly what you describe. We would visit my mother in law about four to six times a year, a 350-mile-each-way trip for a weekend. We'd simply rent a car, drive down, drive back, return it, out $150 or so for the weekend, a total of under $1000 a year; far cheaper than owning. You should factor in whether you will save money, though, on things you might not immediately consider. Will you spend less on groceries, in particular, if you can drive to Costco or Sam's Club (or even just to a regular grocery store)? I doubt you'll save the cost of the car ($2000/year as you say), but it's possible it will factor into the mix. I definitely would discourage purchasing a new car, if you're considering the financial side primarily. I suspect you can get a used car - maybe the $10k car you would've sold - and spend more like $1000 a year on it, or less. I don't know if I'd go to the $5000 level as those in comments suggested, as if you're doing long trips you want something with higher than average reliability; but even a car like a 5 year old mid-level sedan, easily costing you less than $10k, would be fine and likely sell in 5 years for $5k itself while hopefully not having too much maintenance (especially if you choose something with lower mileage; shop around!). But even with those assumptions, 20 days a year of rental which you can probably get less than $50 rates on (particularly if you look at some of the car sharing options, Zipcar and Enterprise both allow you to do longer term rentals for reasonable prices) seems like a fine deal compared to the hassle of owning.", "topk_rank": 12 }, { "id": "363495", "score": 0.7120392918586731, "text": "\"The point is that you need to figure out when a \"\"business expense\"\" is actually just a personal purchase. Otherwise you could very easily just start a business and mark all of your personal purchases as business expenses, so you never have to pay income taxes because you're handling all of your money through the untaxed corporation.\"", "topk_rank": 13 }, { "id": "588430", "score": 0.7118418216705322, "text": "\"Using a \"\"vehicle\"\" is a common technique to isolate project-specific risk from the remainder of the company. There's not any problem with the vehicle making zero paper profits, it was only ever a paper company. The dodgy bit is when they start offering remuneration to participants based on the vehicle's profits - anyone with any sense goes on gross. Or when they are artificially shifting the profits around for tax reasons.\"", "topk_rank": 14 }, { "id": "462831", "score": 0.7116904854774475, "text": "In the US there's no significant difference between what a business can deduct and what an individual can deduct. However, you can only deduct what is an expense to produce income. Businesses are allowed to write off salaries, but individuals can't write off what they pay their gardener or maid (at least in the US) If you're a sole proprietor in the business of managing properties - you can definitely deduct payments to gardeners or maids. Business paying for a gardener on a private property not related to producing the income (like CEO's daughter's house) cannot deduct that expense for tax purposes (although it is still recorded in the business accounting books as an expense - with no tax benefit). Businesses are allowed to deduct utility expenses as overhead, individuals cannot Same thing exactly. I can deduct utility expenses for my rental property, but not for my primary residence. Food, shelter, clothing and medical care are fundamental human needs, but we still pay for them with after-tax money, and pay additional sales tax. Only interest (and not principal) on a mortgage is deductible in the US, which is great for people who take out mortgages (and helps banks get more business, I'm sure), but you're out of luck if you pay cash for your house, or are renting. Sales taxes are deductible. You can deduct sales taxes you paid during the year if you itemize your deduction. You can chose - you either deduct the sales taxes or the State income taxes, whatever is more beneficial for you. BTW in many states food and medicine are exempt from sales tax. Medical expenses are deductible if they're significant compared to your total income. You can deduct medical expenses in excess of 10% of your AGI. With the ACA kicking in - I don't see how would people even get to that. If your AGI is low you get subsidies for insurance, and the insurance keeps your expenses capped. For self-employed and employed, insurance premiums are pre-tax (i.e.: not even added to your AGI). Principle for mortgage is not deductible because it is not an expense - it is equity. You own an asset, don't you? You do get the standard deduction, even if your itemized (real) deductions are less - business don't get that. You also get an exemption amount (for your basic living needs), which businesses don't get. You can argue about the amounts - but it is there. In some States (like California) renters get tax breaks for renting, depending on the AGI. CA renters credit is phasing out at AGI of about $60K, which is pretty high.", "topk_rank": 15 }, { "id": "248318", "score": 0.7112703323364258, "text": "But my gas car doesn't require that, so this is a regression. I had a Model S for 2 years, it was neat but we didn't use it for road trips. For people buying a 35k car, the luxury of having a second or third car isn't a given.", "topk_rank": 16 }, { "id": "366989", "score": 0.7110356688499451, "text": "The thing you need to keep in mind is that if you take on debt, you need to have a plan to pay it off and execute on it. You also need to understand what your carrying cost is (what you will pay in finance charges every month.) There are times when you need to take on debt in order to be a productive person. For example, in many places in the US, you need a car in order to have a job. It's ludicrous for someone to assert that you shouldn't take on any debt in order to get a reliable vehicle. That doesn't mean you go out and lease the fanciest car that you can get on your income. In this case, I'd say it's a bit of a grey area. Could you live in an unfurnished apartment for a while? Perhaps. Many people would have a hard time living like that and it could affect your ability to perform at work. I would argue that buying a decent mattress to sleep on falls under the same category as getting a car so that you can work. You don't want to be missing work because your back is in spasm from sleeping on the floor or a worn out mattress. As far as the rest of it goes, it really depends on how fast you can pay it off. If you are looking at more than a few months (6 tops) to pay off the purchase in full, you should reassess. Realize that the interest you are paying is increasing the cost of the furniture and act accordingly. As mentioned, you can often get 0% financing for a limited period. Understand that if you don't pay off the entire balance in that period, you will normally be retroactively charged interest on the entire starting amount and that interest rate will likely be quite high. The problem with credit is when you start using it and continually growing the balance. It's easy to keep saying that you will start paying it off later and the next thing you know you are buried. It's not a big one-time purchase (by itself) that normally gets people into trouble, it's continual spending beyond their means month after month.", "topk_rank": 17 }, { "id": "466037", "score": 0.7109975218772888, "text": "You are describing a corporation. You can set up a corporation to perform business, but if you were using the money for any personal reasons the courts could Pierce the corporate veil and hold you personally liable. Also, setting up a corporation for purely personal reasons is fraud.", "topk_rank": 18 }, { "id": "568382", "score": 0.7109191417694092, "text": "Utilizing a GPS vehicle tracking and fleet management system is not an issue of questioning the dedication of your workers towards the organization. Then again, a compelling checking has regularly brought about change of profitability, fuel productivity and work hour use.", "topk_rank": 19 } ]
71	Can a business refuse to take credit cards?	[ { "id": "372052", "score": 0.777786374092102, "text": "Businesses are free to decide what payment methods they accept for their goods and services. Businesses sometimes advertise what credit cards they accept by posting some stickers at their door. When your credit card isn't among them and you don't have enough cash with you, ask about your card before you order. If a business doesn't accept your credit card, your best recourse is to take your business elsewhere. When you already ate there and got into an awkward situation because you assumed that they would accept your card, you might also want to write an online review of the place and warn others to bring cash for their visit (but please be fair in the review. When the food and service are decent, a restaurant doesn't deserve a one star rating just because they don't take credit cards). Note that businesses have good reasons to not accept credit cards. It often means additional cost for them in form of: But there is also a more shady reason. Taking payment in cash means that there is no electronic trail of the transaction. That makes it far easier for an establishment to misreport their income. They might under-report it to evade taxes or over-report it to launder money (both are illegal, of course)." } ]	[ { "id": "29849", "score": 0.7377368807792664, "text": "I just listened to a podcast on this topic this week, and Satanicpuppy is pretty much correct. If you are interested, here is a link to the podcast on Legal Lad: Can Businesses Refuse to Accept Cash?", "topk_rank": 0 }, { "id": "9814", "score": 0.7367170453071594, "text": "\"Ever wonder why certain businesses won't accept certain credit cards? (The sign above the register saying \"\"Sorry, we don't accept AmericanExpress\"\"). It's because they don't want to pay that credit card company's transaction fees. One of the roles of the credit card company is to facilitate the transaction process between the customer (you) and the store. And now that using credit cards over cash or check is so ingrained in our culture, it creates extra work for the customer to make purchases at an establishment that is cash-only. Credit card companies know this, and so do businesses. So businesses will partner with credit card companies so that customers can use their cards. This way, everything is handled electronically (this can also benefit the business, since there's added security as they're not dealing with cash directly, and they don't have to manually count as much cash later). However a business may only budget a certain amount of their profits they want taken by credit card transactions. So if a company's fees are too high (say AmericanExpress, for example) and they are banking on you already having a Visa card, the company isn't going to go out of its way to provide the AmericanExpress option for you. If it were free for the business to use a credit card company's service at their stores, then they would all just provide the option for every card! So the credit card company making money is all contingent on you spending your money by using their credit card. You use the card, and the store pays the company for the transaction.\"", "topk_rank": 1 }, { "id": "193081", "score": 0.7330674529075623, "text": "You have to take legal tender to settle a debt. If your business model doesn't involve the customer incurring a debt that is then settled, you don't have to take cash. For example, in a restaurant where you pay after eating, you can insist on paying cash, because you're settling a debt. But in McDonald's they can refuse your cash at the counter, because you've not received your food yet and so no debt has been incurred.", "topk_rank": 2 }, { "id": "474248", "score": 0.732814371585846, "text": "The Federal Reserve website notes that creditors must accept cash for debts on services already rendered, but that businesses may refuse cash for services not yet rendered unless prohibited by local law. The Treasury website includes examples of businesses limiting what cash they will accept: For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.", "topk_rank": 3 }, { "id": "443487", "score": 0.7212257385253906, "text": "Generally, credit card networks (as opposed to debit/ATM cards that may or may not have Visa/MC logos) have a rule that a merchant must accept any credit card with their logo. Visa rules for merchants in the US say it explicitly: Accept all types of valid Visa cards. Although Visa card acceptance rules may vary based on country specific requirements or local regulations, to offer the broadest possible range of payment options to cardholder customers, most merchants choose to accept all categories of Visa debit, credit, and prepaid cards.* Unfortunately the Visa site for China is in Chinese, so I can't find similar reference there. You can complain against a merchant who you think had violated Visa rules here. That said, its not a law, its a contract between the merchant processor and the Visa International organization, and merchants are known to break these rules here and there (most commonly - refusing to accept foreign cards, including in the US). Also, local laws may affect these contracts (for example, in the US it is legal to set minimum amount requirements when accepting credit cards). This only affects credit card processing, and merchants that don't accept credit cards may still accept debit cards since those work in different networks, under a different set of rules. Those who accept credit cards, are also required to accept debit cards (at least if used as credit).", "topk_rank": 4 }, { "id": "395995", "score": 0.7165543437004089, "text": "\"Understood. But based on the OP, it's not categorically clear what they were refusing. If they refused to quote the balance and/or refused to take a phone payment that was otherwise in keeping with the cardholder agreement (i.e., the cardmember called the correct number for phone payments and balance-checking, etc), then yeah, they were not only being unreasonable, but also violating the contract. What I read as ambiguous is whether the cardholder was specifically asking for the payoff balance/amount, and whether they were following process for phone-payments and balance-checking, etc. IOW, it's not necessarily \"\"illegal\"\" and might not even be unreasonable for the customer-service number to have different departments for balance-checking and phone-payments versus card-cancellation. It's not falsifiably clear from the OP that the cardholder was not asking the person on the other end of the phone for categorical statements of fact that they were obligated to make. I'm not accusing anyone of lying or saying that the CC company was acting reasonably, I'm just saying that language such as \"\"They do not provide mid-cycle payoff quotes\"\" is not evidence that they were doing any kind of funny-business.\"", "topk_rank": 5 }, { "id": "262524", "score": 0.7126182913780212, "text": "Try to get a second card in your business' name, with a separate card number (like you would get one for a spouse). They may or may not allow that free (you wouldn't want to pay a second fee), and it might be only possible with the second card bearing the same number, which makes it useless. But it is worth a try.", "topk_rank": 6 }, { "id": "290236", "score": 0.712463915348053, "text": "\"The confusion comes from ambiguity in popular belief -- that businesses are required to accept x_y_x as payment. In reality, a business can state the terms of a transaction to their pleasure. On the other hand, debt is different -- no lender can refuse cash or other legal tender for repayment of debt. Sometimes, people try to split hairs and argue \"\"Well, if I eat a steak and I owe the restaurant $100, they should have to accept my $100 as tender for the debt of my meal.\"\" Not true. The restaurant isn't giving you a line of credit, they're billing you after services rendered, and your payment is due on their terms.\"", "topk_rank": 7 }, { "id": "375170", "score": 0.70981764793396, "text": "A few reasons make sense: They have a defined process for rentals, risk assessment, and customer credit. Especially for a large corporation, making changes to that process is not trivial, adds risk/uncertainty, and will be costly. Such changes for a relatively small customer base might not makes sense. Many rental companies DO allow you to rent with a debit card. Why do some businesses take cash only? With a debit card, there is no third party guarantee. With a credit card, the cash is coming from a well-established third party who will pay (assuming no disputes) and has a well-established history of paying. Even if the merchant holds your account, it is still your cash under the control of you and your bank until the deposit clears the merchants bank. It is not surprising they view that as more risk and potentially not worth hassling with debit.", "topk_rank": 8 }, { "id": "67716", "score": 0.7092962265014648, "text": "A lot of stores, especially smaller ones, won't accept card payments under $10.00. They pay a fee for taking cards and for small transactions it is not worth it.", "topk_rank": 9 }, { "id": "53649", "score": 0.7074834704399109, "text": "I think cash, travelers checks (little iffy about this one: they're legal tender cash equivalents), and money orders are the only ones that you'd be a little weird to not accept. You certainly don't have to accept regular checks, credit cards, or barter. In the end though, you don't HAVE to accept anything. Accept only small bills, accept only checks from certain banks, accept only the diners card. Your sale, your rules.", "topk_rank": 10 }, { "id": "341413", "score": 0.7069010734558105, "text": "\"They don't have to take cash if they reasonably told you in advance they don't take cash, because they made fair effort to prevent you from incurring a debt. They don't have to take cash if the transaction hasn't yet happened (not a debt) or if it can be easily undone at no cost to either party - such as a newspaper subscription they can just stop delivering. Both of these reasons are limited by the rules against discrimination, see below. They don't have to take cash if it's impracticable. For instance a transit bus when fares first went to $1.00, it took years to fund new fareboxes able to take paper money. You don't have to take a mortgage payment in pennies. Liquor stores don't have to take $100 bills. (it requires them to keep too much change in the till, which makes them a robbery target). Trouble arises when it appears there's an ulterior motive for the rule. Suppose a Landlord Jim requires rent to be paid with EFT. Rent-controlled Marcie tells the judge \"\"It's a scheme to oust me, he knows I'm unbanked\"\". Jim counters \"\"No. I got mugged last month because criminals know when I collect cash rents.\"\" It will turn on whether Jim can show good-faith effort to work with his unbanked tenants to find other ways to pay. If Jim does a particularly bad job of this, he could find himself paying Marcie's legal bills! Even worse if the ulterior motive is discrimination. Chet the plumber hates Muslims. Alice the feed supplier hates the Amish. So they decide to take credit cards only, knowing those people's religions don't allow them. Their goose is cooked once they can't show any other reasonable reason to refuse cash.\"", "topk_rank": 11 }, { "id": "123902", "score": 0.7066603899002075, "text": "They cannot refuse to accept coins and demand some other payment after providing a good or service. Legal tender is legal tender for all debts. But until they provide the good or service, they don't have to accept it. In this case, you want the service of depositing money. But by its nature, they have to accept the payment first. In that situation, they can refuse it. There is no law that banks have to accept your deposits. If they don't want you as a customer, that's their problem. Consider switching banks. Historically this was easier and some banks may still do things the old way. Call your local banks and ask. Perhaps you'll find someone happy to do business with you, on your terms. As already said, some coin rolling machines will pay you with gift certificates. If you plan to buy a sufficient amount from the place that accepts the gift certificate, this can get that place to play the fee. That may help you, although it is obviously a limited solution. The goal is to make it so that you only make purchases that you would have anyway. The seller obviously has a different goal. It's possible to buy coin sorters. Heck, you could buy one with a gift certificate from a public machine. Cheap ones require extra work to get the coins rolled and may jam a lot. More expensive ones do more of the work for you. Note that a given sorter that works better may be cheaper than another that doesn't work as well. Cheap is more of a qualitative judgment than a financial measure in this case. If you carry a small amount of change with you, pretty much everywhere accepts small amounts of change for purchases. So if you have been always paying with dollars and dumping the change in a jar, instead always give the correct change (coins). They may still give you dollars in change, but at least you won't get new coins. And you'll use some of your existing coins. Of course, this doesn't scale well. For small purchases, say $1.50, you can often pay the whole thing in change without argument. Or if something is $18.50, you might give them $10, $5, two $1 bills, and the rest in change. If you are buying something and can see that they have little change in one of the coin buckets, offer to swap some change for bills. Sometimes places find that easier than breaking a roll. With vending machines, use change instead of dollar bills. Especially use exact change so as not to convert bills to change. They usually don't take pennies, but they're great with nickels and above. This won't allow you to use change as a way to force yourself to save. But it will keep your change down to a manageable level going forward. And you might be able to use up your existing store. I'm assuming that this isn't a fifty year coin collection that you are just now starting to process. But if you have six months of change, you should be able to use it up in a year or so. I tend to do this. So I rarely have more than a couple dollars in change. No one ever tells me that they don't take change, because I don't give anyone a lot. Maybe $.99 here but more likely $.43 there. Sometimes I give them, e.g., $.07 so as to get $.25 in change rather than $.18. It's a little more work at every transaction, but it saves the big clump of work of rolling the coins. And you don't have to buy wrappers.", "topk_rank": 12 }, { "id": "249505", "score": 0.7033824324607849, "text": "Many businesses that accept regular VISA credit cards will not accept VISA purchase cards intended for corporate/gov purchasing departments and able to furnish a more detailed audit trail (purchase order #, lot #, etc.) than a regular credit card. Other merchants take ONLY VISA purchase cards.", "topk_rank": 13 }, { "id": "406340", "score": 0.6987773180007935, "text": "\"Tough spot. I'm guessing the credit cards are a personal line of credit in their name and not the company's (the fact that the business can be liquidated separately from your parents means they did at least set up an LLC or similar business entity). Using personal debt to save a company that could have just been dissolved at little cost to their personal credit and finances was, indeed, a very bad move. The best possible end to this scenario for you and your parents would be if your parents could get the debt transferred to the LLC before dissolving it. At this point, with the company in such a long-standing negative situation, I would doubt that any creditor would give the business a loan (which was probably why your parents threw their own good money after bad with personal CCs). They might, in the right circumstances, be able to convince a judge to effectively transfer the debt to the corporate entity before liquidating it. That puts the debt where it should have been in the first place, and the CC companies will have to get in line. That means, in turn, that the card issuers will fight any such motion or decision tooth and nail, as long as there's any other option that gives them more hope of recovering their money. Your parents' only prayer for this to happen is if the CCs were used for the sole purpose of business expenses. If they were living off the CCs as well as using them to pay business debts, a judge, best-case, would only relieve the debts directly related to keeping the business afloat, and they'd be on the hook for what they had been living on. Bankruptcy is definitely an option. They will \"\"re-affirm\"\" their commitment to paying the mortgage and any other debts they can, and under a Chapter 13 the judge will then remand negotiations over what total portion of each card's balance is paid, over what time, and at what rate, to a mediator. Chapter 13 bankruptcy is the less damaging form to your parent's credit; they are at least attempting to make good on the debt. A Chapter 7 would wipe it away completely, but your parents would have to prove that they cannot pay the debt, by any means, and have no hope of ever paying the debt by any means. If they have any retirement savings, anything in their name for grandchildren's college funds, etc, the judge and CC issuers will point to it like a bird dog. Apart from that, their house is safe due to Florida's \"\"homestead\"\" laws, but furniture, appliances, clothing, jewelry, cars and other vehicles, pretty much anything of value that your parents cannot defend as being necessary for life, health, or the performance of whatever jobs they end up taking to dig themselves out of this, are all subject to seizure and auction. They may end up just selling the house anyway because it's too big for what they have left (or will ever have again). I do not, under any circumstance, recommend you putting your own finances at risk in this. You may gift money to help, or provide them a place to live while they get back on their feet, but do not \"\"give till it hurts\"\" for this. It sounds heartless, but if you remove your safety net to save your parents, then what happens if you need it? Your parents aren't going to be able to bail you out, and as a contractor, if you're effectively \"\"doing business as\"\" Reverend Gonzo Contracting, you don't have the debt shield your parents had. It looks like housing's faltering again due to the news that the Fed's going to start backing off; you could need that money to weather a \"\"double-dip\"\" in the housing sector over the next few months, and you may need it soon.\"", "topk_rank": 14 }, { "id": "493638", "score": 0.6975831985473633, "text": "I think the question relates to the discussion here: http://clarkhoward.com/liveweb/shownotes/2010/10/05/19449/ It was always the case that merchants could discount purchases made with cash. What wasn't allowed is allowing the merchant to charge extra for credit card transactions (presumably to cover the fees the merchants pay). These fees usually carry a flat fee per transaction, plus around 2% of the purchase price. What also wasn't allowed was them to refuse any credit transactions. People could charge a pack of gum, even if the fees put that transaction in the red. What's allowed according to this new development is different levels of discounting for different credit cards. Somewhat related to this discussion is another development that happened this summer: merchants now have the ability to refuse credit card transactions of less than $10. Here's my feeling on all of this. I think we'll see merchants imposing minimum credit transaction amounts before we see them monkeying at the 1-2% level on pricing for different types of credit cards. My feeling is that they'd be wise not to change anything, even though they can. Refusing transactions (or charging more for others) is going to come as a unpleasant shock to enough people that they may take their business elsewhere.", "topk_rank": 15 }, { "id": "103980", "score": 0.6974156498908997, "text": "I'm not a lawyer, and am certainly not familiar with your jurisdiction, but the general guidelines I've seen around this kind of situation are: If all else fails, you could just cancel the card, though I'm not sure what liability you have to honour the contract. I cancelled a card once to stop being charged by a particularly annoying company and had no problems, but I'm not sure if that is a good way to deal with it in general.", "topk_rank": 16 }, { "id": "420622", "score": 0.6971454620361328, "text": "\"This isn't so much a legal issue, the prohibition on giving discounts was written into the merchant agreements that most of the major credit card companies enforced on businesses that accepted their credit cards. That is, until the recent Financial Reform Bill (2010) passed Congress. It changes everything. (The logic on this is a little convoluted, so read carefully) Credit card companies can no longer prohibit merchants from requiring a minimum purchase amount to use a credit card. Meaning: That if merchants want to, they can now stop taking credit cards for a $4 latte. Credit card companies can no longer prohibit merchants from giving discounts for cash. Here is an article with a lot more detail: Financial Reform Bill Good News for Credit Card Holders Here is a link to the actual bill details and content: HR 4173 - Dodd-Frank Wall Street Reform and Consumer Protection Act Here is the relevant part: This subsection is supposed to take affect \"\"at the end of the 12-month period beginning on the date of the enactment of the Consumer Financial Protection Act of 2010.\"\" In other words, July 21st, 2011.\"", "topk_rank": 17 }, { "id": "200457", "score": 0.692999005317688, "text": "The U.S. Treasury said the same thing on the lawfulness of retailers refusing legal tender at point of sale - retailers are allowed to refuse any denomination of U.S. currency: [...]all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. [...]", "topk_rank": 18 }, { "id": "345475", "score": 0.692945122718811, "text": "In any country, individuals (and shops) can reject any form of payment that is not Legal Tender - defined by law as a payment form that must be accepted. Shops are typically more generous, because they want to do business with you, but individuals are in a different position. In France, only official coins and bills are declared as Legal Tender (so if they don't want to, individuals don't even need to accept bank transfers). This is for doubts you need to pay. In addition, as you are not forced to do business with them, people and shops can require whatever they feel like to require - if you want to buy their car, they can ask you to stand on your head and spit coins, and if you don't like it, they don't sell to you. (They won't do much business then, probably)", "topk_rank": 19 } ]
72	Calculate Estimated Tax on Hobby Business LLC	[ { "id": "549870", "score": 0.6987240314483643, "text": "\"You are on the right track, for tax purposes its all ordinary income at the end of 2016. If the free lance \"\"employer\"\" will withhold fed,state and local tax, then that takes care of your estimated tax. If they can't or won't, you will need to make those estimates and make payments quarterly for the fed and state tax at your projected tax liability. Or, you can bump up withholding by your day job employer and cover your expected tax liability at year end without making estimated tax payments.\"" }, { "id": "302049", "score": 0.7040660381317139, "text": "\"I assume your employer does standard withholding? Then what you need to do is figure what bracket that puts you in after you've done all your normal deductions. Let's say it's 25%. Then multiply your freelance income after business expenses, and that's your estimated tax, approximately. (Unless the income causes you to jump a bracket.) To that you have to add approximately 12-13% Social Security/Medicare for income between the $90K and $118,500. Filling out Form 1040SSE will give you a better estimate. But there is a \"\"safe harbor\"\" provision, in that if what you pay in estimated tax (and withholding) this year is at least as much as you owed last year, there's no penalty. I've always done mine this way, dividing last year's tax by 4, since my income is quite variable, and I've never been able to make sense of the worksheets on the 1040-ES.\"" } ]	[ { "id": "266304", "score": 0.6660205125808716, "text": "Using the http://calculators.ato.gov.au/scripts/asp/simpletaxcalc/main.asp calculator and noting all the caveats (Medicare etc) and assuming everything is proportionate you get: You earn: $110,000 less $28,647 tax = $81,353 She earns: $54,000 less $9,097 tax = $44,903 Total net: $126,256 You earn: $88,000 less $20,507 tax = $67,493 She earns: $72,000 less $14,947 tax = $57,053 Total net: $124,546 So, there is about $1,710 in it per annum or $33/week. Long day care will be setting you back $75-185/day so this is pretty small beans. This is all back of the envelope stuff and probably worth paying a few hundred dollars to an accountant to work it all out.", "topk_rank": 0 }, { "id": "59317", "score": 0.6660144925117493, "text": "This depends on the nature of the income. Please consult a professional CPA for specific advise.", "topk_rank": 1 }, { "id": "307531", "score": 0.6658217310905457, "text": "In this situation I would recommend figuring out about what you would need to pay in taxes for the year. You have two figures (your salary and dependents) , but not others. Will you contribute to a 401K, do you itemize deductions, etc... If things are uncertain, I would figure my taxes as if I took the standard deduction. For argument's sake let's assume that comes out to $7300. I would then add $500 on to my total to cover potential increases in taxes/fees. You can adjust this up or down based on your ability to absorb having to pay or the uncertainty in your first calcuation. So now $7800, divide by 26 (the amount of paychecks you receive in a year) = $300 Then I would utilize a payroll calculator to adjust my exemptions and additional witholding so my federal withholding is as close as possible to this number. Or you can sit with your payroll department and do the same.", "topk_rank": 2 }, { "id": "223170", "score": 0.665797233581543, "text": "Since your YouTube income is considered self-employment income and because you probably already made more than $400 in net income (after deducting expenses from the $4000 you've received so far), you will have to pay self-employment tax and file a return. This is according to the IRS's Publication 17 (2016), Your Federal Income Tax, so assumes the same rules for 2016 will remain in effect for 2017: You are self-employed if you: Carry on a trade or business as a sole proprietor, Are an independent contractor, Are a member of a partnership, or Are in business for yourself in any other way. Self-employment can include work in addition to your regular full-time business activities, such as certain part-time work you do at home or in addition to your regular job. You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1). Also, you must file Form 1040 and Schedule SE (Form 1040), Self-Employment Tax, if: Your net earnings from self-employment (excluding church employee income) were $400 or more, or You had church employee income of $108.28 or more. (See Table 1-3.) Use Schedule SE (Form 1040) to figure your self-employment tax. Self-employment tax is comparable to the social security and Medicare tax withheld from an employee's wages. For more information about this tax, see Pub. 334, Tax Guide for Small Business. I'd also note that your predicted income is getting close to the level where you would need to pay Estimated Taxes, which for self-employed people work like the withholding taxes employers remove their employees paychecks and pay to the government. If you end up owing more than $1000 when you file your return you could be assessed penalties for not paying the Estimated Taxes. There is a grace period if you had to pay no taxes in the previous year (2016 in this case), that could let you escape those penalties.", "topk_rank": 3 }, { "id": "73002", "score": 0.6657759547233582, "text": "An hour of lawyer's time plus an estimate, provided you know what you're going to ask and for what purpose, is going to be pretty cheap. I would start there, and he/she could probably refer you to an experienced accountant as well, which you'll also want to have on retainer more than likely.", "topk_rank": 4 }, { "id": "466718", "score": 0.665581226348877, "text": "\"From the poster's description of this activity, it doesn't look like he is engaged in a business, so Schedule C would not be appropriate. The first paragraph of the IRS Instructions for Schedule C is as follows: Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby does not qualify as a business. To report income from a nonbusiness activity, see the instructions for Form 1040, line 21, or Form 1040NR, line 21. What the poster is doing is acting as a nominee or agent for his members. For instance, if I give you $3.00 and ask you to go into Starbucks and buy me a pumpkin-spice latte, you do not have income or receipts of $3.00, and you are not engaged in a business. The amounts that the poster's members are forwarding him are like this. Money that the poster receives for his trouble should be reported as nonbusiness income on Line 21 of Form 1040, in accordance with the instructions quoted above and the instructions for Form 1040. Finally, it should be noted that the poster cannot take deductions or losses relating to this activity. So he can't deduct any expenses of organizing the group buy on his tax return. Of course, this would not be the case if the group buy really is the poster's business and not just a \"\"hobby.\"\" Of course, it goes without saying that the poster should document all of this activity with receipts, contemporaneous emails (and if available, contracts) - as well as anything else that could possibly be relevant to proving the nature of this activity in the event of an audit.\"", "topk_rank": 5 }, { "id": "156499", "score": 0.6653735041618347, "text": "There are a few methods you can use to estimate your taxes. On the results screen, the app will show you your estimated tax burden, your estimated withholding for the year, and your estimated overpayment/refund or shortfall/tax due. It may also have recommendations for you on how to adjust your W-4 (although, this late in the year, I think it only tells you to come back next year to reevaluate). Your state might also have income tax, and if you are curious about that, you can find the state tax form and estimate your state income tax as well. My guess is that you will be getting a refund this year, as you have only worked half of the year. But that is only a guess.", "topk_rank": 6 }, { "id": "410128", "score": 0.6653298735618591, "text": "In Canada I think you'd do it as a % of square footage. For example: Then you can count 20% of the cost of the of renting the apartment as a business expense. I expect that conventions (i.e. that what's accepted rather than challenged by the tax authorities) may vary from country to country.", "topk_rank": 7 }, { "id": "89503", "score": 0.6652504801750183, "text": "You really shouldn't be using class tracking to keep business and personal operations separate. I'm pretty sure the IRS and courts frown upon this, and you're probably risking losing any limited liability you may have. And for keeping separate parts of the business separate, like say stores in a franchise, one approach would be subaccounts. Messy, I'm sure.", "topk_rank": 8 }, { "id": "540395", "score": 0.6649032235145569, "text": "Alright, IRS Publication 463: Travel, Entertainment, Gift, and Car Expenses Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose. Example. You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense Obviously nothing helpful in the code. So I would use option 1, weight the maintenance-related mileage by the proportion of business use. Although if you use your car for business a lot (and perhaps have a spouse with a car), an argument could be made for 3. So I would consider my odds of being audited (even lower this year due to IRS budget cuts) and choose 1 or 3. And of course never throw anything away until you're room temperature.", "topk_rank": 9 }, { "id": "350839", "score": 0.6646542549133301, "text": "A computer is a special case because the IRS thinks that you might be using it for personal applications. You may need to keep a log, or be able to state that you also have another computer for non-business use. That said, if your schedule C shows a small profit then you don't need to itemize expenses, just state the total.", "topk_rank": 10 }, { "id": "357037", "score": 0.6646143198013306, "text": "You should be careful about mingling your personal money and that of the business, even if it is a sole prop right now. It is a good habit to keep separate business and personal bank/credit accounts just so that when you change to an LLC, it is simpler for you to separate what belongs to the company and what is yours personally. What you're doing makes it more difficult (although only marginally so) to itemize business deductions that were paid with an ostensibly personal credit account. The better habit to get into now is keeping that distinct separation between personal and business. That being said, there's nothing illegal in what you're doing, but it would make an accountant cringe, that's for sure. (chuckle) Hope this helps. Good luck!", "topk_rank": 11 }, { "id": "231719", "score": 0.6643670201301575, "text": "Phil's answer is correct. Just to add to his response: Distributions are not taxable events -- you already paid your taxes, so you can take out $50k or $52k and the IRS is not concerned. You can simply write yourself a check for any amount you choose! To answer your specific question: to match your K1 losses and profit exactly, you could take out $50k. But that might leave the business strapped for cash. One way to decide how much to take out is to use your balance sheet. Look at your retained earnings (or just look at the business bank account balance), subtract however much cash you think you need to keep on hand for operations, and write yourself a check for the rest.", "topk_rank": 12 }, { "id": "97094", "score": 0.6641576290130615, "text": "I'm a freelance programmer, reverse-engineer, and network engineer. I do quarterly 1099 filings using a cheap local accounting firm. I did them on my own at first; not that hard.. You deduct from sum the percentage for that earning-tier issued by the IRS.. $500.00 for writing algorithms on a timer? Yikes.. I did topcoder once but it didn't pay much then it was only good for portfolio.. No way I would race to do algorithms for third-world-rate capital..", "topk_rank": 13 }, { "id": "315086", "score": 0.664156973361969, "text": "Is the business an S-Corp, LLC or Sole Prop? I am going to guess based on the question that it is an LLC that you never closed with the state and you live in a state (NY) that charges a fee for having an LLC in the state in which case you owe those fees to the state. I am not aware of any taxes on the mere existence of a business by the IRS. I think you are going to find out that the are no taxes owed to the IRS for this nonexistent activity.", "topk_rank": 14 }, { "id": "294753", "score": 0.6641114354133606, "text": "I'm not certain I understand what you're trying to do, but it sounds like you're trying to create a business expense for paying off your personal debt. If so - you cannot do that. It will constitute a tax fraud, and if you have additional partners in the LLC other than you and your spouse - it may also become an embezzlement issue. Re your edits: Or for example, can you create a tuition assistance program within your company and pay yourself out of that for the purposes of student loan money. Explicitly forbidden. Tuition assistance program cannot pay more than 5% of its benefits to owners. See IRS pub 15-B. You would think that if there was a way to just incorporate and make your debts pre-tax - everyone would be doing it, wouldn't you?", "topk_rank": 15 }, { "id": "550642", "score": 0.6640844941139221, "text": "If annualized rate of return is what you are looking for, using a tool would make it a lot easier. In the post I've also explained how to use the spreadsheet. Hope this helps.", "topk_rank": 16 }, { "id": "35810", "score": 0.6640022397041321, "text": "Making a game is hard enough, focus on that. If/when you start getting close to having something to sell, then if you're serious and want the company to grow into a full time venture, briefly consult with a lawyer and possibly accountant to set this up. It will save you a lot of time researching what you have to do and a lot of headache from potentially doing things wrong. If you want to try to do it on your own, I'd recommend getting a book on starting a business because there is more to know than a single post can cover. You'll probably have to file for a DBA (doing business as) at your city hall in order to be allowed to refer to yourself as the name of your company (otherwise you have to use your personal name). Initiating that will likely initiate annual business taxes in your town in addition to the cheap filing fee. You also want to consider how you will handle trademark (of your business and game) and copyright (of your game). If this is going to grow, you'll have to have contracts written for either employees or for freelancers who might produce assets for you. You may also need to consider writing an EULA for your game, privacy policies, etc. Additionally, you'll likely have to file with your state to collect and send sales tax. You'll also want to meticulously track costs and revenue related to your business. Formally starting a business will likely open you up to property, sales and income tax. For example, where I am, was even taxed on the equipment the business uses (e.g. computers). This is why it makes sense to wait until you're closer to having a product before you try to formally start a business and to consult with professionals on the best way. The type of business you should form will depend on the scope you plan for the company and the amount of time/money you're willing to put in. A sole proprietorship (what you are by default) means there is no difference legally/financially between you as an individual and you as a company. This may be suitable if this is just a hobby, but not if you intend it to grow because that means any lawsuit directed at your company and its money is also directed at you and your money. The differences between an LLC and corporation are more nuanced and involve differences in legal and tax treatment, however, they both shield you from the previously mentioned problem. If you want this to be more than a hobby you should form either an LLC or a corporation. Do some research on the differences and how they might apply to you and in your state.", "topk_rank": 17 }, { "id": "90230", "score": 0.6639193892478943, "text": "The vendor needs to do this using apportionment, according to the VAT rules for mixed supplies: If you make mixed supplies and the individual supplies are not liable to VAT at the same rate then you need to work out the tax value of each supply in order to calculate how much tax is due. If the tax value is based on the total price you charge (see paragraph 7.3) you do this by splitting that price between the supplies. This is called an apportionment ... There is no special method of apportionment ... However, your calculations must be fair and you must be able to justify them. It is usually best to use one of the methods shown in section 32. The section 32 referred to really relates to apportioning use between business and non-business purposes, but it implies that splitting up the total price in proportion to the original prices would probably be fair. So in your example the vendor might split the £5 discount equally between the spoon and the carrycot as they had the same gross cost, and pay VAT as if each had cost £7.50 gross. The vendor could also do it in proportion to their net (pre-VAT) prices and thus apportion a bit more of the discount to the carrycot than the spoon, but as this would lead to them paying slightly more tax overall they probably wouldn't choose to. However, none of this is likely to be too relevant to a consumer, since in the UK prices must be presented as the gross (VAT-inclusive) amounts and so the discounts will also apply to those amounts. It will of course affect how much of the purchase price the vendor ends up paying on to the government and thus might indirectly affect what discounts the vendor is willing to offer.", "topk_rank": 18 }, { "id": "529565", "score": 0.6638697981834412, "text": "Yes. This income would be reported on schedule SE. Normally, you will not owe any tax if the amount is less than $400. Practically, $100 in a garage sale is not why the IRS created the form SE. I wouldn't lose sleep over keeping track of small cash sales over the course of a year. However, if you have the information I'm not going to tell you not to report it.", "topk_rank": 19 } ]
74	Buying car from rental business without title	[ { "id": "46680", "score": 0.729810357093811, "text": "I would steer well clear of this. The risk is that they take your money but don't pay the bank. This wouldn't require dishonesty - what if they run into financial trouble? Any money of yours that they have that hasn't gone on to the bank yet might end up paying off other debts instead of yours. It's not clear if the idea is that you are paying them all the money up front or will be making payments over time, but either way if they don't clear the lien with the bank then the bank can come after the car no matter who is in physical possession of it. That would leave you without either the money or the car. In theory you'd have a legal claim against the seller, but in reality you'd probably find it hard to collect." } ]	[ { "id": "24165", "score": 0.6912209391593933, "text": "Update: here is a message the seller just sent me. Does this make sense? I spoke with my bank again and they explained it a little better for me. I guess how it works is they will print out something for you that is called an affidavit in lieu of title that states they are no longer the lein holder and to release it to you. You then take that to the dol and they get it put in your name. He says that's how they do it all the time. When we get to the bank, the teller just verifies the check and I deposit it and they release the funds to pay off the account and that's when you would get the paperwork. You would be there for the whole process so nothing is sketchy. Sorry it's such a pain, I didn't understand how that worked. We've never sold a car with a loan on it before.", "topk_rank": 0 }, { "id": "258504", "score": 0.6910069584846497, "text": "In some states, it is your responsibility to pay the sales tax on a transaction, even if the party your purchase from doesn't collect it. This is common with online purchases across state lines; for example, here in Massachusetts, if I buy something from New Hampshire (where there is no sales tax), I am required to pay MA sales tax on the purchase when I file my income taxes. Buying a service that did not include taxes just shifts the burden of paperwork from the other party to me. Even if you would end up saving money by paying in cash, as other here have pointed out, you are sacrificing a degree of protection if something goes wrong with the transaction. He could take your money and walk away without doing the work, or do a sloppy job, or even damage your vehicle. Without a receipt, it is your word against his that the transaction ever even took place. Should you be worried that he is offering a discount for an under the table transaction? Probably not, as long as you don't take him up on it.", "topk_rank": 1 }, { "id": "312090", "score": 0.6895577311515808, "text": "You could have the buyer go to the bank with you so that he can get evidence that the loan will be paid in full and that the lien will be lifted. The bank won't sign over the title (and lift the lien) until the loan is paid back in full. DMV.org has a pretty good section about this. (Note: not affiliated with the actual DMV) Selling to a Private Party Though more effort will be required on your part, selling a car with a lien privately could net you a higher profit. Here are a few things you'll need to consider to make the process easier: Include the details of the lien in your listing. You'll list an advertisement for your car just as you would any other vehicle, with the addition of the lien information that buyers will need so as to avoid confusion. Sell in the location of the lienholder, if possible. If the bank or financial institution holding the lien is located in the area you're trying to sell, this will make the transaction much easier. Once you make an agreement with the buyer, you can go directly to the lender to pay off the existing lien. Ownership can then be transferred in person from the financial institution to the buyer. Consider an escrow service. If the financial institution isn't in your area, an escrow service can help to ensure a secure transaction. An escrow service will assume responsibility for receiving payments from the buyer and will hold the title until the purchase is complete. Advantages of an escrow service include: Payoff services, which will do most of the work with the financing institution for you. Title transfer services, which can help to ensure a safe and legitimate transaction and provide the necessary paperwork once the sale is complete.", "topk_rank": 2 }, { "id": "8528", "score": 0.6885256171226501, "text": "I used to do the opposite when I needed to rent a car locally. I would request the bottom of the line and tell them that I will pick up at one of our expensive resorts. They never had any Kia Sorentos, but they had nice Lincolns and other high end vehicles for Kia prices. I'm sorry, we don't have the Ford Escort you reserved, so I'll give you a Towncar for the Escort price.", "topk_rank": 3 }, { "id": "3222", "score": 0.688444972038269, "text": "This depends in part on where you are. Sometimes signing over the title is all it takes to transfer ownership, sometimes more is involved. Contact your local department of motor vehicles (or equivalent) and ask them about how to transfer ownership, about registration (probably NOT transferrable), about license plates (you may need new ones), and about when the next inspection will be due (here, I think they gave me a grace period of one month to complete that even though it had been inspected for the previous owner two months earlier).", "topk_rank": 4 }, { "id": "541450", "score": 0.6876650452613831, "text": "Possession is 9/10 of the law, and any agreement between you and your grandfather is covered under the uniform commercial code covering contracts. As long as your fulfilling your obligation of making payments, the contract stands as originally agreed upon between you and the lender. In short, the car is yours until you miss payments, sell it, or it gets totalled. The fact that your upside down on value to debt isn't that big of a deal as long as you have insurance that is covering what is owed.", "topk_rank": 5 }, { "id": "110046", "score": 0.6872531771659851, "text": "Everybody on the car title will need to participate in the selling process. The person who is buying the car will need everybody to sign the paperwork so that nobody months later tries to say they never agreed to sell the car. The money will have to be sent to the lender to pay off the rest of the loan. If the money isn't enough to pay off the loan everybody will have to decide how the extra money will be sent to the lender. This will have to be done as part of the selling process because the lender doesn't want you to sell the car and keep the cash. Once the car is gone so is the collateral and they can't take it back if you miss payments. If the cousin is too far away to participate in the selling of the car, you may need the buyer and the lender to tell you how to proceeded. If you are selling at a dealership they will know what documents and signatures will be needed, the bank will also know what to do. If the loan is almost paid off it may be easier to pay the loan first, and then get the title without the lenders name before trying to sell it.", "topk_rank": 6 }, { "id": "357280", "score": 0.6867632269859314, "text": "I've been an F&I Manager at a new car dealership for over ten years, and I can tell you this with absolute certainty, your deal is final. There is no legal obligation for you whatsoever. I see this post is a few weeks old so I am sure by now you already know this to be true, but for future reference in case someone in a similar situation comes across this thread, they too will know. This is a completely different situation to the ones referenced earlier in the comments on being called by the dealer to return the vehicle due to the bank not buying the loan. That only pertains to customers who finance, the dealer is protected there because on isolated occasions, which the dealer hates as much as the customer, trust me, you are approved on contingency that the financing bank will approve your loan. That is an educated guess the finance manager makes based on credit history and past experience with the bank, which he is usually correct on. However there are times, especially late afternoon on Fridays when banks are preparing to close for the weekend the loan officer may not be able to approve you before closing time, in which case the dealer allows you to take the vehicle home until business is back up and running the following Monday. He does this mostly to give you sense of ownership, so you don't go down the street to the next dealership and go home in one of their vehicles. However, there are those few instances for whatever reason the bank decides your credit just isn't strong enough for the rate agreed upon, so the dealer will try everything he can to either change to a different lender, or sell the loan at a higher rate which he has to get you to agree upon. If neither of those two things work, he will request that you return the car. Between the time you sign and the moment a lender agrees to purchase your contract the dealer is the lien holder, and has legal rights to repossession, in all 50 states. Not to mention you will sign a contingency contract before leaving that states you are not yet the owner of the car, probably not in so many simple words though, but it will certainly be in there before they let you take a car before the finalizing contract is signed. Now as far as the situation of the OP, you purchased your car for cash, all documents signed, the car is yours, plain and simple. It doesn't matter what state you are in, if he's cashed the check, whatever. The buyer and seller both signed all documents stating a free and clear transaction. Your business is done in the eyes of the law. Most likely the salesman or finance manager who signed paperwork with you, noticed the error and was hoping to recoup the losses from a young novice buyer. Regardless of the situation, it is extremely unprofessional, and clearly shows that this person is very inexperienced and reflects poorly on management as well for not doing a better job of training their employees. When I started out, I found myself in somewhat similar situations, both times I offered to pay the difference of my mistake, or deduct it from my part of the sale. The General Manager didn't take me up on my offer. He just told me we all make mistakes and to just learn from it. Had I been so unprofessional to call the customer and try to renegotiate terms, I would have without a doubt been fired on the spot.", "topk_rank": 7 }, { "id": "560325", "score": 0.6852788925170898, "text": "Not sure if it is the same in the States as it is here in the UK (or possibly even depends on the lender) but if you have any amount outstanding on the loan then you wouldn't own the vehicle, the loan company would. This often offers extra protection if something goes wrong with the vehicle - a loan company talking to the manufacturer to get it resolved carries more weight than an individual. The laon company will have an army of lawyers (should it get that far) and a lot more resources to deal with anything, they may also throw in a courtesy car etc.", "topk_rank": 8 }, { "id": "494323", "score": 0.685228168964386, "text": "\"this is a bit unusual, but not unheard of. i have known more than one car whose owner was not its driver. besides the obvious risk that the legal owner of the car will repossess it, this seems fairly safe. your insurance should cover any financial liability that you incur during an accident. even if the car is repossessed by the owner, you are only out the registration fees. i would suggest you avoid looking this gift horse in the grill. her father on the other hand might be in for some drama and financial mess if he has a falling-out with his \"\"friend\"\". this arrangement reminds me of divorces where one spouse owns the car, but the other drives it and pays the loan. usually, when the relationship goes south, one spouse is forced to sell the car at a loss.\"", "topk_rank": 9 }, { "id": "512366", "score": 0.6849761605262756, "text": "Find a mechanic in the area that will, for a fee, do a pre-approval inspection. Then when you call the seller to inquire you can ask them to let you take the vehicle there as part of your test drive. I'm not sure how many RV mechanics there are that don't work for a dealership, and those that do may be less inclined to assist you in purchasing from a private party. You could also have a friend or family member who is a mechanic or good with vehicles come along. Also, the seller may not want to bother with the extra hassle, and if it really is a good deal, they likely won't need to. Of course, the other option is to just test drive it and trust your gut. This doesn't sound like a huge risk at 2K. Even if it breaks down right away and can't be repaired for a reasonable price, you could scrap the vehicle and hopefully make up a significant portion of the purchase price.", "topk_rank": 10 }, { "id": "76898", "score": 0.6847305297851562, "text": "Yeah dang. Guess it's probably written deep in the contract that this can happen and nothing is absolutely guaranteed. Any specific experience on rental car chains? I've recently started using National and love the pick your own car experience...much faster and smoother but is more expensive (and luckily reimbursed mostly as well)", "topk_rank": 11 }, { "id": "305200", "score": 0.6837862730026245, "text": "The only issue I can see is that the stranger is looking to undervalue their purchase to save money on taxes/registration (if applicable in your state). Buying items with cash such as cars, boats, etc in the used market isn't all that uncommon* - I've done it several times (though not at the 10k mark, more along about half of that). As to the counterfeit issue, there are a couple avenues you can pursue to verify the money is real: *it's the preferred means of payment advocated by some prominent personal financial folks, including Dave Ramsey", "topk_rank": 12 }, { "id": "455189", "score": 0.6837713718414307, "text": "\"Yes. You did not notice the \"\"$1,410 Customer Down Payment\"\", the \"\"$650 Acquisition Fee\"\", the \"\"$350 Disposition Fee\"\" \"\"due at lease termination\"\", and the \"\"$275 security deposit\"\" for customers who do not have good enough credit. Also, \"\"A dealer documentary service fee up to $150 may be added to the sale price or capitalized cost.\"\" These charges might (or might not) add up to the dealer profit margin. You can negotiate the \"\"Adjusted Capitalized Cost\"\" of \"\"$29,841\"\", and the \"\"documentary service fee\"\". By doing so, you can reduce your up-front payment (and the dealer profit margin). The price mentioned above \"\"Includes destination charge, but excludes state and local taxes, tags, registration, title and insurance.\"\" Also, this is a \"\"low mileage lease\"\". If you choose to not purchase the vehicle at the end of the lease, you \"\"may be charged for excessive wear based on Toyota Financial Services standards for normal use and for mileage in excess of 24,000 miles at the rate of $0.15 per mile\"\".\"", "topk_rank": 13 }, { "id": "58599", "score": 0.6820281147956848, "text": "\"Uh, you want to lease a car through a dealer? That is the worst possible way to obtain a car. Dealers love leases because it allows them to sell a car for an unnegotiated price and to hide additional fees. It's the most profitable kind of sale for them. The best option would be to buy a used car off of Craigslist or eBay, then sell it again the same way when you leave. If you sell the car for what you paid, then you get the car for a year for free. If you are determined to go through with the expensive, risky and annoying plan of leasing a car, then you should use a leasing agent. I recommend reading some car buying guides before going out into the wilderness with the tigers and bears. Comment on Leasing Tricks Don't get tricked by the \"\"interest rate\"\" game. The whole interest thing is just a distraction to trick you into think you are getting some kind of reasonable deal. The leasing company makes most of their money from fees. For example, if you get into an accident it is a big payday for them. The average person thinks they will never get into an accident, but the reality is that most people get into an accident sooner or later. They also collect big penalties for \"\"maintenance failures\"\". Forget to change the oil? BOOM! money. Forget to comply with manufacture recall? BOOM! more money. Forget to do the annual service? BOOM! more money. Scratch the car? BOOM! more money. The original car mats are missing? BOOM! you just paid $400 for a set of mats that cost the leasing company $25 bucks. The leasing company is counting on the fact that 99% of people will not maintain the car correctly or will damage it in some way. They also usually have all kinds of other bogus fees, so-called \"\"walk-away fees\"\", \"\"disposition fees\"\", \"\"initiation fees\"\". Whatever they think they can get away with. The whole system is calculated to screw you.\"", "topk_rank": 14 }, { "id": "58865", "score": 0.6815093755722046, "text": "Seconding @petebelford's comment: if you are looking to save money, considerr taking the middleman out of the equation and buying directly from a car's previous owner. Even after paying a mechanic to inspect it for you, this is likely to be cheaper.", "topk_rank": 15 }, { "id": "424125", "score": 0.6804850697517395, "text": "You should have her sell it to you for the amount of the outstanding loan. You take out a loan in your name for the amount (or at least, the amount you have to come up with). You then transfer the title from her to you, just as you would if you were buying the car from someone else. While the title is in her name, she has ownership. This isn't a technicality, this is the explicit legal situation you two have agreed to.", "topk_rank": 16 }, { "id": "70456", "score": 0.6797351837158203, "text": "\"The transfer is easy. Usually you just sign over the title to the new owner, and you're set. Blue book price is a fantasy designed to get you in a car dealership to trade in your car. You won't get \"\"blue book\"\" pricing. I would use NADA \"\"Yellow Book\"\" or Edmunds TMV pricing as a guide. A dealer won't pay you a good price, but will take the car off your hands quickly. Selling a car privately can be a real pain if you don't have the personality for it. You'll get more money and more hassle. Figure out where people do private party sales in your area. In my area, there's an autotrader magazine that dominates the market. Craigslist is going to attract the types of people who frequent craiglist, which is not always a good thing.\"", "topk_rank": 17 }, { "id": "347050", "score": 0.6787818670272827, "text": "Ordinarily a cosigner does not appear on the car's title (thus, no ownership at all in the vehicle), but they are guaranteeing payment of the loan if the primary borrower does not make the payment. You have essentially two options: Stop making payments for him. If he does not make them, the car will be repossessed and the default will appear on both his and your credit. You will have a credit ding to live with, but he will to and he won't have the car. Continue to make payments if he does not, to preserve your credit, and sue him for the money you have paid. In your suit you could request repayment of the money or have him sign over the title (ownership) to you, if you would be happy with either option. I suspect that he will object to both, so the judge is going to have to decide if he finds your case has merit. If you go with option 1 and he picks up the payments so the car isn't repossessed, you can then still take option 2 to recover the money you have paid. Be prepared to provide documentation to the court of the payments you have made (bank statements showing the out-go, or other form of evidence you made the payment - the finance company's statements aren't going to show who made them).", "topk_rank": 18 }, { "id": "504432", "score": 0.6786168217658997, "text": "\"I strongly discourage leasing (or loans, but at least you own the car at the end of it) in any situation. it's just a bad deal, but that doesn't answer your question. Most new cars are \"\"loss leaders\"\" for dealerships. It's too easy to know what their costs are these days, so they make most of their money though financing. They might make a less than $500 on the sale of a new car, but if it's financed though them then they might get $2,000 - $4,000 commission/sale on the financing contract. Yes, it is possible and entirely likely that the advertised rate will only go to the best qualified lessees (possibly with a credit score about 750 or 800 or so other high number, for example). If the lessee meets the requirements then they won't deny you, they really want your business, but it is more likely to start the process and do all the paperwork for them to come back and say, \"\"Well, you don't qualify for the $99/month leasing program, but we can offer you the $199/month lease.\"\" (since that's the price you're giving from other dealerships). From there you just need to negotiate again. Note: Make sure you always do your research and negotiate the price of the car before talking about financing.\"", "topk_rank": 19 } ]
75	Why should I choose a business checking account instead of a personal account?	[ { "id": "297965", "score": 0.8485109210014343, "text": "\"Some benefits of having a business checking account (versus a personal checking account) are: The first 3 should be pretty easy to determine if they are important to you. #4 is a little more abstract, though I see you have an LLC taxed as a sole proprietorship, and so I'm guessing protecting your personal assets may have been one of the driving reasons you formed the LLC in the first place. If so, \"\"following through\"\" with the business account is advised.\"" } ]	[ { "id": "537593", "score": 0.7945038676261902, "text": "Yes, it's a good idea to have a separate business account for your business because it makes accounting and bookkeeping that much easier. You can open a business checking account and there will be various options for types of accounts and fees. You may or may not want an overdraft account, for example, or a separate business credit card just so you can more easily separate those expenses from your personal cards. When I started my business, I opened a business checking account and met with my banker every year just to show them how the business was doing and to keep the relationship going. Eventually, when I wanted to establish a business line of credit, it was easier to set up because I they were already familiar with my business, its revenue, and needs for a line of credit. You can set up a solo 401k with your bank, too, and they'll be very happy to do so, but I recommend shopping around for options. I've found that the dedicated investment firms (Schwab, Fidelity, etc.) tend to have better options, fees, and features for investment accounts. Just because a specific bank handles your checking account doesn't mean you need to use that bank for everything. Lastly, I use completely different banks for my personal life and for my business. Maybe I'm paranoid, but I just don't want all my finances in the same place for both privacy reasons and to avoid having all my eggs in the same basket. Just something to consider -- I don't really have a completely sane reason for using completely different banks, but it helps me sleep.", "topk_rank": 0 }, { "id": "413229", "score": 0.7883358597755432, "text": "You should have a separate business account. Mixing business and personal funds is a bad practice. Shop around, you should be able to find a bank that will let you open a free checking account, especially if you are going to have minimal activity (e.g. less than 20 of checks per month) and perhaps maintain a small balance (e.g. $100 or $500).", "topk_rank": 1 }, { "id": "591416", "score": 0.7810458540916443, "text": "\"No functional difference. Only impression/convenience. \"\"Business checks\"\" are checks in larger format (8\"\" instead of the regular 5\"\" checks), they can be from your personal account just as well. I didn't have any problem using the small \"\"individual\"\"-standard checks for my company (I actually did get them for free from Wells Fargo, but that was a gesture, not by policy).\"", "topk_rank": 2 }, { "id": "189642", "score": 0.77572101354599, "text": "I would suggest at least getting a personal card that you only use for business expenses, even if you don't opt for a business card. It makes it very clear that expenses on that card are business expenses, and is just more professional. The same goes for a checking account, if you have one of those. It makes it easier to defend if you are ever audited, and if you use an accountant or tax preparer.", "topk_rank": 3 }, { "id": "296717", "score": 0.7696133852005005, "text": "\"Having a separate checking account for the business makes sense. It simplifies documenting your income/expenses. You can \"\"explain\"\" every dollar entering and exiting the account without having to remember that some of them were for non-business items. My credit union allowed me to have a 2nd checking account and allowed me to put whatever I wanted as the name on the check. I think this looked a little better than having my name on the check. I don't see the need for a separate checking account for investing. The money can be kept in a separate savings account that has no fees, and can even earn a little interest. Unless you are doing a lot of investment transactions a month this has worked for me. I fund IRAs and 529 plans this way. We get paychecks 4-5 times a month, but send money to each of the funds once a month. You will need a business account if the number of transactions becomes large. If you deposit dozens of checks every time you go to the bank, the bank will want to move you to a business account.\"", "topk_rank": 4 }, { "id": "64556", "score": 0.7693729400634766, "text": "If you're a sole proprietor there's no reason to have a separate business account, as long as you keep adequate records, as you are one and the same for tax purposes. My husband and I already have 5 accounts and a mortgage with one bank. I don't see the need to open up yet another account. As a contracted accountant, I don't need to write business checks, and my expenses are minimal. As long as I have an present my assumed business name certificate and ID, there's no reason for a bank not to deposit into my personal account.", "topk_rank": 5 }, { "id": "135196", "score": 0.7594033479690552, "text": "\"Checks sold as \"\"business checks\"\" are larger than checks sold as \"\"personal checks\"\". Personal checks are usually 6\"\" x 2 1/2\"\" while business checks are 8 1/2 \"\" x 3 to 4 \"\". Also, business checks typically have a tear-off stub where you can write who the check was made out to and what it was for. In this computer age that seems pretty obsolete to me, I enter the check into the computer, not write it on a stub, but I suppose there are still very small businesses out there that doesn't use a computerized record-keeping system. These days business checks are often printed on 8 1/2 by 11\"\" paper -- either one per sheet with a big tear-off or 3 per sheet with no tear off -- so you can feed them through a computer printer easily. Nothing requires you to use \"\"business checks\"\" for a business account. At least, I've always used personal checks for my business account with no problem. These days I make almost all payments electronically, I think I write like one paper check a year, so it's become a trivial issue. Oh, and I've never had any problem getting a check printer to put my business name on the checks or anything like that.\"", "topk_rank": 6 }, { "id": "364378", "score": 0.7568792700767517, "text": "As an LLC you are required to have a separate bank account (so you can't have one account and mix personal and business finances together as you could if you were a sole trader) - but there's no requirement for it to be a business bank account. However, the terms and conditions of most high street bank personal current accounts specifically exclude business banking, so unless you could find one that would allow it, you'd have to open a business bank account.", "topk_rank": 7 }, { "id": "547301", "score": 0.7527309060096741, "text": "\"Like you said, it's important to keep your personal assets and company assets completely separate to maintain the liability protection of the LLC. I'd recommend getting the business bank account right from the beginning. My wife formed an LLC last year (also as a pass-through sole proprietorship for tax purposes), and we were able to get a small business checking account from Savings Institute and Trust that has no fees (at least for the relatively low quantity of transactions we'll be doing). We wrote it a personal check for startup capital, and since then, the LLC has paid all of its own bills out of its checking account (with associated debit card). Getting the account opened took less than an hour of sitting at the bank. Without knowing exactly where you are in Kentucky, I note that Googling \"\"kentucky small business checking\"\" and visiting a few banks' web sites provided several promising options for no-fee business checking.\"", "topk_rank": 8 }, { "id": "85517", "score": 0.7509679198265076, "text": "Early on, one might not be able to get credit for their business. For convenience, and the card perks, it makes sense to use the personal card. But for sake of a clean paper trail, I'd choose 1 card and use it exclusively, 100% for the business. Not one card here, one card there.", "topk_rank": 9 }, { "id": "222380", "score": 0.7482064366340637, "text": "I like Quicken for personal use, and they have a small business edition if you don't want to move into QuickBooks.", "topk_rank": 10 }, { "id": "531192", "score": 0.7469696998596191, "text": "\"The account you are looking for is called a \"\"Positive Pay\"\" account. It generally is only for business accounts, you provide a list of check numbers and amounts, and they are cross-referenced for clearing. It normally has a hefty monthly fee due to the extra labor involved.\"", "topk_rank": 11 }, { "id": "233751", "score": 0.7469031810760498, "text": "If you are just starting out, I would say there is no disadvantage to using a personal card for business expenses. In fact, the advantage of doing so is that the consumer protections are better on personal cards than on business cards. One possible advantage to business credit cards, is that many (but not all) will not show up on your personal credit report unless you default. This might help with average age of accounts if you have a thin credit file, but otherwise it won't make much difference. Issuers also expect higher charge volumes on business cards, so as your business grows might question a lot of heavy charges on a personal card. Whether this would ever happen is speculation, but it's worth being aware of it.", "topk_rank": 12 }, { "id": "400230", "score": 0.746622622013092, "text": "\"IANAL, but. As you note, when you open a new account, they give you temporary checks that are usually blank in the upper left. I've used such checks and the bank has honored them. Therefore, I conclude that there must not be any legal requirement for anything to appear there, nor does the bank require it. Businesses are often reluctant to accept such temporary checks, for the obvious reason that anyone could go to the bank, open an account with $10, write checks for thousands of dollars, and disappear. At least if they've waited long enough to get the permanent checks in, there's some reason to believe that they plan to stick around. In any case, it's not clear what you are trying to accomplish. You want to hand-write either your business name or your personal name depending on whether the check is for personal or business purposes? I don't see what that gains. You could always use a personal check for business purposes. If you're afraid someone will say, \"\"Hey, that doesn't look very professional, what kind of fly-by-night company is this that uses personal checks?\"\", surely a hand-written company name would look even less professional. Why not just open a business account and have your personal checks printed with your personal name and your business checks with your business name? I don't know where you live, but I have a business account on which I pay zero fees. The only cost is getting checks printed. There's the small hassle of having to make one trip to the bank to open the account. Well, the biggest hassle I have is that the bank won't let me transfer money between my personal and business accounts over the Internet, so I have to either go to the bank to move money back and forth, or I have to write a check from one account to the other and deposit through an ATM.\"", "topk_rank": 13 }, { "id": "580624", "score": 0.7444224953651428, "text": "The bank won't let you because: Differences in required account features — Business accounts have different features (many of them legal features) that are required by businesses. For instances: Do you want to be able to deposit cheques that are written out to your business name? You need a business account for that. Your business could be sold. Then it wouldn't be your business, so it wouldn't make sense to put the business account under your personal name. The bank account and the cash it holds is a business asset and should be owned by the business, so when the business is sold the account goes with it. This is especially the case for a corporation that has shareholders, and not a sole proprietorship. For a business, you could also, in theory, assign other people as signing authorities on the business account (e.g. your corporate treasurer), and the individuals performing that role could change over time. Business accounts allow for this kind of use. Market segmentation — The bank has consciously undertaken to segment their product offerings in order to maximize their profit. Market segmentation helps the bottom line. Even if there were zero legal reasons to have separate personal vs. business accounts, banks would still make it their policy to sell different account types according to use because they can make more money that way. Consider an example in another industry: The plain-old telephone company also practices segmentation w.r.t. personal/business. Do you want a telephone line for a business and listed as such in the phone book? You need a business line. Do you want a phone line hooked up at a non-residential address? You need a business line. Here it's clear it is less of a legal issue than with the bank account, and it doesn't matter that the technical features of the phone line may be identical for the basic product offerings within each segment. The phone company has chosen to segment and price their product offerings this way. Q. Why do companies choose to charge some kinds of customers more than others for essentially the same underlying service? A. Because they can.", "topk_rank": 14 }, { "id": "39006", "score": 0.7437402009963989, "text": "\"For some people, it's easier to stick to a budget if they have separate checking and savings accounts because they can deposit funds directly into their savings account and not have those funds accessible by debit/credit card, checks, etc. This allows people to pay themselves first and accumulate savings, while making it slightly more difficult to spend those savings on a whim. One a more technical/legal note, one key difference in the United States comes from Regulation D. §204.2(d)(2) of the law limits you to six withdrawals from savings and money market accounts. No such limit exists for checking accounts. Regulation D also forbids banks from paying interest on business checking accounts. In the simplest case, checking accounts and savings accounts are a tradeoff between liquidity and return. Checking accounts are much more liquid, but won't necessarily earn interest, while savings accounts are less liquid because of the withdrawal limits, but earn interest. Nowadays, however, sweep accounts blur this line somewhat because they function like checking accounts, in that you can write an unlimited number of checks, make an unlimited number of withdrawals, etc. but you can also earn interest on your account balance because some or all of the funds are \"\"swept\"\" into an investment account when not in use. The definition of \"\"in use\"\" can vary from business to business and bank to bank.\"", "topk_rank": 15 }, { "id": "489959", "score": 0.7420761585235596, "text": "In my opinion, separating your money into separate accounts is a matter of personal preference. I can only think of two main reasons why people might suggest separating your bank accounts in this way: security and accounting. The security reasoning might go something like this: My employer has access to my bank account, because he direct deposits my salary into my account. I don't want my employer to have access to all my money, so I'll have a separate account that my employer has access to, and once the salary is deposited, I can move that money into my real account. The fault in this reasoning is that a direct deposit setup doesn't really give your employer withdrawal access to your account, and your employer doesn't have any reason to pull money out of your account after he has paid you. If fraud is going to happen, it much more likely to happen in the account that you are doing your spending out of. The other reason might be accounting. Perhaps you have several bank accounts, and you use the different accounts to separate your money for different purposes. For example, you might have a checking account that you do most of your monthly spending out of, you might have a savings account that you use to store your emergency fund, and you have more savings accounts to keep track of how much you have saved toward your next car, or your vacation, or your Christmas fund, or whatever. After you get your salary deposited, you can move some into your spending account and some into your various savings accounts for different purposes. Instead of having many bank accounts, I find it easier to do my budgeting/accounting on my own, not relying on the bank accounts to tell me how much money I have allocated to each purpose. I only have one checking account where my income goes; my own records keep track of how much money in that account is set aside for each purpose. When the checking account balance gets too large, I move a chunk of it over to my one savings account, which earns a little more interest than the checking account does. I can always move money back into my checking account if I need to spend it for some reason, and the amount of money in each of the two accounts is not directly related to the purpose of the money. In summary, I don't see a good reason for this type of general recommendation.", "topk_rank": 16 }, { "id": "195207", "score": 0.7375532984733582, "text": "Do you have a separate bank account for your business? That is generally highly recommended. I have a credit card for my single-member LLC. I prefer it this way because it makes the separation of personal and business expenses very clear. Using a personal credit card, but using it for only business expenses seems to be a reasonable practice. You may be able to do one better though... For your sole proprietorship, you can file a DBA which establishes the business name. The details of this depend on your state. With a DBA, I believe you can open a bank account in the name of your business and you may also be able to open a credit card account in the name of the business. I'm not sure what practical difference it makes, but it does make the personal/business distinction clearer. Though, at that point, you might as well just do the LLC...", "topk_rank": 17 }, { "id": "109203", "score": 0.7375358939170837, "text": "You could, but the bank won't let you... If you're a sole proprietor - then you could probably open a personal account and just use it, and never tell them that is actually a business. However, depending on your volume of operations, they may switch you on their own to business account by the pattern of your transactions. For corporations, you cannot use a personal account since the corporation is a separate legal entity that owns the funds. Also, you're generally required to separate corporate and personal funds to keep the limited liability protection (which is why you have the corporation to begin with). Generally, business accounts have much higher volumes and much more transactions than personal accounts, and it costs more for the banks to run them. In the US, some banks offer free, or very low-cost, business accounts for small businesses that don't need too many transactions. I'm sure if you shop around, you'll find those in Canada as well.", "topk_rank": 18 }, { "id": "83346", "score": 0.7339485287666321, "text": "\"For practical purposes, I would strongly suggest that you do create a separate account for each business you may have that is used only for business purposes, and use it for all of your business income and expenses. This will allow you to get an accurate picture of whether you are making money or not, what your full expenses really are, how much of your personal money you have put into the business, and is an easy way to keep business taxes separate. You will also be able to get a fairly quick read on what your profits are without doing much accounting by looking at the account balance less future taxes and expenses, and less any personal money you've put into the account. Check out this thread from Paypal about setting up a \"\"child\"\" account that is linked to your personal account and can be set up to autosweep payments into your main account, should you like. You will still be able to see transactions for each child account. NOTE: Do be careful to make sure you are reserving the proper amount out of any profits your startup may have for taxes - you don't want to mix this with personal money and then later find out that you owe taxes and have to scramble to come up with the money if you have already spent it This is one of the main reasons to segregate your startup's revenues and profits in the business account. For those using \"\"brick and mortar\"\" banking services rather than a service like Paypal: You likely do not need a business checking account if you are a startup. Most likely, you can simply open a second personal account with your bank in your name, and name it \"\"John Doe DBA Company Name\"\" (DBA = Doing Business As). This way, you can pay expenses and accept payments in the name of your startup. Check with your banker for additional details (localized information).\"", "topk_rank": 19 } ]
76	How to report house used for 100% business?	[ { "id": "375357", "score": 0.735649049282074, "text": "As DJClayworth said, be very careful with this one! The property is a residence, not a business location. Given that, it is almost a certainty that the IRS is not going to let you claim 100% of the expenses for the home as a business expense, even if nobody's actually living there. You may get away with doing this for a period of time and not run into zoning or other issues such as those DJ mentioned, but it's like begging for trouble. You run the very real risk of being audited if you try to do what you're proposing, and rest assured, whatever you saved in taxes will disappear like smoke in the wind under an audit. That being said, there's no reason you can't call a tax service and ask a simple question, because in answering it they're going to hope to gain your business. It'd be well worth the phone call before you land yourself in any hot water with the IRS. I can tell you that I'd rather have a double root canal with no anesthetic than go through an audit, even when I didn't do anything wrong! (grin) Good luck!" } ]	[ { "id": "327826", "score": 0.6984483599662781, "text": "You only need to report INCOME to the IRS. Money which you are paying to a landlord on behalf of someone else is not income.", "topk_rank": 0 }, { "id": "485898", "score": 0.695780873298645, "text": "Getting the first year right for any rental property is key. It is even more complex when you rent a room, or rent via a service like AirBnB. Get professional tax advice. For you the IRS rules are covered in Tax Topic 415 Renting Residential and Vacation Property and IRS pub 527 Residential Rental Property There is a special rule if you use a dwelling unit as a personal residence and rent it for fewer than 15 days. In this case, do not report any of the rental income and do not deduct any expenses as rental expenses. If you reach that reporting threshold the IRS will now expect you to to have to report the income, and address the items such as depreciation. When you go to sell the house you will again have to address depreciation. All of this adds complexity to your tax situation. The best advice is to make sure that in a tax year you don't cross that threshold. When you have a house that is part personal residence, and part rental property some parts of the tax code become complex. You will have to divide all the expenses (mortgage, property tax, insurance) and split it between the two uses. You will also have to take that rental portion of the property and depreciation it. You will need to determine the value of the property before the split and then determine the value of the rental portion at the time of the split. From then on, you will follow the IRS regulations for depreciation of the rental portion until you either convert it back to non-rental or sell the property. When the property is sold the portion of the sales price will be associated with the rental property, and you will need to determine if the rental property is sold for a profit or a loss. You will also have to recapture the depreciation. It is possible that one portion of the property could show a loss, and the other part of the property a gain depending on house prices over the decades. You can expect that AirBnB will collect tax info and send it to the IRS As a US company, we’re required by US law to collect taxpayer information from hosts who appear to have US-sourced income. Virginia will piggyback onto the IRS rules. Local law must be researched because they may limit what type of rentals are allowed. Local law could be state, or county/city/town. Even zoning regulations could apply. Also check any documents from your Home Owners Association, they may address running a business or renting a property. You may need to adjust your insurance policy regarding having tenants. You may also want to look at insurance to protect you if a renter is injured.", "topk_rank": 1 }, { "id": "411655", "score": 0.6954814195632935, "text": "There are many basic services that the business should be offering but are not. This can easily increase sales by 100k per year. Due to old age of the owner, he refrains from doing so. I just want to make sure the business is in good standing on the books.", "topk_rank": 2 }, { "id": "486964", "score": 0.6935805082321167, "text": "You need to understand the business and the books as an owner do it for your parents also the manager could be the issue but it could a lot of things I’d like to see the quarterlies for the last 3 Years and a few other things like monthly statements payrolls some accounts etc... to do the math. it could be a partner? The only way to know this is to follow the paper trail.", "topk_rank": 3 }, { "id": "47260", "score": 0.6931664347648621, "text": "Typically you can only claim as business deductions those expenses which strictly relate to your business. In some cases, if you have a dedicated home office in your house, you can specify that expenses related to this space (furniture, etc.) are business expenses because it is a dedicated space. For example, I know of someone in sports broadcasting who claimed several TVs as a business expense, but these are for a room in his house that he uses only for watching games related to his work responsibilities, and never for entertaining, having friends over, etc. I think it will be difficult for you to count any portion of this type of installation as a business expense as it would relate to both your business as well as your residence. If you intend to try to get this deducted, I would strongly recommend consulting a CPA or tax attorney first. I think it will be difficult to prove that the only benefit is to your LLC if your electricity bills/credits are co-mingled with those for your residence. Best of luck!", "topk_rank": 4 }, { "id": "162922", "score": 0.6926953792572021, "text": "Dude, don’t worry what people are saying. Get the books, statements, or a lawyer. You have every right to the books as the other owners do. As the saying goes, if they have nothing to hide why are they afraid of you looking at the books. You can also demand a 3rd party audit, trying to come up with a business solutions with out knowing the finances what fixes you can afford, etc etc. come on man, MBA teach you it’s all about the money, and the stats. If you don’t know the money knowing the stats don’t help much ;)", "topk_rank": 5 }, { "id": "368165", "score": 0.6883916854858398, "text": "This is business as usual, except that you need to keep in mind that the corporate entity is separate from the individual. As such - all the background checks and references should be with regards to the actual renter - the corporation. You should be cautious as it is not so easy to dissolve an individual (well... Not as easy, and certainly not as legal), as it is to dissolve the corporation. So you may end up with a tenant who doesn't pay and doesn't have to pay because the actual renter, the corporation, no longer exists. So check the corporation background - age, credit worthiness, tax returns/business activity, judgements against, etc etc, as you would do for an individual.", "topk_rank": 6 }, { "id": "28764", "score": 0.6872551441192627, "text": "You would report it as business income on Schedule C. You may be able to take deductions against that income as well (home office, your computer, an android device, any advertising or promotional expenses, etc.) but you'll want to consult an accountant about that. Generally you can only take those kinds of deductions if you use the space or equipment exclusively for business use (not likely if it's just a hobby). The IRS is pretty picky about that stuff.", "topk_rank": 7 }, { "id": "299211", "score": 0.6834551095962524, "text": "\"-Alain Wertheimer I'm a hobbyist... Most (probably all) of those older items were sold both prior to my establishing the LLC This is a hobby of yours, this is not your business. You purchased all of these goods for your pleasure, not for their future profit. The later items that you bought after your LLC was establish served both purposes (perks of doing what you love). How should I go about reporting this income for the items I don't have records for how much I purchased them for? There's nothing you can do. As noted above, these items (if you were to testify in court against the IRS). \"\"Losses from the sale of personal-use property, such as your home or car, aren't tax deductible.\"\" Source Do I need to indicate 100% of the income because I can't prove that I sold it at a loss? Yes, if you do not have previous records you must claim a 100% capital gain. Source Addition: As JoeTaxpayer has mentioned in the comments, the second source I posted is for stocks and bonds. So at year begin of 2016, I started selling what I didn't need on eBay and on various forums [January - September]. Because you are not in the business of doing this, you do not need to explain the cost; but you do need to report the income as Gross Income on your 1040. Yes, if you bought a TV three years ago for a $100 and sold it for $50, the IRS would recognize you earning $50. As these are all personal items, they can not be deducted; regardless of gain or loss. Source Later in the year 2016 (October), I started an LLC (October - December) If these are items that you did not record early in the process of your LLC, then it is reported as a 100% gain as you can not prove any business expenses or costs to acquire associated with it. Source Refer to above answer. Refer to above answer. Conclusion Again, this is a income tax question that is split between business and personal use items. This is not a question of other's assessment of the value of the asset. It is solely based on the instruments of the IRS and their assessment of gains and losses from businesses. As OP does not have the necessary documents to prove otherwise, a cost basis of $0 must be assumed; thus you have a 100% gain on sale.\"", "topk_rank": 8 }, { "id": "417981", "score": 0.6831087470054626, "text": "\"While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do I quantify the travel expenses? Generally, \"\"necessary and ordinary\"\" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say \"\"no\"\" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000 miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (\"\"pleasure\"\") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is \"\"business\"\" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the property? Although, again, the \"\"necessary and ordinary\"\" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA).\"", "topk_rank": 9 }, { "id": "377621", "score": 0.6817446351051331, "text": "Your home doesn't belong to the partnership, it belongs to you. So you can (if qualified) deduct home office usage as a business expense on your individual tax return. Same goes to your partner. Similarly any other unreimbursed expense.", "topk_rank": 10 }, { "id": "428348", "score": 0.6814014315605164, "text": "\"As I understand your scenario, you paid the contractor twice for cabinets - Once by paying the $20k in cash on the original contract and once \"\"in-kind\"\" by providing the cabinets yourself. The $20k that you got from the contractor is not income to you, it's just a refund of your overpayment. I don't think you need to report that at all. Just make sure that you can document that the check that you got back from the contractor matches what you paid for the cabinets and keep that record.\"", "topk_rank": 11 }, { "id": "536849", "score": 0.6812055110931396, "text": "\"I've done various side work over the years -- computer consulting, writing, and I briefly had a video game company -- so I've gone through most of this. Disclaimer: I have never been audited, which may mean that everything I put on my tax forms looked plausible to the IRS and so is probably at least generally right, but it also means that the IRS has never put their stamp of approval on my tax forms. So that said ... 1: You do not need to form an LLC to be able to claim business expenses. Whether you have any expenses or not, you will have to complete a schedule C. On this form are places for expenses in various categories. Note that the categories are the most common type of expenses, there's an \"\"other\"\" space if you have something different. If you have any property that is used both for the business and also for personal use, you must calculate a business use percentage. For example if you bought a new printer and 60% of the time you use it for the business and 40% of the time you use it for personal stuff, then 60% of the cost is tax deductible. In general the IRS expects you to calculate the percentage based on amount of time used for business versus personal, though you are allowed to use other allocation formulas. Like for a printer I think you'd get away with number of pages printed for each. But if the business use is not 100%, you must keep records to justify the percentage. You can't just say, \"\"Oh, I think business use must have been about 3/4 of the time.\"\" You have to have a log where you write down every time you use it and whether it was business or personal. Also, the IRS is very suspicious of business use of cars and computers, because these are things that are readily used for personal purposes. If you own a copper mine and you buy a mine-boring machine, odds are you aren't going to take that home to dig shafts in your backyard. But a computer can easily be used to play video games or send emails to friends and relatives and lots of things that have nothing to do with a business. So if you're going to claim a computer or a car, be prepared to justify it. You can claim office use of your home if you have one or more rooms or designated parts of a room that are used \"\"regularly and exclusively\"\" for business purposes. That is, if you turn the family room into an office, you can claim home office expenses. But if, like me, you sit on the couch to work but at other times you sit on the couch to watch TV, then the space is not used \"\"exclusively\"\" for business purposes. Also, the IRS is very suspicious of home office deductions. I've never tried to claim it. It's legal, just make sure you have all your ducks in a row if you claim it. Skip 2 for the moment. 3: Yes, you must pay taxes on your business income. If you have not created an LLC or a corporation, then your business income is added to your wage income to calculate your taxes. That is, if you made, say, $50,000 salary working for somebody else and $10,000 on your side business, then your total income is $60,000 and that's what you pay taxes on. The total amount you pay in income taxes will be the same regardless of whether 90% came from salary and 10% from the side business or the other way around. The rates are the same, it's just one total number. If the withholding on your regular paycheck is not enough to cover the total taxes that you will have to pay, then you are required by law to pay estimated taxes quarterly to make up the difference. If you don't, you will be required to pay penalties, so you don't want to skip on this. Basically you are supposed to be withholding from yourself and sending this in to the government. It's POSSIBLE that this won't be an issue. If you're used to getting a big refund, and the refund is more than what the tax on your side business will come to, then you might end up still getting a refund, just a smaller one. But you don't want to guess about this. Get the tax forms and figure out the numbers. I think -- and please don't rely on this, check on it -- that the law says that you don't pay a penalty if the total tax that was withheld from your paycheck plus the amount you paid in estimated payments is more than the tax you owed last year. So like lets say that this year -- just to make up some numbers -- your employer withheld $4,000 from your paychecks. At the end of the year you did your taxes and they came to $3,000, so you got a $1,000 refund. This year your employer again withholds $4,000 and you paid $0 in estimated payments. Your total tax on your salary plus your side business comes to $4,500. You owe $500, but you won't have to pay a penalty, because the $4,000 withheld is more than the $3,000 that you owed last year. But if next year you again don't make estimated payment, so you again have $4,000 withheld plus $0 estimated and then you owe $5,000 in taxes, you will have to pay a penalty, because your withholding was less than what you owed last year. To you had paid $500 in estimated payments, you'd be okay. You'd still owe $500, but you wouldn't owe a penalty, because your total payments were more than the previous year's liability. Clear as mud? Don't forget that you probably will also owe state income tax. If you have a local income tax, you'll owe that too. Scott-McP mentioned self-employment tax. You'll owe that, too. Note that self-employment tax is different from income tax. Self employment tax is just social security tax on self-employed people. You're probably used to seeing the 7-whatever-percent it is these days withheld from your paycheck. That's really only half your social security tax, the other half is not shown on your pay stub because it is not subtracted from your salary. If you're self-employed, you have to pay both halves, or about 15%. You file a form SE with your income taxes to declare it. 4: If you pay your quarterly estimated taxes, well the point of \"\"estimated\"\" taxes is that it's supposed to be close to the amount that you will actually owe next April 15. So if you get it at least close, then you shouldn't owe a lot of money in April. (I usually try to arrange my taxes so that I get a modest refund -- don't loan the government a lot of money, but don't owe anything April 15 either.) Once you take care of any business expenses and taxes, what you do with the rest of the money is up to you, right? Though if you're unsure of how to spend it, let me know and I'll send you the address of my kids' colleges and you can donate it to their tuition fund. I think this would be a very worthy and productive use of your money. :-) Back to #2. I just recently acquired a financial advisor. I can't say what a good process for finding one is. This guy is someone who goes to my church and who hijacked me after Bible study one day to make his sales pitch. But I did talk to him about his fees, and what he told me was this: If I have enough money in an investment account, then he gets a commission from the investment company for bringing the business to them, and that's the total compensation he gets from me. That commission comes out of the management fees they charge, and those management fees are in the same ballpark as the fees I was paying for private investment accounts, so basically he is not costing me anything. He's getting his money from the kickbacks. He said that if I had not had enough accumulated assets, he would have had to charge me an hourly fee. I didn't ask how much that was. Whew, hadn't meant to write such a long answer!\"", "topk_rank": 12 }, { "id": "545341", "score": 0.6797869801521301, "text": "This may not be entirely scientific, but as a landlord my usual approach is just to do a search for rental properties on Craigslist for comparable homes in the neighborhood. There are all kinds of formulas professional property managers use, but in the end these listings are the ones you are going to be competing with for tenants. Also, it isn't super accurate, but online services like Zillow.com can give you some numbers for rental houses that include those that aren't currently advertising.", "topk_rank": 13 }, { "id": "78486", "score": 0.6796775460243225, "text": "Given your clarifying points, it sounds like you are running both businesses as one combined business. As such, you should be able to get just a single HST number and use that. However, let me please urge you to contact a professional accountant and possibly a lawyer, as it is very unusual to be performing these services without a business license, and you may be exposing yourself to civil penalties and placing your personal assets (e.g. your house) at risk. Additionally, it may be beneficial for you to run these as businesses as you can likely write off (more of) your expenses.", "topk_rank": 14 }, { "id": "175649", "score": 0.6796419620513916, "text": "\"You are assuming 100% occupancy and 100% rent collection. This is unrealistic. You could get lucky and find that long term tenant with great credit that always pays their bills... but in reality that person usually buys a home they do not rent long term. So you will need to be prepared for periods of no renters and periods of non payment. The expenses here I would expect could wipe out more than you can make in \"\"profit\"\" based on your numbers. Have you checked to find out what the insurance on a rental property is? I am guessing it will go up probably 200-500 a year possibly more depending on coverage. You will need a different type of insurance for rental property. Have you checked with your mortgage provider to make sure that you can convert to a rental property? Some mortgages (mine is one) restrict the use of the home from being a rental property. You may be required to refinance your home which could cost you more, in addition if you are under water it will be hard to find a new financier willing to write that mortgage with anything like reasonable terms. You are correct you would be taking on a new expense in rental. It is non deductible, and the IRS knows this well. As Littleadv's answer stated you can deduct some expenses from your rental property. I am not sure that you will have a net wash or loss when you add those expenses. If you do then you have a problem since you have a business losing money. This does not even address the headaches that come with being a landlord. By my quick calculations if you want to break even your rental property should be about 2175/Month. This accounts for 80% occupancy and 80% rental payment. If you get better than that you should make a bit of a profit... dont worry im sure the house will find a way to reclaim it.\"", "topk_rank": 15 }, { "id": "278168", "score": 0.6778793931007385, "text": "\"Several, actually: Maintenance costs. As landlord, you are liable for maintaining the basic systems of the dwelling - structure, electrical, plumbing, HVAC. On top of that, you typically also have to maintain anything that comes with the space, so if you're including appliances like a W/D or fridge, if they crap out you could spend a months' rent or more replacing them. You are also required to keep the property up to city codes as far as groundskeeping unless you specifically assign those responsibilities to your tenant (and in some states you are not allowed to do so, and in many cases renters expect groundskeeping to come out of their rent one way or the other). Failure to do these things can put you in danger of giving your tenant a free out on the lease contract, and even expose you to civil and criminal penalties if you're running a real slum. Escrow payments. The combination of property tax and homeowner's insurance usually doubles the monthly housing payment over principal and interest, and that's if you got a mortgage for 20% down. Also, because this is not your primary residence, it's ineligible for Homestead Act exemptions (where available; states like Texas are considering extending Homestead exemptions to landlords, with the expectation it will trickle down to renters), however mortgage interest and state taxes do count as \"\"rental expenses\"\" and can be deducted on Schedule C as ordinary business expenses offsetting revenues. Income tax. The money you make in rent on this property is taxable as self-employment income tax; you're effectively running a sole proprietorship real-estate management company, so not only does any profit (you are allowed to deduct maintenance and administrative costs from the rent revenues) get added to whatever you make in salary at your day job, you're also liable for the full employee and employer portions of Medicare/Medicaid/SS taxes. You are, however, also allowed to depreciate the property over its expected life and deduct depreciation; the life of a house is pretty long, and if you depreciate more than the house's actual loss of value, you take a huge hit if/when you sell because any amount of the sale price above the depreciated price of the house is a capital gain (though, it can work to your advantage by depreciating the maximum allowable to reduce ordinary income, then paying lower capital gains rates on the sale). Legal costs. The rental agreement typically has to be drafted by a lawyer in order to avoid things that can cause the entire contract to be thrown out (though there are boilerplate contracts available from state landlords' associations). This will cost you a few hundred dollars up front and to update it every few years. It is deductible as an ordinary expense. Advertising. Putting up a \"\"For Rent\"\" sign out front is typically just the tip of the iceberg. Online and print ads, an ad agency, these things cost money. It's deductible as an ordinary expense. Add this all up and you may end up losing money in the first year you rent the property, when legal, advertising, initial maintenance/purchases to get the place tenant-ready, etc are first spent; deduct it properly and it'll save you some taxes, but you better have the nest egg to cover these things on top of everything your lender will expect you to bring to closing (assuming you don't have $100k+ lying around to buy the house in cash).\"", "topk_rank": 16 }, { "id": "454068", "score": 0.6776973009109497, "text": "This will be a complex issue and you will need to sit down with a professional to work through the issues: When the house was put up for rent the initial year tax forms should have required that the value of the house/property be calculated. This number was then used for depreciation of the house. This was made more complex based on any capital improvements. If the house wasn't the first he owned, then capital gains might have been rolled over from previous houses which adds a layer of complexity. Any capital improvements while the house was a rental will also have to be resolved because those were also depreciated since they were placed in service. The deprecation will be recaptured and will be a part of the calculation. You have nowhere near enough info to make a calculation at this time.", "topk_rank": 17 }, { "id": "100884", "score": 0.6761595606803894, "text": "\"Hey Maison, Thanks for the reply. At this point we're not receiving any statements...I've tried multiple times to ask for papers but it always gets pushed aside and eventually forgotten about (I have a full-time day job as well). Does it make sense that the manager is collecting his full salary + extras, but we as the owners (at least my portion) are not getting anything? I think the manager is the one handling everything - including taxes, payroll, etc. I'm going to be putting in somebody that I trust, with more business acumen, to go and have a first hand look. Is there anything overly important you would suggest that needs to be focused on heavily and can easily shed some light on this issue? Like you said, this single point of failure may be what's killing me, and it makes no sense that the bar wouldn't be making any money since every time I've gone it always seems packed. The manager just kind of talks down to me when I try and ask him about the situation since he's the \"\"Expert\"\" and I'm relatively without experience, and always has a reason such as renovations, fixing of the roof, etc. all expenses that come out of the total earnings..\"", "topk_rank": 18 }, { "id": "197352", "score": 0.6751354932785034, "text": "Street name is not what you think it is in the question. The broker is the owner in street name. There is no external secondary owner information. I don't know if there is available independent verification, but if the broker is in the US and they go out of business suddenly, you can make a claim to the SIPC.", "topk_rank": 19 } ]
78	How to record business income tax paid, in QuickBooks?	[ { "id": "152407", "score": 0.6011483669281006, "text": "Federal income taxes are indeed expenses, they're just not DEDUCTIBLE expenses on your 1120. Federal Income Tax Expense is usually a subcategory under Taxes. This is one of the items that will be a book-to-tax difference on Schedule M-1. I am presuming you are talking about a C corporation, as an S corporation is not likely to be paying federal taxes itself, but would pass the liability through to the members. If you're paying your personal 1040 taxes out of an S-corporation bank account, that's an owner's draw just like paying any of your personal non-business expenses. I would encourage you to get a tax professional to prepare your corporate tax returns. It's not quite as simple as TurboTax Business makes it out to be. ;) Mariette IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law." } ]	[ { "id": "526158", "score": 0.5710154175758362, "text": "For the first four months of the year, when you were an employee, the health insurance premiums were paid for with pre-tax money. When you receive your W-2 at the end of the year, the amount in Box 1 of the W-2 will be reduced by the amount you paid for health insurance. You can't deduct it on your tax return because it has already been deducted for you. Now that you are a 1099 independent contractor, you are self-employed and eligible for the self-employed health insurance deduction. However, as you noted, the COBRA premiums are likely not eligible for this deduction, because the policy is in your old employer's name. See this question for details, but keep in mind that there are conflicting answers on that question.", "topk_rank": 0 }, { "id": "501527", "score": 0.5709988474845886, "text": "The $1300 turns into $2817/mo over a year. You've identified just over $1700 in expenses, but clearly missed a lot. Use what you wish, Mint, a spreadsheet, a notebook, I don't care. Just track every penny for a time. My property tax is due quarterly, so 3 months is minimum. It takes a year to get a full view of the items that are seasonal. Unless of course, the winter is mild (and your plowing expenses are low) or the summer is rainy (and the water bill for the grass is low.) Even the above doesn't capture the things that are less regular. The house painting, the heater repair, etc. The exercise itself is a great first step. As others stated $280 for cable/phone? Once you add the missing $900/mo, we'll know more. What's really important is that you look at 100% of where the money goes and decide what the priorities are. No one's judging you, we chose the bigger house over eating out and expensive vacations. It's about knowing and understanding your choices.", "topk_rank": 1 }, { "id": "313392", "score": 0.5707647800445557, "text": "California is very aggressive when it comes to determining residency. While you have a legitimate defense, I suggest talking with a California-licensed CPA or EA practicing in California, which are experienced in dealing with the FTB residency audits.", "topk_rank": 2 }, { "id": "340169", "score": 0.5707089900970459, "text": "\"You withdrew the 'cash' portion, and will pay tax on it. How was the check \"\"another for move remaining to B\"\" issued? Was it payable to you? If so, it's too late, it's your money and the whole account was cashed out. If it was payable to B, you should have had it sent directly to their custodian, are you saying you still have that check? You might need to ask A to reissue the check to you, since you are no longer in the US. I'm not sure if you can roll it to an IRA at this point.\"", "topk_rank": 3 }, { "id": "102880", "score": 0.5707008838653564, "text": "Looks like this is just for billing mostly. We need inventory management that integrates with our PO's but still be able to add line items for sales that do not come from inventory. We need a system similar to SAP.", "topk_rank": 4 }, { "id": "341960", "score": 0.5706338882446289, "text": "To start with, I should mention that many tax preparation companies will give you any number of free consultations on tax issues — they will only charge you if you use their services to file a tax form, such as an amended return. I know that H&R Block has international tax specialists who are familiar with the issues facing F-1 students, so they might be the right people to talk about your specific situation. According to TurboTax support, you should prepare a completely new 1040NR, then submit that with a 1040X. GWU’s tax department says you can submit late 8843, so you should probably do that if you need to claim non-resident status for tax purposes.", "topk_rank": 5 }, { "id": "519257", "score": 0.5706316828727722, "text": "For two reasons: 1- People are entitled to deductions and credits that your employer cannot possibly know. Only you as an individual know about your personal situation and can therefore claim these deductions and credits by filing income tax returns. 2- Me telling you that you made $100,000 last year is not the same as telling you that you made $125,000 last year, but someone took $25,000 out of your pocket. Tax season is the one time of the year when citizens know exactly what chunk of their hard earned money was taken by the government, creating more collective awareness about taxation and giving politicians a harder time when they propose raising taxes.", "topk_rank": 6 }, { "id": "245611", "score": 0.5706304907798767, "text": "There's still a paper trail for every transaction. There's gotta be a debit and credit in there somewhere. Plus these companies are supposed to be audited by an independent auditor who, if they're worth their salt, should be able to track down every penny.", "topk_rank": 7 }, { "id": "120523", "score": 0.5705983638763428, "text": "I have fairly simple tax returns and my experience was that TurboTax software produced roughly the same result as human accountant and costs much less. The accountant was never able to find any deductions that the program couldn't find. Of course, if you have business, etc. you probably need an accountant to help you navigate all the rules, requirements, etc. But for simple enough cases I found that the additional pay is not justified.", "topk_rank": 8 }, { "id": "192612", "score": 0.5705843567848206, "text": "Not for the amount in the accounts but for the interest you earn per year is taxable. But the sum of your all taxable incomes is under the limit, then you dont need to pay any income tax. The limit is available at wiki here But you should intimate your bank not to deduct TDS (Tax Deducted at Source) by submitting Form 15G/15H (which will be normally available in Bank itself), provided your total interest income for the year will not fall within overall taxable limits. You may calculate your income tax amount at Official website at here", "topk_rank": 9 }, { "id": "383832", "score": 0.5705674290657043, "text": "The tax year will be determined by the date on the check from Lottery and they will withhold estimated taxes for federal, and for most state, incomes taxes. Just remember if the ticket is claimed in January, then you will have to wait until the following year to get any possible refund.", "topk_rank": 10 }, { "id": "136283", "score": 0.5705559253692627, "text": "\"Yahoo Finance: http://finance.yahoo.com/q/pr?s=VFINX+Profile Under \"\"Management Information\"\"\"", "topk_rank": 11 }, { "id": "278902", "score": 0.570499837398529, "text": "The advice is always to not get a big refund from the IRS, because that is giving them an interest free loan. You actually have an opportunity to get an interest free loan from them. When you file your taxes for 2013 note how much you paid in taxes. Not the check you had to send in with your tax form or the refund you received, but the total amount in taxes you paid. Multiply that amount by 1.1 or (110%). For example $8,000 * 1.10 = $8,800. When you get your paychecks in 2014 you goal is to make sure that your federal taxes (not state, Social security or medicare) taken from your paycheck will get you over that number $8,800 /26 or ~350 a paycheck. Keep in mind that the later you start the more each check needs to be. You will owe them a big check in April 2015. But because of the 110% rule you will not owe interest, penalties, or have to deal with quarterly taxes. The 110% rule exempts you from these if you end them 110% as much a you paid in taxes the previous year. Note that no matter how you pay your taxes for 2014: big check now, extra per paycheck, or minimum now; you will have to watch your withholding during 2015 because the 110% rule won't protect you.", "topk_rank": 12 }, { "id": "428533", "score": 0.5704087615013123, "text": "\"If you have income - it should appear on your tax return. If you are a non-resident, that would be 1040NR, with the eBay income appearing on line 21. Since this is unrelated to your studies, this income will not be covered by the tax treaties for most countries, and you'll pay full taxes on it. Keep in mind that the IRS may decide that you're actually having a business, in which case you'll be required to attach Schedule C to your tax return and maybe pay additional taxes (mainly self-employment). Also, the USCIS may decide that you're actually having a business, regardless of how the IRS sees it, in which case you may have issues with your green card. For low income from occasional sales, you shouldn't have any issues. But if it is something systematic that you spend significant time on and earn significant amounts of money - you may get into trouble. What's \"\"systematic\"\" and how much is \"\"significant\"\" is up to a lawyer to tell you.\"", "topk_rank": 13 }, { "id": "546372", "score": 0.5704016089439392, "text": "You better consult with a tax adviser (EA or CPA) on this, my answer doesn't constitute such an advice. Basically, you're selling stuff on Kickstarter. No matter how they call it (projects, pledges, rewards - all are just words), you're selling stuff. People give you money (=pledges) and in return you're giving them tangible or intangible goods (=rewards). All the rest is just PR. So you will pay taxes on all the money you get, and you will be able to deduct some of the expenses (depends on whether its a business or a hobby, the deduction may be full or limited). It doesn't matter if you use LLC or your own account from the financial/taxation point of you, but it matters legally. LLC limits your personal liability, but do get a legal advice on this issue, and whether it is at all relevant for you. If you raise funds in 2012 you pay taxes on the money in 2012. If you go into production in 2013 - you can deduct expenses in 2013. If you're classified as a hobby, you'll end up paying full taxes in 2012 and deducting nothing in 2013. Talk to a tax adviser.", "topk_rank": 14 }, { "id": "135220", "score": 0.5703968405723572, "text": "\"For the purposes of report generation, I would recommend that you present the data in the currency of the user's home country. You could present another indicator, if needed, to indicate that a specific transaction was denominated in a foreign currency, where the amount represents the value of the foreign-denominated transaction in the user's home country Currency. For example: Airfare from USA to London: $1,000.00 Taxi from airport to hotel: $100.00 (in £) In terms of your database design, I would recommend not storing the data in any one denomination or reference currency. This would require you to do many more conversions between currencies that is likely to be necessary, and will create additional complexity where in some cases, you will need to do multiple conversions per transaction in and out of your reference currency. I think it will be easier for you to store multiple currencies as themselves, and not in a separate reference currency. I would recommend storing several pieces of information separately for each transaction: This way, you can create a calculated Amount for each transaction that is not in the user's \"\"home\"\" currency, whereas you would need to calculate this for all transactions if you used a universal reference currency. You could also get data from an external source if the user has forgotten the conversion rate. Remember that there are always fees and variations in the exchange rate that a user will get for their home country's currency, even if they change money at the same place at two different times on the same day. As a result, I would recommend building in a simple form that allows a user to enter how much they exchanged and how much they got back to calculate the exchange rate. So for example, let's say I have $ 200.00 USD and I exchanged $ 100.00 USD for £ 60.00, and there was a £ 3.00 fee for the exchange. The exchange rate would be 0.6, and when the user enters a currency conversion, your site could create three separate transactions such as: USD Converted to £: $100.00 £ Received from Exchange: £ 60.00 Exchange Fee: £ 3.00 So if the user exchanged currency and then ran a balance report by Currency, you could either show them that they now have $ 100.00 USD and £ 57.00, or you could alternatively choose to show the £ 57.00 that they have as $95.00 USD instead. If you were showing them a transaction report, you could also show the fee denominated in dollars as well. I would recommend storing your balances and transactions in their own currencies, as you will run into some very interesting problems otherwise. For example, let's say you used a reference currency tied to the dollar. So one day I exchange $ 100.00 USD for £ 60.00. In this system I would still have 100 of my reference currency. However, if the next day, the exchange rate falls and $ 1.00 USD is only worth £ 0.55, and I change my £ 60.00 back into USD, I will get approxiamately $ 109.09 USD back for my £ 60.00. If I then go and buy something for $ 100.00 USD, the balance of the reference currency would be at 0, but I will still have $ 9.09 USD in my pocket as a result of the fluctuating currency values! That is why I'd recommend storing currencies as themselves, and only showing them in another currency for convenience using calculations done \"\"on the fly\"\" at report runtime. Best of luck with your site!\"", "topk_rank": 15 }, { "id": "578732", "score": 0.5703368782997131, "text": "No, you cannot. You can only deduct expenses that the employer required from you, are used solely for the employer's (not your!) benefit, you were not reimbursed for them and they're above the 2% AGI threshold. And that - only if you're itemizing your deductions.", "topk_rank": 16 }, { "id": "29304", "score": 0.5703194737434387, "text": "\"It's called a \"\"checkbook register\"\" -- learn what it is and how to use it properly (not only recording your transactions & maintaining your own running balance, but also including \"\"reconciling\"\" it with your bank-issued statements or online transaction listings) and you will not overdraw. It's [fairly basic stuff](http://www.practicalmoneyskills.com/spanish/pdf/teachers/specialneeds/lev_3/lesson_06/6_3activity.pdf) but it never ceases to amaze me how many (supposedly \"\"smart\"\") people fail to do it properly (if at all).\"", "topk_rank": 17 }, { "id": "464593", "score": 0.5702794194221497, "text": "\"The pure numbers answer says you want the refund to be close to $0. You can even argue, as some answers have, that you want to try to maximize the payment without receiving any sanctions for underpaying during the year. If you trace the money, it's easy to see why. Let's say you get a paycheck. Tag some of the dollars for Uncle Sam. These are the dollars that, eventually, will be given to the IRS. Now consider the following scenarios: From the raw numbers like this, its clear that you lose utility by setting yourself up for a large refund check. The money was yours the entire time, but you chose to give it to Uncle Sam instead. However, the raw numbers are only part of the puzzle. If you're a cold steely-gazed numbers person, they're the part that matters. When the billionares are playing their tax evasion games, this is the only thing they are paying attention to. However, real humans have a few psychological reasons they may choose to lose utility in terms of raw dollars in exchange for psychological assistance: These attitudes exist, and may be ideal for any one person. Obviously the financially savvy answer of \"\"minimize your refund\"\" is the ideal answer from a dollars and cents perspective, but its up to you to see whether that attitude is right when you account for all of the non-measurable things, like stress. In general, I would lead anyone to \"\"minimize your refund,\"\" but I would be remiss if I didn't include the very real psychological reasons people choose to deviate from it.\"", "topk_rank": 18 }, { "id": "365907", "score": 0.5702725052833557, "text": "You do not need to report gifts from US residents (US citizens/green card holders/tax residents due to length of stay) since filing gift tax return is their responsibility. In case of foreigners you need to report gifts in excess of $100K. In any case, transfers between spouses are exempt from gift tax.", "topk_rank": 19 } ]
80	Get a loan with low interest rate on small business	[ { "id": "252473", "score": 0.7306022644042969, "text": "\"I am going to assume your location is the US. From what I am seeing it is unlikely you will get a loan other than some government backed thing. You are a poor risk. At 7k/month, you have above average household income. The fact that all of your income \"\"is being washed off somewhere\"\" is a behavior problem, not a mathematical one. For example, why do you have a car payment? You should purchase a car for cash. Failing that, given reasonable rent (1100), reasonable car payment (400), insurances (300), other expenses (1000), you should clear at least 4000 per month in cash flow. Where is that money going? Here tracking spending and budgeting is your friend. Figure out the leaks in your budget and fix them. By cutting back, and perhaps working a second job or somehow earning more you could have a down payment for a home in as little as 10 months. That is not a very long time. Similarly we can discuss the grocery store. Had you prepared for this moment three years ago you could have bought the store for cash. This would have eliminated a bunch of risk and increase the likelihood of this venture's success. If you had started this one year ago, you could have gone in with a significant down payment. The bank would see this as a good risk if you wanted to borrow the remainder. Instead the bank sees you as a person as a poor risk. You spend every dime you make without much concern for the future or possible negative events (by implication of your question). If you cannot handle the cash flows of regular employment well, how can you handle the cash flows of a grocery business? It is far more complex, and there is far less room for error. So how do you get a loan? I would start with learning on how to manage your personal finance well prior to delving into the world of business.\"" } ]	[ { "id": "59367", "score": 0.6940069198608398, "text": "I'm not saying it's great, but I have a 705... I think we'll get a second opinion to lower that rate. Also, logically, with a higher down payment, we should be able to reduce the amount we need to borrow. Is that how that would work? For example, if we scrounged up a $7,000 for a down payment and came down on the price say $3,000", "topk_rank": 0 }, { "id": "5152", "score": 0.6939055323600769, "text": "Essentially, what you're describing is a leveraged investment. As others noted, the question is how confident you can be that (a) the returns on the investment will exceed what you're paying in interest, and (b) that if you lose the bet you'll still be able to pay off the loan without severely injuring yourself. I did essentially this when I bought my house, taking out a larger loan than necessary and leaving more money in my investments, which had been returning more than the mortgage's interest rate. I then got indecently lucky during the recession and was able to refinance down to under 4%, which I am very certain my investment will beat. I actually considered lengthening the term of the loan for that reason, or borrowing a bit more, but decided not to double down on the bet; that was my own risk-comfort threshold. Know exactly what your risks are, including secondary effects of these risks. Run the numbers to see what the likely return is. Decide whether you like the odds enough to go for it.", "topk_rank": 1 }, { "id": "299724", "score": 0.6938824653625488, "text": "There is the underpayment penalty, and of course the general risk of any balloon-style loan. While you think that you have enough self-discipline, you never know what may happen that may prevent you from having enough cash at hands to pay the accumulated tax at the end of the year. If you try to do more risky investments (trying to maximize the opportunity) you may lose some of the money, or have some other kind of emergency that may preempt the tax payment.", "topk_rank": 2 }, { "id": "221605", "score": 0.6938123106956482, "text": "Sometimes there are credit cards that offer a (promotional) 0% APR on transfers with no transfer fees. It can be a good option to move the money to one of these if you're disciplined enough to keep hacking away at the debt before the APR jumps.", "topk_rank": 3 }, { "id": "366215", "score": 0.6937963962554932, "text": "Do you have any legal options? Not really. Citi is under no obligation to refinance your loan on your terms. But that goes both ways, and you are under no obligation to refinance with Citi! Get more quotes from another lender. It'll feel really good when you find a lender that wants your business. You might get a better deal. And think how good it will feel to cut ties with Citi!", "topk_rank": 4 }, { "id": "553955", "score": 0.6937618851661682, "text": "Does your business have a loan or overdraft with a bank? If so that bank will be much more likely to offer you a personal mortgage if you can show them a solid business plan and your profits for each year. Other than that make sure you have a perfect credit rating, use Experian to iron out any small things that might get in the way.", "topk_rank": 5 }, { "id": "408308", "score": 0.6934235095977783, "text": "I have a job and would like to buy equipment for producing music at home and it would be easier for me to pay for the equipment monthly I just want to address your contention that it would be easier to pay monthly, with an interest calculation. Lets say you get a credit card with a very reasonable rate of 12% and you buy $2,500 of equipment. A typical credit card minimum payment is interest charges + 1% of the principle. You can see how this is going. You've paid nearly $200 to clear about $100 off your principle. Obviously paying the minimum payment will take forever to wipe out this debt. So you pay more, or maybe you get 0% interest for a while and take advantage of that. Paying $100 per month against $2,500 at 12% per year will take 29 months and cost about $390 in interest. At $200 per month it'll take 14 months and cost $184 in interest. Also note, you'll probably get an interest rate closer to 16 or 17%. It's always easier to pay small amounts frequently than it is to pay a lot of money all at once, that ease has a cost. If you're buying the gear to start a little business, or you already have a little business going and want to upgrade some gear, great; disciplined debt handling is a wonderful skill to have in business. If you want to start yourself in to a new hobby, you should not do that with debt. If interest rates are low enough financing something can make sense. 0.9% apr on a car, sure; 15% apr on a mixing board, no. Credit card interest rates are significant and really should not be trifled with.", "topk_rank": 6 }, { "id": "264160", "score": 0.6934101581573486, "text": "\"I started with lending club about a year ago. I love it. It has been insightful. Off topic, but I am in a loan to a guy who make 120K a year and is regularly late and has a pretty high interest rate. Crazy. You gain some economies of scale by going with a bigger note. I have $100 notes that I get hit for 2 or 3 cents for a fee, where $25 notes are always a penny. However, I don't think that should be your deciding factor. I scale my note purchases based on how much I like the status of the borrower. For example, I did $100 (which is currently my max) for a guy with a reasonable loan amount 16K, a stable work history (15+ years), a great credit history, and a great interest rate (16.9%). If one of those things were a bit out of \"\"whack\"\". I might go $50, two $25. I prefer 36 month notes, really 5 years to get out of debt? It is unlikely to happen IMHO. Keep in mind that if you invest $100 in a loan, then you get one $100 note. You can't break them up into 4 $25 notes. For that reason, if you are likely to want to sell the note prematurely, keep it at $25. The market is greater. I've had a lot of success using the trading account, buying further discounted notes for people who want out of lending club, or get spooked by a couple of late payments and a change in billing date. Another advantage of using the trading account is you start earning interest day 1. I've had new notes take a couple of weeks to go through. To summarize: There are some other things, but that is the main stuff I look at.\"", "topk_rank": 7 }, { "id": "395590", "score": 0.6930834054946899, "text": "If you have enough money to buy a car in full, that probably means you have good credit. If you have good credit, car dealerships will often offer 0% loans for either a small period of time, like 12 months, or the entire loan. Taking a 0% loan is obviously more optimal than paying the entire lump sum up front. You can take the money and invest in other things that earn you more than 0%. However, most dealerships offer a rebate OR a 0% loan. Some commenters below claim that the rebate is usually larger than the saved interest, so definitely do the math if you have that option.", "topk_rank": 8 }, { "id": "223551", "score": 0.6930700540542603, "text": "Lots of good advice on investing already. You may also want to think about two things: A Bausparvertrag. You can set this up for different monthly saving rates. You'll get a modest interest payment, and once you have saved up enough (the contract is zuteilungsreif), you will be eligible for a loan at a low rate. However, you can only use the loan for building, buying or renovating real estate. With interest rates as low as they are right now, this is not overly attractive. However, depending on your salary, you may qualify for subsidies, and these could indeed be rather attractive. This may be helpful (in German). A Riester-Rente. This is a subsidized saving scheme - you save something every year and again get subsidies at the end of the year. I think the salary thresholds where you qualify for a subsidy are a bit higher for the Riester-Rente than for a Bausparvertrag, and even if you don't qualify for a subsidy, your contributions will be deducted from your taxable income. I wouldn't invest all my leftover money in these, considering that you commit yourself for the medium to long term, but they might well be attractive options for at least part of your money, say 20-25% of what you aim at saving every month. Finally, as others have written: banks and insurance companies exist to make money, and they live off their provisions. Get an independent financial advisor you pay by the hour, who doesn't get provisions, and have him help you.", "topk_rank": 9 }, { "id": "500755", "score": 0.6930620074272156, "text": "Set up a meeting with the bank that handles your business checking account. Go there in person and bring your business statements: profit and loss, balance sheet, and a spreadsheet showing your historical cash flow. The goal is to get your banker to understand your business and your needs and also for you to be on a first-name basis with your banker for an ongoing business relationship. Tell them you want to establish credit and you want a credit card account with $x as the limit. Your banker might be able to help push your application through even with your credit history. Even if you can't get the limit you want, you'll be on your way and can meet again with your banker in 6 or 12 months. Once your credit is re-established you'll be able to shop around and apply for other rewards cards. One day you might want a line of credit or a business loan. Establishing a relationship with your banker ahead of time will make that process easier if and when the time comes. Continue to meet with him or her at least annually, and bring updated financial statements each time. If nothing else, this process will help you analyze your business, so the process itself is useful even if nothing comes of it immediately.", "topk_rank": 10 }, { "id": "22807", "score": 0.6928019523620605, "text": "Genius answer: Don't spend more than you make. Pay off your outstanding debts. Put plenty away towards savings so that you don't need to rely on credit more than necessary. Guaranteed to work every time. Answer more tailored to your question: What you're asking for is not realistic, practical, logical, or reasonable. You're asking banks to take a risk on you, knowing based on your credit history that you're bad at managing debt and funds, solely based on how much cash you happen to have on hand at the moment you ask for credit or a loan or based on your salary which isn't guaranteed (except in cases like professional athletes where long-term contracts are in play). You can qualify for lower rates for mortgages with a larger down-payment, but you're still going to get higher rate offers than someone with good credit. If you plan on having enough cash around that you think banks would consider making you credit worthy, why bother using credit at all and not just pay for things with cash? The reason banks offer credit or low interest on loans is because people have proven themselves to be trustworthy of repaying that debt. Based on the information you have provided, the bank wouldn't consider you trustworthy yet. Even if you have $100,000 in cash, they don't know that you're not just going to spend it tomorrow and not have the ability to repay a long-term loan. You could use that $100,000 to buy something and then use that as collateral, but the banks will still consider you a default risk until you've established a credit history to prove them otherwise.", "topk_rank": 11 }, { "id": "82472", "score": 0.6926041841506958, "text": "\"It's rarely advisable to pay interest for something you can afford with cash. Just because you have no credit or loan history doesn't mean you aren't credit worthy. When applying for loans or credit, the lending institutions look at your credit report, not just your credit score. There are lots of things that show up on the reports they receive including (but not limited to): Right now, so many people are focused on their credit score, they're taking on unnecessary debt and potentially losing money in the long run. Yes, having a higher credit score will ultimately be beneficial, but your score will start growing naturally as you live your life. Unless of course you can and do pay for everything with cash. The concept of monitoring your score and striving to get it as high as possible is being shoved down our throats by advertisers at the moment. Don't fall for it. Rather than taking out a loan, which will cost you money in interest and actually show up as a closed account once it's paid off, you might be better served by applying for a credit card and using it sparingly just to start getting that credit history together. (Add usual \"\"don't spend more than you can pay back\"\" mantra here). Get a card with no annual fee and maybe some cash back options, and use it as the auto-payment for a utility if possible. You build credit history, increase your score, and it doesn't cost you any more than you'd be paying anyways. With regards to the investment question: With little to no credit history, you're not going to be approved for a loan with a low enough interest rate anyways. Think double digits. With a co-signer, you'll get a better rate, but then you need a co-signer. I don't know the exact math, but in today's market I'd say you'd need a loan interest rate of 2% or lower for investing to be worth thinking about. I believe this answer helps clarify the loan to invest math: https://money.stackexchange.com/a/26193/30798\"", "topk_rank": 12 }, { "id": "439548", "score": 0.6926030516624451, "text": "\"I don't want to bother with micropayments, and harassing her for monthly payments. Alternative approach to lending her $20K, arranging for her to pay you back $x per month, and having to (as you say) harass her for micropayments. Instead, you give her the $20K, and she sets up a savings account with a monthly direct debit deposit of $x. The bank takes care of the monthly \"\"payments\"\" into the savings account, and at the end of the loan period, you've got your $20K, and instead of the bank making interest off your mom, you make some interest out of the savings account.\"", "topk_rank": 13 }, { "id": "65659", "score": 0.6924818158149719, "text": "I work in banking for the private bank division for a major bank as a banker. I have been helping clients with these types of transactions for years. I believe that large transactions like this are best left to the big boys. That is where the talented bankers/loan officers/underwriters are, and that is the type of transaction they specialize in. I know for a fact that your credit union will not be able to suit your needs, and a smaller bank will be tough to deal with. I wouldn't worry at all about the credit pulls as much as picking a rock solid bank with lots of experiences doing these kinds of deals. That is my 2 cents, albeit a little bit biased, but it is also coming from experience. History with the bank definitely matters, but what business you can bring to the bank along with the lending (deposits, 401k management, personal investments, business services, etc) matter just as much and can make or break the approval/decline or even the terms being favorable or not favorable to your company.", "topk_rank": 14 }, { "id": "531051", "score": 0.6923669576644897, "text": "I completely agree with Pete that a 401(k) loan is not the answer, but I have an alternate proposal: Reduce your 401(k) contribution down to the 4% that you get a match on. If you are cash poor now and have debts to be cleaned up, those need to be addressed before retirement savings. You'll have plenty of time to make up the lost savings after you get the debts paid off. If your company matches 50% (meaning you have to contribute 8% to get the 4% match), then consider temporarily stopping your 401(k) altogether. A 100% match is very hard to give up, but a 50% match is less difficult. You have plenty of years left ahead of you to make up the lost match. Plus, the pain of knowing you're leaving money on the table will incentivize you to get the loans paid as quickly as possible. It seems to me that I would be reducing middle to high interest debt while also saving myself $150 per month. No, you'd be deferring $150 per month for an additional two years, and not reducing debt at all, just moving it to a different lender. Interest rate is not your problem. Right now you're paying less than $30 per month in interest on these 3 loans and about $270 in principal, and at the current rate should have them paid off in about 2 years. You're wanting to extend these loans to 4 years by borrowing from your retirement savings. I would buckle down, reduce expenses wherever possible (cable? cell phone? coffee? movies? restaurants?) until you get these debts paid off. You make $70,000 per year, or almost $6,000 per month. I bet if you try hard enough you can come up with $1,100 fairly quickly. Then the next $1,200 should come twice as fast. Then attack the next $4,000. (You can argue whether the $1,200 should come first because of the interest rate, but in the end it doesn't matter - either one should be paid off very quickly, so the interest saved is negligible) Maybe you can get one of them paid off, get yourself some breathing room, then loosen up a little bit, but extending the pain for an additional two years is not wise. Some more drastic measures:", "topk_rank": 15 }, { "id": "223411", "score": 0.6922958493232727, "text": "To what end would you want to break the law? Why would you think it is beneficial to you in any way? The reason for these limitations is to protect people who have no financial reserves and are not sophisticated investors from making dangerous and risky investments with the little money they have to invest. You need to remember that there's no guarantee of principal with these loans and the rate of default is pretty high. From my own personal experience with Lending Club (and I've only invested in A and some B-rated loans) - rate of default is about 10%. This may be a nice exercise in microlending - but if you want to put all your savings into this, you're taking a huge risk. Risk which is completely unjustified since not only the returns are pretty low (again - from my aforementioned experience: <6% APR, you take higher rate loans - you get higher rate of defaults), but they're also taxed as ordinary gains. Why would you not, instead, invest in a more conservative bond or bond/stock mix fund which will pay you dividends that will get preferential tax treatment and appreciation would be subject to capital gains tax? No reason. And the limitation on who can invest in Lending Club is there for exactly this purpose - to weed out people like you who have no idea of what they're doing.", "topk_rank": 16 }, { "id": "6343", "score": 0.6919904947280884, "text": "Depending on the state this might not be possible. Loans are considered contracts, and various states regulate how minors may enter into them. For example, in the state of Oregon, a minor may NOT enter into a contract without their parent being on the contract as well. So you are forced to wait until you turn 18. At that time you won't have a credit history, and to lenders that often is worse than having bad credit. I can't help with the car (other than to recommend you buy a junker for $500-$1,000 and just live with it for now), but you could certainly get a secured credit card or line of credit from your local bank. The way they are arranged is, you make a deposit of an amount of your choosing (generally at least $200 for credit cards, and $1,000 for lines of credit), and receive a revolving line with a limit of that same amount. As you use and pay on this loan, it will be reported in your credit history. If you start that now, by the time you turn 18 you will have much better options for purchasing vehicles.", "topk_rank": 17 }, { "id": "442241", "score": 0.6917639374732971, "text": "A traditional bank is not likely to give you a loan if you have no source of income. Credit card application forms also ask for your current income level and may reject you based on not having a job. You might want to make a list of income and expenses and look closely at which expenses can be reduced or eliminated. Use 6 months of your actual bills to calculate this list. Also make a list of your assets and liabilities. A sheet that lists income/expenses and assets/liabilities is called a Financial Statement. This is the most basic tool you'll need to get your expenses under control. There are many other options for raising capital to pay for your monthly expenses: Sell off your possessions that you no longer need or can't afford Ask for short term loan help from family and friends Advertise for short term loan help on websites such as Kijiji Start a part-time business doing something that you like and people need. Tutoring, dog-walking, photography, you make the list and pick from it. Look into unemployment insurance. Apply as soon as you are out of work. The folks at the unemployment office are willing to answer all your questions and help you get what you need. Dip into your retirement fund. To reduce your expenses, here are a few things you may not have considered: If you own your home, make an appointment with your bank to discuss renegotiation of your mortgage payments. The bank will be more interested in helping you before you start missing payments than after. Depending on how much equity you have in your home, you may be able to significantly reduce payments by extending the life of the mortgage. Your banker will be impressed if you can bring them a balance sheet that shows your assets, liabilities, income and expenses. As above, for car payments as well. Call your phone, cable, credit card, and internet service providers and tell them you want to cancel your service. This will immediately connect you to Customer Retention. Let them know that you are having a hard time paying your bill and will either have to negotiate a lower payment or cancel the service. This tactic can significantly reduce your payments. When you have your new job, there are some things you can do to make sure this doesn't happen again: Set aside 10% of your income in a savings account. Have it automatically deducted from your income at source if you can. 75% of Americans are 4 weeks away from bankruptcy. You can avoid this by forcing yourself to save enough to manage your household finances for 3 - 6 months, a year is better. If you own your own home, take out a line of credit against it based on the available equity. Your bank can help you with that. It won't cost you anything as long as you don't use it. This is emergency money; do not use it for vacations or car repairs. There will always be little emergencies in life, this line of credit is not for that. Pay off your credit cards and loans, most expensive rate first. Use 10% of your income to do this. When the first one is paid off, use the 10% plus the interest you are now saving to pay off the next most expensive card/loan. Create a budget you can stick to. You can find a great budget calculator here: http://www.gailvazoxlade.com/resources/interactive_budget_worksheet.html Note I have no affiliation with the above-mentioned site, and have a great respect for this woman's ability to teach people about how to handle money.", "topk_rank": 18 }, { "id": "341508", "score": 0.6916478276252747, "text": "It's highly unlikely that you will be able to achieve 8% and would consider myself lucky to get 4% in the current interest rate environment. You might want to read some reviews of peer-to-peer lending and even try it out some yourself. Give yourself something like 2000 Euros/Dollars and a year. If you truly need 8% to retire, then you are not ready to retire. Here in the US it increases the complexity of your tax forms. I did an experiment with lending club. Here is what I found: After 18 months of giving it a try, I decided to abandon this strategy. My money will receive better and safer returns in a dividend focused mutual fund. However, I encourage you to give it a try yourself.", "topk_rank": 19 } ]
81	Does revenue equal gross profit for info product business?	[ { "id": "451207", "score": 0.6005113124847412, "text": "What about web-hosting fees? Cost of Internet service? Cost of computer equipment to do the work? Amortized cost of development? Time for support calls/email? Phone service used for sales? Advertising/marketing expenses? Look hard--I bet there are some costs." } ]	[ { "id": "546782", "score": 0.5704739093780518, "text": "You could also switch to CreditKarma to file taxes, it's 100% free and just launched. I'm not affiliated with them, just bringing up an alternative.", "topk_rank": 0 }, { "id": "539508", "score": 0.5704674124717712, "text": "If you make 100K in the U.S., you are most definitely NOT paying 25.7% tax federally. Only money that you made over 37.5K is even charged at 25% AND you didn't even factor in that you get deductions which decrease your effective tax rate. Where are you pulling your numbers?", "topk_rank": 1 }, { "id": "42726", "score": 0.5703815817832947, "text": "You've asked for risks but neglected straight up costs. CD laddering will have some explicit and implicit costs:", "topk_rank": 2 }, { "id": "40184", "score": 0.5703752636909485, "text": "My point was to collect as much tax revenue as possible without letting a loophole curtail the collection of said taxes. How ever that is accomplished is a possible solution I support, if the end game eventually disallows paying your own corp in a different country to bring down your bottom line then so be it. Or maybe we should watch what corps categorize as expenses, this is the magic of the internet, people can kick ideas around, you on the other hand had a virtual boner to find a small hole in my suggestion in which you could try to curtail the discussion. Instead of be anti-intellectual and trying to find tiny flaws in someones suggestions, why not make some of your own. Because last I checked shooting down suggestions while offering none of your own was not a productive practice.", "topk_rank": 3 }, { "id": "236375", "score": 0.5703747272491455, "text": "Okay I will asap. And yes, to getting the business off the ground. I've done all the marketing and will be for some time to come. Not just sweaty hands, but also ideas that shape our marketing strategies and also bringing in loyal customers that I personally know who are going to be consistent with us. But I'll talk to a lawyer and have that figured out. I just dont want to get screwed over and I'm new to this being only 19 so.", "topk_rank": 4 }, { "id": "83012", "score": 0.5703638792037964, "text": "\"I was told by the lawyers there was no tax consequence because the two numbers were the same. That is correct. However, a tax professional tells me that since the start-up stock was \"\"realized\"\" there invokes a taxable event now. That is correct. I'm now led to believe I owe cap-gains tax on the entire 4 year vest this year That is incorrect. You owe capital gains tax on the sale of your startup stock. Which is accidentally the exact same amount you \"\"paid\"\" for the new unvested stocks. There's no taxable event with regards to the new stocks because the amount you paid for them was the amount you got for the old stocks. But you did sell the old stocks, and that is a taxable event.\"", "topk_rank": 5 }, { "id": "260705", "score": 0.570360004901886, "text": "\"This is a very vague question and could not be fairly answered without knowing additional details, some examples would be: * What is the total revenue of the non-profit? * What are the total expenses of the non-profit? * What is the effectiveness rate to the \"\"cause\"\" of each $1 donated? Non-profit organizations and charities have grown to large scale business operations that are focused on delivering value to their determined cause. The Top 5 largest charities each had total revenues over $3.3 billion in 2012. This included United Way, Goodwill, The Y, and the Salvation Army with the largest being the Y at over $6.2 billion in annual revenue. All of these non-profits bring in enough revenue to be in the Fortune 500 (The 500th company on the list is Newmont Mining Corp at $3.2 billion in revenue). When you consider the scale of these operations I think you need to acquire an experienced CEO that has a career history of leading large and many times multi-national organization. These CEOs command high salaries because of their talent and expertise. I believe when they are passionate about a cause they're willing to take a discount, but you have to understand the term discount proportionately. I made a quick table below just to provide some context and show reference points of several Fortune 500 companies in comparison to The Y, the largest non-profit in total revenue. You can quickly see that a salary of $450,000 for an organization of this size would be a significant discount in comparison to the CEO salaries of comparably sized organization in the for profit world. When considering charitable contributions it is entirely valid to consider the CEO's salary, but also consider the potential value add. For example, if that CEO generates a significantly more effective ratio of utilizing donated $ then it may justify the salary. In some scenarios it is fair to say that $450,000 would be a fair and adequate salary for a CEO running a large scale non-profit. Is this the case for every non-profit? Probably not. It should often be thought of as a function of total revenue and effectiveness of the $ donated. Company \| 2013 Revenue \| 2013 CEO Salary \| Ratio ---\|----\|----\|-----\| Cummins \| $6.3B \| $9.4M \| .15% EMC Corp \| $6.2B \| $32.3M \| .52% Northeast Utilities \| $6.1B \| $1.7M \| .03% Agilent Technologies \| $6.1B \| $10.2M \| .17% The Y (YMCA) \| $6.2B \| $.45M \| .007% Source(s): http://www.thenonprofittimes.com/wp-content/uploads/2013/11/11-1-13_Top100.pdf http://www.salary.com/ http://www.grossing.com/fortune500.htm\"", "topk_rank": 6 }, { "id": "114234", "score": 0.570353090763092, "text": "\"Gross income is used because there are a lot of variables inherent in the calculation of a \"\"net income\"\", including a lot of things under your direct control that you could use to game the system. \"\"Net Income\"\", as others have inferred, is a very flexible term. For the average individual, the definition that would most easily come to mind is likely post-deduction, post-tax earnings; \"\"take-home pay\"\". It sounds reasonable, too, as the amount you take home each month can be easily demonstrated with your two most recent pay stubs (which you need to bring in anyway to verify gross earnings). However, even that simplistic definition is fraught with possibility. You have the ability to modify your pre-tax deductions, such as for retirement or healthcare, and that in turn affects your taxes and thus your net take-home pay. To assume that you won't do that is foolish for the loan officer. Other definitions of \"\"net income\"\", such as, in the case of shopping for a house, \"\"disposable income plus current rent\"\", are the result of even longer lists of deductions from gross pay. Many are also dependent on your current home; your electric bill is a function of the size, location and construction of your current home, all of which will change as soon as you move in. Your other bills, such as telecom (TV/phone/internet) are also more or less location-dependent, as even within a single city or metro area, your choice of services and service providers is dictated by the home's physical location. You may have to pay through the nose right now because your current home isn't serviced by anyone's fiber-optic network, while the home you're moving into could be in a hotly-contested area with access to multiple fiber-optic trunks. So, to simplify all this, mortgage companies simply ask for gross income, then apply a metric that makes relatively conservative assumptions about your spending habits to arrive at a final amount. The upside is simplicity, the downside being that two people both making $60,000/yr may have two completely different financial pictures behind that single number.\"", "topk_rank": 7 }, { "id": "86864", "score": 0.5703495144844055, "text": "first, let me reiterate what everyone else is saying about rental rates having nothing to do with your expenses. you should charge market rates. slightly higher if you want better tenants and slightly lower if you want to avoid prolonged vacancy. you can determine market rates by finding similar properties in your area and seeing what they are asking for rent. you will need to adjust for location, square footage, number of bathrooms, etc. now that that is out of the way, here is a quick checklist of expenses that you will need to calculate and/or estimate for your specific property in order to decide if you should rent or sell: if you add up all of the above expenses and it's more than the market rates for rent, you should sell. if the above expenses are below the market rates, then you need to consider if the profit margin is enough to justify the hassle and the risk.", "topk_rank": 8 }, { "id": "173444", "score": 0.5703442692756653, "text": "Businesses from food to retail, all assume the risk of spoilage, theft, or any form of lost assets. It's just business. With that said, I'm sure your mom didn't imagine too many ways she could've lost out when opening her nailshop. I'm unsure what the policy is that you're looking for, but my best advice to you would be to cut your losses and learn from this. Hopefully you and your mother can be sure to check or figure out a system to ensure customers don't lie about their payments. Good luck", "topk_rank": 9 }, { "id": "431610", "score": 0.5703119039535522, "text": "You are still selling one investment and buying another - the fact that they are managed by the same company should be irrelevant. So yes, it would get the same tax treatment as if they were managed by different companies.", "topk_rank": 10 }, { "id": "123638", "score": 0.5703009963035583, "text": "I haven't worked with Xero before, but can't you just set it up as accounts payable? Put in an accounts payable for the contract. When the client makes a payment, the accounts payable goes down and the cash goes up.", "topk_rank": 11 }, { "id": "437061", "score": 0.5702906250953674, "text": "If you're audited routinely you probably have an accountant to get this straight. It's not something that I would be too worried about as it is purely journal-entry issue, there's no problem with the actual money. Mistakes happen. I'd suggest converting the currency, taking loss/gain on the conversion as a capital loss/gain, and credit the correct currency to the correct account. If GnuCash causes problems - just record it in the EUR equivalent, putting in notes the actual SGD value. Note that I'm not an accountant and this is not a professional advice.", "topk_rank": 12 }, { "id": "295738", "score": 0.5702282190322876, "text": "\"Financial statements provide a large amount of specialized, complex, information about the company. If you know how to process the statements, and can place the info they provide in context with other significant information you have about the market, then you will likely be able to make better decisions about the company. If you don't know how to process them, you're much more likely to obtain incomplete or misleading information, and end up making worse decisions than you would have before you started reading. You might, for example, figure out that the company is gaining significant debt, but might be missing significant information about new regulations which caused a one time larger than normal tax payment for all companies in the industry you're investing in, matching the debt increase. Or you might see a large litigation related spending, without knowing that it's lower than usual for the industry. It's a chicken-and-egg problem - if you know how to process them, and how to use the information, then you already have the answer to your question. I'd say, the more important question to ask is: \"\"Do I have the time and resources necessary to learn enough about how businesses run, and about the market I'm investing in, so that financial statements become useful to me?\"\" If you do have the time, and resources, do it, it's worth the trouble. I'd advise in starting at the industry/business end of things, though, and only switching to obtaining information from the financial statements once you already have a good idea what you'll be using it for.\"", "topk_rank": 13 }, { "id": "328863", "score": 0.5702223777770996, "text": "\"Assuming you file state tax returns, you shouldn't buy Basic. Ever. Your choice is probably between the \"\"Premier\"\" version and the \"\"Business and Home\"\" version. Price difference is insignificant (I have a comparison on my blog, including short descriptions as to who might find each version useful the most). The prices have gone down significantly, since when I wrote the article, its cheaper now.\"", "topk_rank": 14 }, { "id": "75626", "score": 0.5702102780342102, "text": "I super appreciate too giving me so much time. I'm in England so, no GameStop here - we have game.net and they're like a monopoly at the moment. My marketing strategy will be VERY innovative and I'll be using American e-commerce style affiliate system to have organic growth. (America is always a step ahead from the world and what ever gets big there, gets big everywhere sooner or later)", "topk_rank": 15 }, { "id": "119077", "score": 0.570208728313446, "text": "I believe you can easily make tresholds for what constitute a partial owner. If I work for GE and buy a share, I'm not exactly a partial owner. Anything under 10% for companies making, I don't know, less than 50 Mil in revenue, you're an employee. Larger companies, 5%. That's just an idea, could be refined but, yeah...", "topk_rank": 16 }, { "id": "459647", "score": 0.5701749920845032, "text": "\"You could try this experiment: pay for an Ad/banner on Facebook for 1 month. The Ad/banner should link to your ecommerce site. Then see if the Ad/banner does or does not convert into ecommerce orders (\"\"converting\"\" means that people coming to your eccomerce site from Facebook after having clicked on your Ad/banner really buy something on your site). If it does convert, you will go on paying for Ads/banners and other people will do the same for their sites, so FB might make cash in next years. But if it does NOT convert you and everybody else will soon discover and stop paying for Ads/banners, thus it will be hard for Facebook to make money with Advertising, thus Facebook might be just a big bubble (unless they find other ways of making money). I did the experiment I suggested above and the conversion rate was an absoulte ZERO!!! (Instead Google Adwords converted well for the same site). So IMHO I would stay away from FB. But remember that stock market is emotional (at least on short periods of time), so it might be that even if FB wil never become a cash cow, for the 1st few months people (expecially small investors tempeted by the brand) might go crazy for the stocks and buy buy buy, making the price go up up up. EDIT in reply to some comments below arguing that my answer was boiled down to one single experiment: General Motors said Tuesday that it will stop paid advertising on Facebook...the social media paid ads simply weren't delivering the hoped-for buyers... (CNN May/15/2012) A donkey can not fly either when it's me (with a single experiment) trying to make it fly or the entire GM workforce.\"", "topk_rank": 17 }, { "id": "472347", "score": 0.570167064666748, "text": "I can't speak for other companies, but we certainly hired people without experience in those products (I was one of them). And I certainly didn't get any experience in any finance/accounting class in undergrad. There's probably a whole spectrum of things you could do from just youtubing intro videos to get taking a weekend classes and getting certified. Sounds like from your coding experience you'll have a good leg up. But sorry I can't be more helpful", "topk_rank": 18 }, { "id": "118270", "score": 0.5701016187667847, "text": "Both are correct depending on what you are really trying to evaluate. If you only want to understand how that particular investment you were taking money in and out of did by itself than you would ignore the cash. You might use this if you were thinking of replacing that particular investment with another but keeping the in/out strategy. If you want to understand how the whole investment strategy worked (both the in/out motion and the choice of investment) than you would definitely want to include the cash component as that is necessary for the strategy and would be your final return if you implemented that strategy. As a side note, neither IRR or CAGR are not great ways to judge investment strategies as they have some odd timing issues and they don't take into account risk.", "topk_rank": 19 } ]
82	Will unpaid taxes prevent me from getting a business license?	[ { "id": "500708", "score": 0.7790223360061646, "text": "Generally these things are unrelated. Your tax debt is to agency X, your license is (mostly) from agency Y. If your business involves agency X, then it may be a problem. For example, you cannot get a EA license (IRS Enrolled Agent) if you have unsettled tax debt or other tax compliance issues. You should check Michigan state licensing organizations if there are similar dependencies. Also, some background checks may fail, and some state licenses require them to pass. For example, you can probably not get an active bar registration or a CPA license with an unsettled tax debt. You might have a problem with registering as a Notary Public, or other similar position. You can probably not work in law enforcement as a contractor. If you're on an approved payment plan - then your tax debt is settled unless you stop paying as agreed, and shouldn't be a problem." } ]	[ { "id": "538699", "score": 0.7253848314285278, "text": "\"It is the presupposition that makes this a rather ridiculous question. Makes me curious, would this be a civil or criminal crime? If you are convinced that this presupposition of illegality is a thing, talk to a lawyer. Yes, there may be consequences of doing any variety of actions while you owe the IRS, and while you do not owe the IRS. As an unincorporated business the IRS does not stop you from gaining an additional source of income to pay them with. Perhaps lenders might not help you with capital. As an incorporated business no state is going to ask you if you \"\"owe back taxes\"\" before they allow you to pay them to register your business in their state. This isn't legal advice, I'm just assuming there is no legal advice to give based on your presupposition, to your original question, I'm going to go with no.\"", "topk_rank": 0 }, { "id": "407540", "score": 0.7218196988105774, "text": "Sales tax permits come from the state in which your business is operating. You need a business license first for them to issue you one. US sales taxes are collected by the business and remitted to the government, you need the permit in order to do this. A bigger question is whether it's legal for you to engage in business in the first place. What is your visa status?", "topk_rank": 1 }, { "id": "485140", "score": 0.7178665399551392, "text": "Tried that, got asked how I filed taxes by the _hiring guy_! What the fuck! How is that any of his business? He wanted to see a business license! What if I'm advertising availability and _nobody is hiring me_, how did spending money on a license help?", "topk_rank": 2 }, { "id": "142623", "score": 0.7102833390235901, "text": "\"You need to hire a tax professional and have them sort it out for you properly and advise you on how to proceed next. Don't do it yourself, you're way past the stage when you could. You're out of compliance, and you're right - there are penalties that a professional might know how to mitigate, and maybe even negotiate a waiver with the IRS, depending on the circumstances of the case. Be careful of answers like \"\"you don't need to pay anything\"\" that are based on nothing of facts. Based on what you said in the question and in the comments, it actually sounds like you do have to pay something, and you're in trouble with the IRS already. It might be that you misunderstood something in the past (e.g.: you said the business had filed taxes before, but in fact that might never happened and you're confusing \"\"business filed taxes\"\" with \"\"I filed schedule C\"\") or it might be the actual factual representation of things (you did in fact filed a tax return for your business with the IRS, either form 1120 of some kind or 1065). In any case a good licensed (CPA or EA) professional will help you sort it out and educate you on what you need to do in the future.\"", "topk_rank": 3 }, { "id": "551315", "score": 0.7082827091217041, "text": "If the business is legally separated and not commingled - they probably cannot. What they can do is put a lien on it (so that you cannot sell the business) and garnish your income. If the corporate veil is pierced (and its not that hard to have it pierced if you're not careful) - then they can treat it as if it is your personal asset. Verify this with a lawyer licensed in your state, I'm not a lawyer or a tax professional.", "topk_rank": 4 }, { "id": "231254", "score": 0.7075292468070984, "text": "\"This is an answer grounded in reality, not advice. Most states have no means of enforcing their foreign business entity registration statutes. Some states never even codified consequences. (California is a notable exception.). Some states have 'business licenses' that you need in order to defend your entity in court, but will retroactively apply the corporate veil when you get the license. The \"\"do I have to register\"\" question is analogous to asking a barber if you need a haircut. But this doesn't absolve you of looking in the mirror (doing your research). Registration and INCOME taxes are different stories. If a state calls their fee a franchise tax and it is applicable and there are real consequences for not, then you will have to pay that tax. Anyway, this isn't advocating breaking the law, but since it describes ignoring toothless state-chartered agencies, then there are people that will disagree with this post, despite being in line with business climate in the United States. Hope that helps\"", "topk_rank": 5 }, { "id": "150857", "score": 0.7039178013801575, "text": "\"If you're \"\"living off the land\"\" and make no money, then you don't have to file. Though you might be able to actually make money through credits and the like if you do file. If you've lost more than you've made, then you'll probably need to file since someone will have needed to report that they paid you (W-2 or 1099-MISC). If the IRS receives a form saying that you made X and you don't file, they aren't going to just take your word for it that you lost more than you made, right? That, and if you want a refund, you'll almost certainly need to file to get it.\"", "topk_rank": 6 }, { "id": "530119", "score": 0.7033765316009521, "text": "I'm no tax expert by any means. I do know that a disreagarded entity is considered a sole proprietor for federal tax purposes. My understanding is that this means your personal tax year and your business tax year must be one and the same. Nevertheless, it is technically possible to have a non-calendar fiscal year as an individual. This is so rare that I'm unable to find a an IRS reference to this. The best reference I could find was this article written by two CPAs. If you really want to persue this, you basically need to talk with an accountant, since this is complicated, and required keeping propper accounting records for your personal life, in addition to your business. A ledger creqated after-the-fact by an accountant has been ruled insufficent. You really need to live by the fiscal year you choose.", "topk_rank": 7 }, { "id": "318388", "score": 0.702446699142456, "text": "According to the government website, the answer appears to be no in terms of personal income. However you may want to anyway to start creating RRSP contribution room as well as possibly qualify for GST/HST credit. If your business is registered you are going to be required to file a tax return for it (and if it is a sole proprietorship then you would be required to file a T1 regardless). When all is said and done, it seems that it's probably better to file rather than not file; even if you pay no income tax at least you are sure you won't receive a nasty letter from Revenue Canada in the future :)", "topk_rank": 8 }, { "id": "315086", "score": 0.7009505033493042, "text": "Is the business an S-Corp, LLC or Sole Prop? I am going to guess based on the question that it is an LLC that you never closed with the state and you live in a state (NY) that charges a fee for having an LLC in the state in which case you owe those fees to the state. I am not aware of any taxes on the mere existence of a business by the IRS. I think you are going to find out that the are no taxes owed to the IRS for this nonexistent activity.", "topk_rank": 9 }, { "id": "496959", "score": 0.7005732655525208, "text": "As others have said, make sure you can and do file your taxes on a cash basis (not accrual). It sounds like it's very unlikely the company is going to issue you a 1099 for invoices they never paid you. So you just file last year's taxes based on your income, which is the money you actually received. If they do pay you later, in the new year, you'll include that income on next year's tax return, and you would expect a 1099 at that time. Side note: not getting paid is unfortunately common for consultants and contractors. Take the first unpaid invoice and sue them in small claims court. After you win (and collect!), tell them you'll sue them for each unpaid invoice in turn until they pay you in full. (You might need to break up the lawsuits like that to remain under the small claims limit.)", "topk_rank": 10 }, { "id": "505341", "score": 0.6981439590454102, "text": "Normally you could either head down to the office supply store and pick up a copy of a tax program, or you could head over to the IRS office and pick up the instructions and forms. However, in your case you should be talking to a tax lawyer. The unfiled taxes are bad enough but you own a business outside the USA and most likely have bank accounts also. That brings you into the realm of FATCA.", "topk_rank": 11 }, { "id": "426947", "score": 0.6968541741371155, "text": "You appear to just have admitted to tax evasion. You need a lawyer. There's a good chance you don't actually owe any money, but you need legal advice. To be clear, you may well not have been obligated to file tax returns, but you have stated you had some income you didn't report, so there's really nothing else we can say other than recommend you seek legal advice.", "topk_rank": 12 }, { "id": "510409", "score": 0.6960605978965759, "text": "No, even businesses pay taxes quarterly. So if you formed Nathan, LLC, or otherwise became self employed, you'd still have to file quarterly estimates and make tax payments. This would cause taxes to be a much more high touch part of your life. However, you should ensure that you're claiming the proper exemptions etc to avoid excessive withholding.", "topk_rank": 13 }, { "id": "133235", "score": 0.6943596005439758, "text": "\"Do I understand correctly, that we still can file as \"\"Married filing jointly\"\", just add Schedule C and Schedule SE for her? Yes. Business registration information letter she got once registered mentions that her due date for filing tax return is January 31, 2016. Does this prevent us from filing jointly (as far as I understand, I can't file my income before that date)? IRS sends no such letters. IRS also doesn't require any registration. Be careful, you might be a victim to a phishing attack here. In any case, sole proprietor files a regular individual tax return with the regular April 15th deadline. Do I understand correctly that we do not qualify as \"\"Family partnership\"\" (I do not participate in her business in any way other than giving her money for initial tools/materials purchase)? Yes. Do I understand correctly that she did not have to do regular estimated tax payments as business was not expected to generate income this year? You're asking or saying? How would we know what she expected? In any case, you can use your withholding (adjust the W4) to compensate.\"", "topk_rank": 14 }, { "id": "595121", "score": 0.6928621530532837, "text": "There are penalties for failure to file and penalties for failure to pay tax. The penalties for both are based on the amount of tax due. So you would owe % penalties of zero, otherwise meaning no penalties at all. The IRS on late 1040 penalties: Here are eight important points about penalties for filing or paying late. A failure-to-file penalty may apply if you did not file by the tax filing deadline. A failure-to-pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline. The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should explore other payment options such as getting a loan or making an installment agreement to make payments. The IRS will work with you. The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date. If you timely requested an extension of time to file your individual income tax return and paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty. However, you must pay any remaining balance by the extended due date. If both the 5 percent failure-to-file penalty and the ½ percent failure-to-pay penalties apply in any month, the maximum penalty that you’ll pay for both is 5 percent. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax. You will not have to pay a late-filing or late-payment penalty if you can show reasonable cause for not filing or paying on time. If the IRS owes you a refund, April 15 isn't much of a deadline. I suppose the real deadline is April 15, three years later - that's when the IRS keeps your refund and it becomes property of the Treasury. Of course, there's little reason to wait that long. Don't let the Treasury get all your interest.", "topk_rank": 15 }, { "id": "55250", "score": 0.6927159428596497, "text": "Washington State doesn't have a state income tax for individuals, so unless you've got a business there's nothing to file. Find out more on their website.", "topk_rank": 16 }, { "id": "125422", "score": 0.6926718354225159, "text": "If this is because he wants to avoid paying taxes, will I get in trouble if I agree to have him work on my vehicle? You should check your state and local sales tax laws to be certain, but in my state you have no liability if he does not pay his taxes. That's his problem, not yours. The biggest risk for you is if something goes wrong, you have no proof that the work was ever done, so it's possible he could deny that any transaction ever took place and refuse to correct it or refund your money. So at worst you're out what you paid for the service, plus what it would cost you to fix it if you needed to and chose to do so. If you don't want to take that risk, then insist on a receipt or take you business elsewhere, but there's no criminal liability for you if he chooses not to report the income. EDIT Be aware, though that state tax is levied at the state and local level, so the laws of your individual state or city may be different.", "topk_rank": 17 }, { "id": "2020", "score": 0.6910138726234436, "text": "\"The founders almost certainly owe tax on the \"\"income\"\" represented by the rent they aren't being charged. It isn't clear whether the corporation also owes income tax on the rent it is not receiving back from them. You definitely want advice from a paid tax accountant, not least because that helps protect everyone should this arrangement be challenged.\"", "topk_rank": 18 }, { "id": "187695", "score": 0.6902134418487549, "text": "The IRS can direct your refund towards repayment of your unpaid taxes either on Federal or State/Local level. Whether it will depends on whether the State of New York will ask for it. Generally, if you owe taxes to New York for this year only, you would expect them to wait for you to file your State tax return and pay the taxes owed. If you don't - I'm pretty sure that the next year refund from the IRS will go directly to them.", "topk_rank": 19 } ]
83	Using cash back rewards from business credit card	[ { "id": "534277", "score": 0.6937058568000793, "text": "\"A C-Corp is not a pass-through entity, any applicable taxes would be paid by the Corporation, which is a separate legal entity from yourself. If you use the points to purchase something for yourself, that would constitute \"\"income\"\" to you, and would be taxable on your personal income tax.\"" } ]	[ { "id": "282623", "score": 0.6588735580444336, "text": "\"I'm not a fan of using cash for \"\"emergency\"\" savings. Put it in a stable investment that you can liquidate fairly quickly if you have to. I'd rather use credit cards for a while and then pay them off with investment funds if I must. Meanwhile those investments earn a lot more than the 0.1 percent savings or money market accounts will. Investment grade bond funds, for example, should get you a yield of between 4-6% right now. If you want to take a longer term view put that money into a stock index fund like QQQ or DIA. There is the risk it will go down significantly in a recession but over time the return is 10%. (Currently a lot more than that!) In any event you can liquidate securities and get the money into your bank is less than a week. If you leave it in cash it basically earns nothing while you wait for that rainy day which many never come.\"", "topk_rank": 0 }, { "id": "428290", "score": 0.6588571667671204, "text": "\"When processing credit/debit cards there is a choice made by the company on how they want to go about doing it. The options are Authorization/Capture and Sale. For online transactions that require the delivery of goods, companies are supposed to start by initially Authorizing the transaction. This signals your bank to mark the funds but it does not actually transfer them. Once the company is actually shipping the goods, they will send a Capture command that tells the bank to go ahead and transfer the funds. There can be a time delay between the two actions. 3 days is fairly common, but longer can certainly be seen. It normally takes a week for a gas station local to me to clear their transactions. The second one, a Sale is normally used for online transactions in which a service is immediately delivered or a Point of Sale transaction (buying something in person at a store). This action wraps up both an Authorization and Capture into a single step. Now, not all systems have the same requirements. It is actually fairly common for people who play online games to \"\"accidentally\"\" authorize funds to be transferred from their bank. Processing those refunds can be fairly expensive. However, if the company simply performs an Authorization and never issues a capture then it's as if the transaction never occurred and the costs involved to the company are much smaller (close to zero) I'd suspect they have a high degree of parents claiming their kids were never authorized to perform transactions or that fraud was involved. If this is the case then it would be in the company's interest to authorize the transaction, apply the credits to your account then wait a few days before actually capturing the funds from the bank. Depending upon the amount of time for the wait your bank might have silently rolled back the authorization. When it came time for the company to capture, then they'd just reissue it as a sale. I hope that makes sense. The point is, this is actually fairly common. Not just for games but for a whole host of areas in which fraud might exist (like getting gas).\"", "topk_rank": 1 }, { "id": "189303", "score": 0.6588529348373413, "text": "Another thing to factor in are deals provided by banks. In general, banks care about new customers more than their existing customers. Hence they explicitly restrict the best deals on credit cards, savings accounts, etc, to new customers only. (Of course, there are occasionally good deals for existing customers, and some banks choose not to discriminate.) If you have many different bank accounts, you are making yourself unavailable for switching bonuses and introductory rates.", "topk_rank": 2 }, { "id": "504208", "score": 0.6588274836540222, "text": "\"If psychologically there is no difference to you between cash and debit (you should test this over a couple of months on yourself and spouse to make sure), then I suggest two debit cards (one for you and spouse) on your main or separate checking account. If you use Mint you can set budgets for each category (envelope) and when a purchase is made Mint will automatically categorize that transaction and deduct that amount from the correct budget. For example: If you have a \"\"Fast Food\"\" budget set at $100 per month and you use the debit at McDonalds, Mint should automatically categorize it as \"\"Fast Food\"\" and deduct the amount from the \"\"Fast Food\"\" budget that you set. If it can't determine a category or gets it wrong, you can just select the proper category. Mint has an iPhone (also Android and Windows phone) app that I find very easy to use. Many people state that they don't have this psychologically difference between spending cash and debit/credit, but I would say that most actually do, especially with small purchases. It doesn't have anything to do with intellect or knowing that you are actually spending money. It has more to do with tangibility, and the physical act of handing over cash. You may not add that soda and candy bar to your purchase if you have visible cash in your wallet that will disappear more quickly. I lived in Germany for 2 years before debit cards were around or common. I'm a sharp guy and even though I knew that I paid $100 for the 152 DM, it still kind of felt like spending Monopoly money, especially considering that in the US we are used to coins normally being 25 cents or less and in Germany coins are up to 10 DM (almost $10) and are used more frequently than paper.\"", "topk_rank": 3 }, { "id": "416679", "score": 0.6586958765983582, "text": "I'm not sure if someone else answered already in the same manner I will. I can't guarantee for sure if it's the same in the U.S.A. (it might since major credit cards companies like Visa/MC/AMEX are American companies) but in Canada having/keeping unused CC is a disadvantage because of the following: Banks and financing companies look more at the total amount of credit available to you than at how much purchases you have on your cards. Ex: Let's say that you have the following: - Visa cc with $10,000 limit and $2000 worth of purchases (made more than 30 days ago) on it. - Mastercard cc with $10,000 limit as well and $1000 worth of purchases (less than 30 days old) - A major retail store cc with $2000 limit and $0 balance. Hypothetical situation: You want a bank loan to do some expensive house repairs and are looking for a lower interest rate than what your cc can offer. The bank will not care about the amount on the cards. They will add-up all the limits of your cc and treat your loan request as if ALL your cards were filled to their respective limit. So in this case: they will consider you as being right now in debt of $10K+$10K+$2K = $22,000 instead of only $3000 and they might: 1. refuse you the loan 2. grant it only if you transfer all purchases on a single card and cancel all the others. 3. Once the $3000 is transferred on one of the cards (and the others cancelled), they can require that you reduce the limit of that card. Hope this helps!", "topk_rank": 4 }, { "id": "399199", "score": 0.6586934328079224, "text": "I'm a CPA and former IRS agent and manager. Whether you are a cash or accrual basis taxpayer, you get to deduct the expense when your card is charged. Think of it this way: You are borrowing from the credit card company or bank that issued the credit card. You take that money to make a purchase of a product or service. You now have an expense and a liability to a third party. When you pay off the liability, you do not get to take a deduction. Your deduction is when you pay for the expense. Depending on what you purchased, you may have to capitalize it.", "topk_rank": 5 }, { "id": "203446", "score": 0.6586714386940002, "text": "\"If you are using software like QuickBooks (or even just using spreadsheets or tracking this without software) use two Equity accounts, something like \"\"Capital Contributions\"\" and \"\"Capital Distributions\"\" When you write a personal check to the company, the money goes into the company's checking account and also increases the Capital Contribution account in accordance with double-entry accounting practices. When the company has enough retained earnings to pay you back, you use the Capital Distributions equity account and just write yourself a check. You can also make general journal entries every year to zero out or balance your two capital accounts with Retained Earnings, which (I think) is an automatically generated Equity account in QuickBooks. If this sounds too complex, you could also just use a single \"\"Capital Contributions and Distributions\"\" equity account for your contributions and distributions.\"", "topk_rank": 6 }, { "id": "300117", "score": 0.6586599349975586, "text": "Billshrink offers some pretty neat analysis tools to help you pick a credit card. They focus more on rewards than the features you mention but it might be worth a look. If you use Mint, they offer a similar service, too. If you're not already using Mint, though, I'd look at Billshrink as Mint requires some extensive setup. MOD EDIT Looks like billshrink.com is shut down. From their site: Dear BillShrink customer, As you may have heard, BillShrink.com was shut down on July 31, 2013. While we’re sad to say goodbye, we hope we’ve been able to help you be better informed and save some money along the way! The good news is that much of the innovative award-winning BillShrink technology will still be available via our StatementRewards platform (made available to customers by our partnering financial institutions). Moreover, we expect to re-launch a new money-saving service in the future. To see more of what we’re up to, visit Truaxis.com. We have deleted your personal information as of July 31. We will retain your email address only to announce a preview of the new tool. If you do not want us to retain your email address, you can opt out in the form below. This opt out feature will be available until September 31, 2013. If you have already opted out previously, you do not need to opt out again. If you have any further questions, contact us at info@billshrink.com. Thanks, The BillShrink/Truaxis Team", "topk_rank": 7 }, { "id": "92549", "score": 0.6586575508117676, "text": "It is absolutely worth it. My wife and I have two of these accounts (different banks). We are required to use our cards 20 times for one bank, and 15 for the other. We have yet to miss the required transactions in a month (over 15 months of use now), and are actually considering getting a third account. Between the two of us, we simply have to use our card on average once a day. Getting gas? Use your debit card. Getting stamps? Use your debit card? Self checkout? Use your debit card twice. Eating out? Use your debit card. If married, split the bill. As soon as we reach the minimum, we stop using the debit cards and switch to credit cards to further boost the rewards. Maybe it's easier for us since we don't have kids and are out a lot, but 12 transactions is really simple to obtain. We receive ~$100 a month from our two accounts, all for doing something we already do.", "topk_rank": 8 }, { "id": "591566", "score": 0.6586509346961975, "text": "\"Could the individual [directly] use the credit cards for the down-payment? No, not directly. Indirectly, either via Cash Advance or \"\"Balance Transfer\"\" to a bank account with a promotional rate could work, however you may have to show the money sitting in a bank account and ready to go before the loan will be approved, which means the money you took out on the credit cards will show up when they pull your credit (unless you somehow timed it perfectly, and even if you did that you'd be breaking the law by lying on the disclosure statement about your current debts.) If he could, are there any negative consequences from doing so (other than probable high monthly payments on the cards)? Definitely. Let's assume we're talking about the indirect method of cash advance or balance transfer, since that is actually possible. There are 3 things to compare: Final thought: Most of the time the rate you pay on a non-mortgage loan will be higher than that of the mortgage, and furthermore mortgage interest is oftentimes tax deductible, so it would rarely ever make sense to shift would-be mortgage debt into another type of loan, down payment or otherwise.\"", "topk_rank": 9 }, { "id": "258504", "score": 0.6585889458656311, "text": "In some states, it is your responsibility to pay the sales tax on a transaction, even if the party your purchase from doesn't collect it. This is common with online purchases across state lines; for example, here in Massachusetts, if I buy something from New Hampshire (where there is no sales tax), I am required to pay MA sales tax on the purchase when I file my income taxes. Buying a service that did not include taxes just shifts the burden of paperwork from the other party to me. Even if you would end up saving money by paying in cash, as other here have pointed out, you are sacrificing a degree of protection if something goes wrong with the transaction. He could take your money and walk away without doing the work, or do a sloppy job, or even damage your vehicle. Without a receipt, it is your word against his that the transaction ever even took place. Should you be worried that he is offering a discount for an under the table transaction? Probably not, as long as you don't take him up on it.", "topk_rank": 10 }, { "id": "278667", "score": 0.6585170030593872, "text": "There are different ways of credit card purchase authorizations. if some choose less secure method it's their problem. Merchants are charged back if a stolen card is used.", "topk_rank": 11 }, { "id": "31144", "score": 0.658450186252594, "text": "The regulations you're talking about (TR 1.263) are going into effect starting tax year 2016, so for purchases you made last year they're (kindof...) irrelevant. Kindof, because the IRS promises to not audit those that qualify under the regulations even if they use it before it goes into effect, but it doesn't legally have to. Since the regulations are new, I suggest you talk to a licensed professional who'd explain them to you and interpret them with regards to your specific situation. From my brief read, you can expense under these rules things that you would otherwise capitalize, with the $500 limit to the invoice. Meaning, if you bought a computer paying $500, which you use 50% for your business - you can expense $250. The benefit, comparing to the Sec. 179, is that you're not limited to new items, nor are you limited to business revenue. Otherwise, it looks like the applicability is similar. As I said - talk to a licensed tax adviser (EA/CPA licensed in your State), since these rules are new and untested, and you should probably have a professional provide guidance. I'm not such a professional.", "topk_rank": 12 }, { "id": "383863", "score": 0.6582501530647278, "text": "some of that article is misleading, some of it is just plain wrong. Very wrong... like you end up drawing an incorrect conclusion type wrong. Corporate transaction accounts, whose balances are up recently due to TAG (expires 12/31), are subject to reserve requirements. When you purchase something with a credit card, the bank's asset of your credit increases and the bank's asset of cash decreases (it goes wherever you purchased). There is no change to your deposit account and no change to reserves. The incoming bank's cash account and liability account associated with that business transaction account increase, and it is trivial to transfer the % of cash necessary to reach minimum reserve requirements to the Fed. Secondly, anyone with a smidgen of accounting can tell that his balance sheet won't balance.", "topk_rank": 13 }, { "id": "1873", "score": 0.6582408547401428, "text": "\"I expect the company wanted to pay you for a product (on a purchase order) rather than as a contract laborer. Whatever. Would they be willing to re-issue the check to you as a sole proprietor of a business named ABC Consulting (or anything like that)? You can register your sole proprietor business with the state using a \"\"Doing Business As\"\" (DBA, or fictitious name), and then open the bank account for your business using the check provided by the customer as the first deposit. (There is likely a smaller registration fee for the DBA.) If they won't re-issue the check and you have to go the LLC route... Scrounge up $125 doing odd jobs or borrowing from a friend or parents. Seriously, anyone can earn that amount of money in a week or two. Besides the filing fee for the LLC, your bank may require you to provide an Operating Agreement (which is not required by the State). The Operating Agreement can be simple, or more complex if you have a partner (even if it's a spouse). If you do have a partner, it is essential to have such an agreement because it would specify the responsibilities and benefits allocated to each partner, particularly in the event of equity distributions (taking money out of the business, or liquidating and ending the LLC). There are websites that will provide you a boilerplate form for Operating Agreements. But if your business is anything more than just single member LLC, you should pay an attorney to draw one up for you so the wording is right. It's a safeguard against potential future lawsuits. And, while we're at it, don't forget to obtain a EIN (equivalent to a SSN) from the IRS for your LLC. There's no cost, but you'll have to have it to file taxes as a business for every year the LLC exists and has income. Good luck!\"", "topk_rank": 14 }, { "id": "99463", "score": 0.6581880450248718, "text": "It's harder than you think. Once card companies start seeing your debt to credit line ratios climb, they will slash your credit lines quickly. Also, cash credit lines are always much smaller, so in reality, such a scheme would require you to buy goods that can be converted to cash, which dilutes your gains and makes it more likely that you're going to get detected and busted. Think of the other problems. Where do you store your ill-gotten gains? How do you get the money out of the country? How will your actions affect your family and friends? Also, most people are basically good people -- the prospect of defrauding $100k, leaving family and friends behind and living some anonymous life in a third world country isn't an appealing one. If you are criminally inclined, building up a great credit history is not very practical -- most criminals are by nature reactive and want quick results.", "topk_rank": 15 }, { "id": "446870", "score": 0.6580593585968018, "text": "Generally, unless you explicitly elect otherwise, LLCs are transparent when it comes to taxes. So the money in the LLC is your money for tax purposes, there's no need to pay yourself a salary. In fact, the concept of salary for LLC members doesn't exist at all. It is either distributions or guaranteed payments (and even that is mostly relevant to multi-member LLCs). The only concern is the separation of personal and LLC finances - avoiding commingling. Mixing your personal and business expenses by using the same accounts/cards for both business and personal spending may cause troubles when it comes to the liability protection in case of a lawsuit. I'd suggest discussing this with a FL-licensed attorney. Bottom line - technically the withdrawal is just writing yourself a check from the business account or moving money between your personal and business accounts. If you're a sole member - you need not more than that. Make sure the operating agreement explicitly empowers you to do that, of course. There are no tax consequences, but as I mentioned - there may be legal consequences.", "topk_rank": 16 }, { "id": "208219", "score": 0.6580590605735779, "text": "\"If you are considering this to be an entry for your business this is how you would handle it.... You said you were making a balance sheet for monthly expenses. So on the Balance Sheet, you would be debiting cash. For the Income Statement side you would be crediting Owner's Equity to balance the equation: Assets = Liabilities + Owner's Equity So if you deposited $100 to your account the equation would be affected thus: $ 100 in Assets (Debit to Cash Account) = 0 Liabilities - $100 (Credit to Owner's Equity) It is correctly stated above from the bank's perspective that they would be \"\"Crediting\"\" you account with $100, and any outflow from the bank account would be debiting your account.\"", "topk_rank": 17 }, { "id": "375170", "score": 0.6580458879470825, "text": "A few reasons make sense: They have a defined process for rentals, risk assessment, and customer credit. Especially for a large corporation, making changes to that process is not trivial, adds risk/uncertainty, and will be costly. Such changes for a relatively small customer base might not makes sense. Many rental companies DO allow you to rent with a debit card. Why do some businesses take cash only? With a debit card, there is no third party guarantee. With a credit card, the cash is coming from a well-established third party who will pay (assuming no disputes) and has a well-established history of paying. Even if the merchant holds your account, it is still your cash under the control of you and your bank until the deposit clears the merchants bank. It is not surprising they view that as more risk and potentially not worth hassling with debit.", "topk_rank": 18 }, { "id": "579472", "score": 0.6580115556716919, "text": "\"Several events will always result in a reduction of your score, including: These will show up in the short term, but I don't think it's worth $40 per year in perpetuity to avoid this. These aren't serious \"\"black marks\"\" in the same category as missing payments, carrying too much debt, or foreclosures/evictions, etc. These effects are designed to signal issuers when someone acquires a large amount of credit in a very short period of time, which may indicate a greater risk. If your credit is good and you are using your other cards responsibly, closing the card (given the annual fee) would not cause me great concern if it were me. Since you are so much better of a risk than you likely were in college, you can also call Capital One, ask to speak with a supervisor, and ask them to drop the fee and increase your credit limit. They should be able to easily verify that you meet the requirements for other types of preferred cards they offer, and they should be willing to offer you improved terms rather than losing your business. It is very possible they simply haven't re-evaluated your risk since you initially applied. Also, remember that these types of effects determine only a portion of your overall score. Activity is also a major component. Rather than leaving an unused card open for history and debt-to-limit purposes only, I would also recommend having some minimum level of activity, such as an automatic bill payment, on each card you carry. The effect of using your cards over time will have a significant positive effect on your score. Best of luck!\"", "topk_rank": 19 } ]
85	Moving my online only business to the USA?	[ { "id": "431230", "score": 0.7028812170028687, "text": "You don't need a Visa to create or own US property. Your registered agent will be able to take care of most of this, and your new entity will use the registered agent's address where applicable, but you may need your own separate address which can be your office in the UK. If you want privacy then you'll want a separate address, which can also be a PO Box or an address the registered agent also provides. US corporations, especially in Delaware, have a lot more compliance issues than the LLC product. Delaware has a lot more costs for formation and annual reports than most other united states. There are definitely a lot of states to choose from, but more people will have information for Delaware." } ]	[ { "id": "384219", "score": 0.6676343083381653, "text": "You could of course request payment in EUR or USD, maybe keep a PayPal account and just leave the funds in PayPal unless you need to withdraw the money in local currency? Either currency would be fine because the problem you are trying to overcome is the instability in the ruble. EUR and USD both accomplish that. If you can get local clients to pay in EUR or USD (again, PayPal seems like an easy way to accomplish that) you avoid the ruble, but at the risk that your services become more expensive to local clients because they have to convert a weaker currency to a stronger one. You should also solicit some international clients! You are obviously perfectly fluent in English and that's a significant advantage. And they'll be happy to pay in dollars and euros.", "topk_rank": 0 }, { "id": "529727", "score": 0.6673936247825623, "text": "There are short-term and long term aspects. In the long term, if you live and work in Australia and plan to continue doing both indefinitely, you might as well move all your cash investments there. There would be no point bearing the exchange rate risks. It may be worth keeping the account open with just enough credit to stop it being shut down. There is no point needing to (think about) filing foreign tax returns just because you have an account earning a small amount of interest. In the short term, I think the more important question is practicality rather than exchange rate risk. You want to have enough cash in both countries that if you suddenly have to pay say an apartment deposit or a bill, you won't be caught short. So I would leave at least a few thousands dollars in a US bank account until at least a couple of months after the move, when I was sure everything was settled. Good luck.", "topk_rank": 1 }, { "id": "558416", "score": 0.6655927300453186, "text": "The first thing to do would be to decide what action will change the states. Take one example, “moving clothes from washer to dryer” (or whatever). If there was something you could print with a bar code on it for a given load, you might scan it when it moves from the washer to the dryer, then update some trivial database that the customer app could look at. Is that what you’re asking about?", "topk_rank": 2 }, { "id": "117958", "score": 0.6653404235839844, "text": "Take a look at Google Checkout but keep in mind that there is a different list of countries that they support as sellers vs. buyers. The buyer list is much more comprehensive, and I believe covers CIS (Russia, Ukraine and Belarus) while the seller list does not (yet) which means that your client will need to create a U.S. or U.K. based entity to accept payments, however they will be able to accept payments from buyers both in CIS and internationally. Удачи.", "topk_rank": 3 }, { "id": "258611", "score": 0.6652708053588867, "text": "The cost will be around $300-$500 if you do it correctly it in Florida and can be over a $1,000 if you do it in New York (New York is more expensive due to a publication requirement that New York has for LLC’s). The price ranges I’ve given include filing, state fees, getting a tax ID number (EIN), operating agreement, membership certificates, registered agent fees and publication fees if done in New York. Each state also have licensing boards and city fees that are applicable, so you would want to also make sure that you are keeping compliant there. Yearly paperwork to keep the LLC running won’t be so expensive, expect the state to charge a yearly fee and require some basic information to be submitted. I had a quick look at Florida, and with someone filing it for you, expect around $200 to $250 a year, plus registered agent fees. If you are late in Florida the penalty is $400 so you definitely would want a service that provides compliance calendar notifications to make sure you are on time with fees. In regards to bookkeeping and taxes, yearly tax filing will start at $250 to $500 for an LLC and move up from there depending on the services being offered and the amount of time of work. I recently referred someone to an accountant that will charge $250 to file an almost zero tax return on an LLC. I think $40 an hour is a little low for a bookkeeper but it all depends on where you are. I know in some major cities bookkeepers expect $75 an hour or higher. So the expectation in Miami and Manhattan will probably be more expensive than Jacksonville and Albany. If you doing a little business don’t expect the cost to be too much on the bookkeeping. So, breakdown: $300-$500 (FL) - $1,000 (NY) Registration of LLC + any business license, city or other registrations $250 Yearly Fee + Yearly Registered Agent + any business licenses, city or other fee $500 Tax Return + Bookkeeping Fee Banks will charge more than a personal account so expect $120 a year plus. In regards to service I would look at companies that specialize in foreigners setting up businesses in the US, because they will have services designed to help you more than services that primarily specialize with US clients. You are going to have some different needs, based on not having a Social Security Number or establishing from overseas.", "topk_rank": 4 }, { "id": "413078", "score": 0.6651943922042847, "text": "Most US banks allow to initiate wire transfers online. (I do it regularly with BoA and JPMorgan-Chase) Once you have your account details in Germany, you log on to your US account, set it up, and initiate the transfer; that should go through within one day. The exchange ratio is better than anything you would get buying/selling currency (paper cash money), no matter where you do it. Chase takes a fee of 40$ per online transaction; BoA 45$. The receiving bank might or might not take additional fees, they should be lower though (I have experienced between 0€ and 0.35%). Therefore, it is a good idea to bundle your transfers into one, if you can.", "topk_rank": 5 }, { "id": "60281", "score": 0.6651530861854553, "text": "It's not so much about time but about intent. If your intent is to move there permanently, it would be when you arrive in the state for the purposes of living there (i.e. not from a while before that when you went to check a place out or for an interview). I believe that most (if not all) states expect you to get a Driver's License from that state within 30-days of moving there. Something like a Driver's License or State ID would be proof of your residency. These things vary greatly from state to state, so you'd have to research particular states. Or find someone who's done that already. A bit of searching, specifically for Texas, brought me to this forum thread: If you / he wish to establish residency here -- here being Texas -- get a Texas Driver's License and Voter Registration here. Government issued ID with a Texas address is pretty much bulletproof defense against being found to be a resident of elsewhere. Your battle, if there is one, will not be with Texas, but with your present home of record state and/or local government if there are income taxes associated with having been a resident there during the tax year. Which brings up the other question: You would need to make sure that California does not have some provision that would cause you issues. (This isn't so much a case of income from a company in the state as it about capital gains, but it is still prudent to check.)", "topk_rank": 6 }, { "id": "474974", "score": 0.6651336550712585, "text": "There's no reason to keep the California LLC if you don't intend to do business in California. If you'll have sales in California then you'll need to keep it and file taxes accordingly for those sales. You can just as easily form a new LLC in Washington state and even keep the same name (if it's available in Washington, that is). Keeping the California LLC just creates paperwork for whatever regulatory filings California will require for no purpose at all. As for your question about it looking suspicious that you just set up an LLC and then are shutting it down, nobody's going to care, to be honest. As with your situation, plans change, so it isn't really all that unusual. If you're concerned the government will say something, don't.", "topk_rank": 7 }, { "id": "194987", "score": 0.664398729801178, "text": "I figured you might say Australia. Unfortunately, you'll still need to pay US taxes (if I understand things correctly) on top of any Australian taxes you'll have to pay so long as you are still a US citizen (and afaik, you can't give up US citizenship w/o first becoming a citizen of some foreign country). Do you have a plan for this (yet)? If so, what? I have to say that the reaction to Eduardo Saverin leaving the US is frightening and certainly goes a long way toward validating your concerns.", "topk_rank": 8 }, { "id": "454425", "score": 0.664231538772583, "text": "No problem and more than happy to help! Both posting locations I've indicated for you to browse and apply any helpful info. And to answer your question in your post: I think the Federal Trade Commission would address any regulatory concerns as internet does not seem to fall under the FCC for communications, but likely the FTC regarding advertising. I don't think you will have many obstacles, but in addition to the FTC link below, maybe check out privacy policies and legal links on other job sites for reference. Also posting your question in r/legaladvice etc. may get you good free feedback from legal redditors. Hope this helps and best of luck! https://www.ftc.gov/tips-advice/business-center/advertising-and-marketing", "topk_rank": 9 }, { "id": "320092", "score": 0.6640031337738037, "text": "Drop shipping is the term your looking for. Stay away from anything overseas, drop-shipping from anywhere other than where your primary market is located can be a nightmare. Research the company your going to use pretty heavily. Try to talk with someone on the phone and ask them questions. Ask them about pricing, billing terms, shipping procedures, returns/exchanges and things of that sort. Remember, even if your not physically handling the merchandise you are still responsible for the business. It doesn't need to be complicated but it does need to done responsibly. It is a business after all!", "topk_rank": 10 }, { "id": "540917", "score": 0.6638363003730774, "text": "You should talk to a lawyer who's familiar with the matter. I'm not such a lawyer. For the best of my understanding, at least with regards to the US, the answer to all three of your questions is no. Legally, a US company cannot employ Iranian residents and transfer money to Iran. However, I know of Iranians working in the US. So if you manage to secure a H1b visa and move to the US - you can work and earn money here. What you do with it after you earned it - is your business.", "topk_rank": 11 }, { "id": "472094", "score": 0.6637994050979614, "text": "The US requires its (tax) residents to report foreign accounts if the balances (on all the accounts together) are $10K or more at any given day during the year. This is done through the FBAR system. In addition, you obviously need to report this income on your US tax return and pay taxes. If the balances on your foreign accounts exceed specific threshold, your tax return should also include form 8938. If you report everything and pay the taxes due - you can keep the money wherever you want and transfer it between your accounts as you may see fit. If you don't - the US government may come after you with huge penalties, and the Dubai bank may freeze your account. Its easy to become US tax resident. Stay in the US for more than half a year in a row - and here you are. Subject to the US taxation. Even if you're not a US citizen or green card holder, or at all illegal. Some immigration statuses may grant you an exemption, but none that allows you working for your Dubai employer, so I'm assuming you're a US tax resident.", "topk_rank": 12 }, { "id": "38424", "score": 0.6629065275192261, "text": "Depending on how tech savvy your client is you could potentially use bitcoin. There is some take of indian regulators stopping bitcoin exchanges, meaning it might be hard to get your money out in your local country but the lack of fees to transfer and not getting killed on the exchange rate every time has a huge impact, especially if your individual transaction sizes are not huge.", "topk_rank": 13 }, { "id": "53602", "score": 0.6628987193107605, "text": "There are a few options that I know of, but pretty much every one of them will cost more than you want to pay in fees, probably. You should be able to write a check/cheque to yourself. You might check with your US bank branch to see how much of a limit they'd have. You can also use a Canadian ATM card at a US ATM. The final option would be to use a Canadian credit card for all of your purchases in the US, and then pay the bill from the Canadian bank account. I don't recommend the last option because if you're not careful to pay off the bill every month, you're running up debt. Also, it's hard to pay some kinds of expenses by credit card, so you'd want a way to have cash available. Another option would be to use a service like Paypal or Hyperwallet to send yourself the money. Again, you'd be paying fees, but these might be cheaper than what the bank would charge. There may be other options, but these are the ones I'm aware of. Whatever you choose, look carefully at what the fees would be, and how long you'd have to wait to get the money. If you can plan ahead a bit, and take larger chunks of money at a time, that should help keep the fees down a bit. I believe there's also a point where you start having to report these transfers to the US government. The number $10,000 stick in my head, but they may have changed that recently.", "topk_rank": 14 }, { "id": "131382", "score": 0.6627010703086853, "text": "If you move money - you don't need to pay any taxes. If the money was not there before and magically appeared at some point and now you want to move it - you'll have to explain a thing or two to the IRS and FinCEN. Generally, if you're a green card holder - you pay taxes on your worldwide income. So if you have a foreign account that earns interest - that interest is taxable to you in the US. In the year you earned it, not in the year you moved the money to the US. There are also reporting requirements (FBAR notably, and others). If you haven't filed FBAR with regards to the accounts which you now want to move, and especially if that also includes unreported income (interest and other) - you may find yourself in a very deep s#!t. Sorry, very deep troubles. Talk to a tax adviser (EA/CPA licensed in your State). A proper consultation is warranted, if you haven't had one already. You might need a tax attorney.", "topk_rank": 15 }, { "id": "547737", "score": 0.6624107956886292, "text": "I doubt you're going to find anywhere that will give you free outgoing wires unless you're depositing a huge amount of money like $500K or more. An alternative would be to find a bank that offers everything else you want and use XETrade for very low cost online wires. I've used them in the past and can recommend their services. Most banks won't charge for incoming wires. I have accounts at ETrade Bank that don't charge any fees and I can do everything online. You might want to check them out. ETrade also offers global trading accounts which allow you to have accounts denominated in a few foreign currencies (EUR, JPY, GBP, CAD and HKD I think). I don't think there is a fee for moving money between the different currencies. If your goal is simply to diversify your money into different currencies, you could deposit money there instead of wiring it to other banks.", "topk_rank": 16 }, { "id": "424216", "score": 0.6622785925865173, "text": "You should definitely be able to keep the US bank account and credit cards. I'm a UK citizen and resident who worked in the US for a few months (on a temporary visa) many years back and I still have the US bank account from that time. Unless you are planning on moving to the UK permanently, you also should keep your US bank account and cards to make the process of moving back there eventually easier. I would also suggest keeping/moving at least a portion of your savings to the US at regular intervals to insure you against the risk that exchange rates will be against you when you move back. It'll also make things easier when you visit the US as you presumably will every so often - if you use your US account and cards you won't get hit so badly by charges for making each individual payment.", "topk_rank": 17 }, { "id": "192083", "score": 0.6614903211593628, "text": "It's not just the US based mailing address for registration or US based credit-card or bank account: even if you had all these, like I do, you will find that these online filing companies do not have the infrastructure to handle non-resident taxes. The reason why the popular online filing companies do not handle non-resident taxes is because: Non-residents require a different set of forms to fill out - usually postfixed NR - like the 1040-NR. These forms have different rules and templates that do not follow the usual resident forms. This would require non-trivial programming done by these vendors All the NR forms have detailed instructions and separate set of non-resident guides that has enough information for a smart person to figure out what needs to be done. For example, check out Publication 519 (2011), U.S. Tax Guide for Aliens. As a result, by reading these most non-residents (or their accountants) seem to figure out how the taxes need to be filed. For the remaining others, the numbers perhaps are not significant enough to justify the non-trivial programming that need to be done by these vendors to incorporate the non-resident forms. This was my understanding when I did research into tax filing software. However, if you or anyone else do end up finding tax filing software that does allow non-resident forms, I wil be extremely happy to learn about them. To answer your question: you need to do it yourself or get it done by someone who knows non-resident taxes. Some people on this forum, including me for gratis, would be glad to check your work once you are done with it as long as you relieve us of any liability.", "topk_rank": 18 }, { "id": "319435", "score": 0.6614900231361389, "text": "I use XE.com for almost the same purpose. They have free transfer options, such as ACH withdrawals and deposits. I normally do a online bill payment through my international bank to XE, and have them deposit it in the US via ACH. It takes 1-3 business days, and there's no fee beyond their small percentage (about 1.25%) on top of the exchange rate.", "topk_rank": 19 } ]
86	Moving a personal business to a LLC accounting in California	[ { "id": "71569", "score": 0.7080561518669128, "text": "You can move money in and out of the business at will, just keep track of every transaction. Ideally you'd use an accounting software like QuickBooks or similar. Create a Capital Contributions account and every time you put money into the business checking account record it as a Capital Contribution. Likewise, if you take money out of the business, it comes from your capital accounts. (You can create a separate Capital Distributions account in your accounting software, or just use a single account for contributions and distributions). Money coming in and out of those capital accounts is not taxable because you will pay taxes based on net earnings regardless of whether or not you have distributed any profits. So there's no need to make a loan to the company, which would have tax consequences. To reimburse yourself for purchases already made, submit an expense report to the company. If the company is unfunded right now, you can make a capital contribution to cover current expenses, submit the expense report, and wait until you have some profits before paying out the expense report or making any distributions. Welcome to entrepreneurship." } ]	[ { "id": "463893", "score": 0.6724939346313477, "text": "Honing in on your last question: Is there a better way? I think there is, but it would require you to change the way you handle your spending, and that may not be of interest to you. Right now you have a lot of manual work, keeping track of expenditures and then entering the, every day. The great thing about switching to a habit where you pay for everything using a debit or credit card is that you can skip the manual entry by importing your transactions from your bank. You mention that your bank doesn't allow for exporting. There's still a chance that your bank can connect with a solution like Wave Accounting (http://www.waveaccouting.com), which is free and made for small business accounting. (Full disclosure: I represent Wave.) If your current bank doesn't permit export or connections with Wave, it may be worth switching to a different bank. It's a bit of a pain to make the switch, I know, but you really will save a massive amount of time and effort over the course of the year, as well as minimize the risk of human error, compared to entering your receipts on a daily basis. In Wave, you can still enter all of your cash receipts manually if you want to continue with your current practice of cash payments. One important thing to mention, too: If you're looking for a better way of doing things, make sure it includes proper backup. There would be nothing worse than entering all that data onto a spreadsheet and then something happening to your computer and you lose it all. Wave Accounting is backed up hourly and uses bank-level security to keep your information safe. One last thing: as I mention above, Wave Accounting is free. So if it is a good match for your small business accounting needs, it will also be a nice fit for your wallet.", "topk_rank": 0 }, { "id": "260603", "score": 0.6720831990242004, "text": "\"The \"\"independent contractor\"\" vs. \"\"employee\"\" distinction is a red herring to this discussion and not at all important just because someone suggested you use your LLC to do the job. Corp-2-Corp is a very common way to do contracting and having an LLC with business bank accounts provides you with more tax deductions (such as deducting interest on credit lines). Some accounting practices prefer to pay entities by their Tax ID numbers, instead of an individual's social security number. The actual reasoning behind this would be dubious, but the LLC only benefits you and gives you more advantages by having one than not. For example, it is easier for you to hire subcontractors through your LLC to assist with your job, due to the opaqueness of the private entity. Similarly, your LLC can sign Non Disclosure and Intellectual Property agreements, automatically extending the trade secrets to all of its members, as opposed to just you as an individual. By signing whatever agreement with the company that is paying you through your LLC, your LLC will be privy to all of this. Next, assuming you did have subcontractors or other liability inducing assets, the LLC limits the liability you personally have to deal with in a court system, to an extent. But even if you didn't, the facelessness of an LLC can deter potential creditors, for example, your client may just assume you are a cog in a wheel - a random employee of the LLC - as opposed to the sole owner. Having a business account for the LLC keeps all of your expenses in one account statement, making your tax deductions easier. If you had a business credit line, the interest is tax deductible (compared to just having a personal credit card for business purposes). Regarding the time/costs of setting up and managing an LLC, this does vary by jurisdiction. It can negligible, or it can be complex. You also only have to do it once. Hire an attorney to give you a head start on that, if you feel that is necessary. Now back to the \"\"independent contractor\"\" vs. \"\"employee\"\" distinction: It is true that the client will not be paying your social security, but they expect you to charge more hourly than an equivalent actual employee would, solely because you don't get health insurance from them or paid leave or retirement plans or any other perk, and you will receive the entire paycheck without any withheld by the employer. You also get more tax deductions to utilize, although you will now have self employment tax (assuming you are a US citizen), this becomes less and less important the higher over $105,000 you make, as it stops being counted (slightly more complicated than that, but self employment tax is it's own discussion).\"", "topk_rank": 1 }, { "id": "167494", "score": 0.6719720959663391, "text": "\"I'm not an accountant, and you should probably get the advice of one to be sure about what to do. However, if the business is a sole-proprietorship, you'd complete a Schedule C for the business, and you'd end up with a loss at the end. If the investment you made in the business is considered to be entirely or partially \"\"at risk\"\" per the IRS definition, you'd get to claim all or part of the loss as a reduction in your income. If the business was an LLC, then you're beyond my already limited knowledge. There may be some other considerations based on whether this was really a business vs a hobby, and whether or not you're going to try to continue with the business, or whether you've shut it down. I'm not sure about those parts, but they'd be worth exploring with an accountant.\"", "topk_rank": 2 }, { "id": "69306", "score": 0.6717687845230103, "text": "Most US states have rules that go something like this: You will almost certainly have to pay some registration fees, as noted above. Depending on how you organize, you may or may not need to file a separate tax return for the business. (If you're sole proprietor for tax purposes, then you file on Schedule C on your personal Form 1040.) Whether or not you pay taxes depends on whether you have net income. It's possible that some losses might also be deductible. (Note that you may have to file a return even if you don't have net income - Filing and needing to pay are not the same since your return may indicate no tax due.) In addition, at the state level, you may have to pay additional fees or taxes beyond income tax depending on what you sell and how you sell it. (Sales tax, for example, might come into play as might franchise taxes.) You'll need to check your own state law for that. As always, it could be wise to get professional tax and accounting advice that's tailored to your situation and your state. This is just an outline of some things that you'll need to consider.", "topk_rank": 3 }, { "id": "334603", "score": 0.6714139580726624, "text": "\"If you have a single member LLC there is no need to separate expenses in this way since it is simply treated as part of the owner's normal tax returns. This is the way I've been operating. Owner of Single-Member LLC If a single-member LLC does not elect to be treated as a corporation, the LLC is a \"\"disregarded entity,\"\" and the LLC's activities should be reflected on its owner's federal tax return. If the owner is an individual, the activities of the LLC will generally be reflected on: Form 1040 Schedule C, Profit or Loss from Business (Sole Proprietorship) (PDF) Form 1040 Schedule E, Supplemental Income or Loss (PDF) Form 1040 Schedule F, Profit or Loss from Farming (PDF) An individual owner of a single-member LLC that operates a trade or business is subject to the tax on net earnings from self employment in the same manner as a sole proprietorship. If the single-member LLC is owned by a corporation or partnership, the LLC should be reflected on its owner's federal tax return as a division of the corporation or partnership. https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies\"", "topk_rank": 4 }, { "id": "331248", "score": 0.6714056730270386, "text": "Forms for the Colorado LLCs are online. You can find the link to the dissolution form here, and instructions here. IRS instructions are here. That's what they want: To close your business account, send us a letter that includes the complete legal name of the entity, the EIN, the business address and the reason you wish to close your account. If you have a copy of the EIN Assignment Notice that was issued when your EIN was assigned, include that when you write to us at: Internal Revenue Service Cincinnati, Ohio 45999 Everything is pretty straight forward. Note that you might be required to file a initial/final tax return if you had any transactions.", "topk_rank": 5 }, { "id": "144190", "score": 0.6713678240776062, "text": "You can receive funds from US Client as an individual. There is no legal requirement for you to have a company. If the transactions are large say more than 20 lacs in a year, its advisable to open a Private Ltd. Although its simple opening & Registering a company [A CA or a Laywer would get one at a nominal price of Rs 5000] you can do yourself. Whatever be the case, its advisable to have seperate accounts for this business / professional service transactions. Maintain proper records of the funds received. There are certain benefits you can claim, a CA can help you. Paying taxes in Advance is your responsibility and hence make sure you keep paying every quarter as advance tax. Related questions Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? Freelancer in India working for Swiss Company Freelancing to UK company from India How do I account for money paid to colleagues out of my professional income?", "topk_rank": 6 }, { "id": "292051", "score": 0.6713278889656067, "text": "\"Your first and second paragraphs are two different cases. Moving money between a checking account and a savings account will credit Cash and debit Cash, making a GL transaction unnecessary, unless the amounts in the two bank accounts are tracked as two separate GL accounts. You might have account 1001 (Cash-Checking) and account 1002 (Cash-Savings). In that case, a movement of money between these two accounts should be tracked by a transaction between the GL accounts; credit checking, debit savings. It won't affect your balance sheet, but depending on your definition of liquidity of assets it might affect working capital on your statement of cash flows (if you consider the savings account \"\"illiquid\"\" then money moved to it is a decrease in working capital). Basically, what you are creating with your \"\"store credit\"\" accounts for each client is an \"\"unearned revenue\"\" account. When clients pay you cash for work you haven't done yet, or you refund money for a return as \"\"store credit\"\" instead of cash, the credit is a liability account, balancing an increase in cash, inventory, or an expense (if you're giving credit for free, perhaps due to a mistake on your part, you would debit a \"\"Store Credit Expense\"\" account). This can be split out client-by-client in the GL if you wish, avoiding the need for a holding account. The way you want to do it, you'd have a \"\"Client Holding\"\" account. It must be unique in the GL and to the client, and yes, it is a liability account. To transfer to holding, you simply debit Unearned Revenue and credit Client Holding, logging the transaction as \"\"transfer of client store credit\"\" or similar (moving liability to liability; balance sheet doesn't change). Then, as you sell goods or services to the client, you debit Accounts Receivable and credit Revenue, then to record the payment you credit AR and debit Client Holding (up to its current credit balance, after which the client pays you Cash and you debit that, or the client still owes you). To zero out a remaining balance on the Holding account, debit Client Holding and credit Unearned Revenue. I don't think the Holding account, the way you want to use it, is a good idea. If you want to track each customer's store credit balance with a GL account, then create specialized Unearned Revenue accounts for each client who gets a store credit, named for the client and containing their balance (zero or otherwise). If you don't care about it at the GL level, then pool it in one Unearned Revenue account (have one Store Credit account if you must), and track individual amounts off the books.\"", "topk_rank": 7 }, { "id": "468959", "score": 0.6712715029716492, "text": "Can he use an existing credit card in his name for all his business expenses, or does that pierce the corporate veil? That would be a question to a lawyer, since there's no definitive answer but rather circumstantial. Generally it is safer to separate the finances completely than to try and guess what the court would rule if it comes to that. It is not hard to get a separate card for a LLC (especially if it is a sole proprietorship). We are going to buy a house soon, so I don't want any extra inquiries. I guess it depends on the bank and the type of card. My Citi business card doesn't show up on my personal credit report.", "topk_rank": 8 }, { "id": "460995", "score": 0.6712709069252014, "text": "Thank you for the quick reply. My main firm pretty much sets us up as individual practices with limited support as far as customer service. The clients are ours to take care of. There is not a formal small account policy I am aware of, though I will confirm this next week. I am considering delegating a current assistant, who is training to be a rep, to take care of these clients under my close supervision. It might be good experience for him and a way I can still profit. I wouldn't want to lose these clients because a) they might mature or bring referrals, and b) there are individuals in need of at least some insurance to protect their families.", "topk_rank": 9 }, { "id": "495827", "score": 0.6710723042488098, "text": "\"Its not for US citizens - its for US residents. If the US considers you as a tax resident - you'll be treated the same as a US citizen, regardless of your immigration status. The question is very unclear, since it is not mentioned whether your US sourced income \"\"from the Internet\"\" is sales in the US, sales on-line, services you provide, investments, or what else. All these are treated differently. For some kinds of US-sourced income you should have paid taxes in the US already, regardless of where you physically reside. For others - not. In any case, if you become US tax resident, you'll be taxed on your worldwide income, not only the $10K deposited in the US bank account. ALL of your income, everywhere in the world, must be declared to the US government and will be taxed. You should seek professional advice, before you move to the US, in order to understand your responsibilities, liabilities and rights. I suggest looking for a EA/CPA licensed in California and experienced with taxation of foreigners (look for someone in the SF or LA metropolitan areas). Keep in mind that there may be a tax treaty between the US and your home country that may affect your Federal (but not California) taxes.\"", "topk_rank": 10 }, { "id": "177074", "score": 0.670856237411499, "text": "\"If you use \"\"a room or other separately identifiable space\"\" within your apartment exclusively for your business, then you might be able to recoup a fraction of your rent for that. Check the rules for home office at the IRS and adopt a consistent and well-documented approach. (I would pay your full rent out of your personal account, and then do an \"\"expense report\"\" for the portion that's legitimately business related, but that's not a unique approach.) Other than that, I agree with the answer by litteadv - You cannot reduce your tax by the full amount of your rent just by having the S Corp pay, and trying to do so is probably playing with fire. Generally speaking, don't comingle business and personal expenses like that.\"", "topk_rank": 11 }, { "id": "251392", "score": 0.6708526611328125, "text": "\"Here's a brief rundown: 1. You're not going to need a lot of capital or debt 2. You aren't in a high-liability or high (MM+) revenue industry unless you're making children's toys out of reclaimed dynamite or something 3. You are operating by yourself The first fact rules out S or C corp. The second fact dings LLC, and the third one rules out a LLP or GP by default, although you can always convert later if you get a partner. Benefits of sole proprietorship include very simple taxes! As a pass-through entity, the business's income is considered your own, and business expenses are tax deductible. You don't need separate tax returns for both. Additionally, if it's just your name, you might not even need a license depending on your state and municipality (figure this out). If you want a different name, you usually need to register \"\"doing business as [name]\"\" with your state or municipality. Lastly, you don't need to use business income in any special way, since you have no additional tax liability or general liability shield. With an LLC, there are a lot of rules and restrictions. Let me know if you have any specific questions.\"", "topk_rank": 12 }, { "id": "6029", "score": 0.6706816554069519, "text": "If it was me I would want to go with the state I am moving too. I'm not familiar with business law too much as I'm only a law student right now but I would guess it's a safer bet. There might be local state laws that could apply. If there are not any local regulations then they should still know all of the national regulations just the same.", "topk_rank": 13 }, { "id": "244808", "score": 0.6705020070075989, "text": "\"Yes, it is possible. Although there may be red tape for a business account, Alliant Credit Union offers completely online signup and their representatives are reachable by email. You'll probably need to send in the LLC articles this way http://www.alliantcu.com/checking-accounts.html (as pointed out by @littleadv this site defaults to \"\"personal checking\"\" accounts, there is a business checking tab which doesn't generate a direct link, some might miss that) And even if there are a ton of regulations that some pencil pushers at larger banks anecdotally cite (without citing), there will be enough banks that don't care. Good Luck\"", "topk_rank": 14 }, { "id": "418884", "score": 0.6702994108200073, "text": "Book keeping as a sole proprietor will seem like a headache. Basically you have to have two accounts for everything and track specifics for any company assets that are mixed use (such as mileages). No real downsides aside from that. We just bought a start up kit and then modified it an then did a lot of research on proper registrations. I found out later you can have a legal expert do it for like 250-300. If we had known that it would have been worth it. The state and fed registration is a boring headache. Your time is better spent earning.", "topk_rank": 15 }, { "id": "152354", "score": 0.6702771186828613, "text": "Answering for just the US part, yes, you should be able to do this and it's a good strategy. The only additional gotcha I can think of is that if you've made after-tax contributions to your traditional IRA, you need to prorate the conversion, you can't just convert all the pre-tax or all the after-tax. I'm not familiar with Oregon personal income tax so there may be additional gotchas there.", "topk_rank": 16 }, { "id": "299211", "score": 0.669956386089325, "text": "\"-Alain Wertheimer I'm a hobbyist... Most (probably all) of those older items were sold both prior to my establishing the LLC This is a hobby of yours, this is not your business. You purchased all of these goods for your pleasure, not for their future profit. The later items that you bought after your LLC was establish served both purposes (perks of doing what you love). How should I go about reporting this income for the items I don't have records for how much I purchased them for? There's nothing you can do. As noted above, these items (if you were to testify in court against the IRS). \"\"Losses from the sale of personal-use property, such as your home or car, aren't tax deductible.\"\" Source Do I need to indicate 100% of the income because I can't prove that I sold it at a loss? Yes, if you do not have previous records you must claim a 100% capital gain. Source Addition: As JoeTaxpayer has mentioned in the comments, the second source I posted is for stocks and bonds. So at year begin of 2016, I started selling what I didn't need on eBay and on various forums [January - September]. Because you are not in the business of doing this, you do not need to explain the cost; but you do need to report the income as Gross Income on your 1040. Yes, if you bought a TV three years ago for a $100 and sold it for $50, the IRS would recognize you earning $50. As these are all personal items, they can not be deducted; regardless of gain or loss. Source Later in the year 2016 (October), I started an LLC (October - December) If these are items that you did not record early in the process of your LLC, then it is reported as a 100% gain as you can not prove any business expenses or costs to acquire associated with it. Source Refer to above answer. Refer to above answer. Conclusion Again, this is a income tax question that is split between business and personal use items. This is not a question of other's assessment of the value of the asset. It is solely based on the instruments of the IRS and their assessment of gains and losses from businesses. As OP does not have the necessary documents to prove otherwise, a cost basis of $0 must be assumed; thus you have a 100% gain on sale.\"", "topk_rank": 17 }, { "id": "72391", "score": 0.6698969006538391, "text": "As far as accounting goes, if you speak with a CPA, you may be able to reduce the business tax liability. So... the company buys the truck, deducts it, and the adjusted gross income drops, so he'd pay less tax. Or something. You said anything helps, hope you meant it!", "topk_rank": 18 }, { "id": "598143", "score": 0.6698869466781616, "text": "I guess you are making quite a bit of assumptions without clarifying what you are trying to achieve. As a non-resident you cannot incorporate a sole proprietorship in Singapore. You have to be citizen. Alternatively you can register a company that has its own norms like minimum number of directors and some being Singapore national, etc. As you are paying dividend and not salary to yourself, the company will be required to pay taxes on gains. So all consulting money is gain as there is no expense. The balance when you transfer to Spain would potentially get taxed as income to you subject to DTAA", "topk_rank": 19 } ]
87	What should one look for when opening a business bank account?	[ { "id": "357938", "score": 0.650709867477417, "text": "From my experience, I opened a business account to handle my LLC which owns a rental property. The account process and features were similar to shopping for a personal checking account. There would be fees for falling below a minimum balance, and for wanting a paper statement. In my case, keeping $2000 avoids the fee, and I pull the statements online and save the PDFs. Once open for a certain amount of time, you might be able to get credit extended based on the money that flows through that account. The online access is similar to my personal checking, as is the sending of payments electronically." }, { "id": "537593", "score": 0.6936107277870178, "text": "Yes, it's a good idea to have a separate business account for your business because it makes accounting and bookkeeping that much easier. You can open a business checking account and there will be various options for types of accounts and fees. You may or may not want an overdraft account, for example, or a separate business credit card just so you can more easily separate those expenses from your personal cards. When I started my business, I opened a business checking account and met with my banker every year just to show them how the business was doing and to keep the relationship going. Eventually, when I wanted to establish a business line of credit, it was easier to set up because I they were already familiar with my business, its revenue, and needs for a line of credit. You can set up a solo 401k with your bank, too, and they'll be very happy to do so, but I recommend shopping around for options. I've found that the dedicated investment firms (Schwab, Fidelity, etc.) tend to have better options, fees, and features for investment accounts. Just because a specific bank handles your checking account doesn't mean you need to use that bank for everything. Lastly, I use completely different banks for my personal life and for my business. Maybe I'm paranoid, but I just don't want all my finances in the same place for both privacy reasons and to avoid having all my eggs in the same basket. Just something to consider -- I don't really have a completely sane reason for using completely different banks, but it helps me sleep." } ]	[ { "id": "548596", "score": 0.6384721994400024, "text": "For months prior to going public a company has to file financial documents with the SEC. These are available to the public at www.sec.gov on their Edgar database. For instance, Eagleline is listed as potentially IPOing next week. You can find out all the details of any IPO including correspondence between the company and the SEC on Edgar. Here's the link for Eagleline (disclaimer, I have not investigated this company. It is an example only) https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001675776&owner=exclude&count=40 The most important, complex, and thorough document is the initial registration statement, usually an S-1, and subsequent amendments that occur as a result of new information or SEC questions. You can often get insight into a new public company by looking at the changes that have occurred in amendments since their initial filings. I highly advise people starting out to first look at the filings of companies they work for or know the industry intimately. This will help you to better understand the filings from companies you may not be so familiar with. A word of caution. Markets and company filings are followed by very large numbers of smart people experienced in each business area so don't assume there is fast and easy money to be made. Still, you will be a bit ahead if you learn to read and understand the filings public companies are required to make.", "topk_rank": 0 }, { "id": "3336", "score": 0.6382266879081726, "text": "\"Yes, kinda. Talk to local banks about a business account, and tell them you want to enable certain employees to make deposits but not withdrawals. They don't need to know you're all the same person. For instance I have a PayPal account for business. These allow you to create \"\"sub accounts\"\" for your employees with a variety of access privileges. Of course I control the master account, but I also set up a \"\"sub account\"\" for myself. That is the account I use every day.\"", "topk_rank": 1 }, { "id": "589862", "score": 0.6381620168685913, "text": "Yep, you need to hire a lawyer and an accountant, honestly. When I was starting my business, I hired one who was BOTH. Not really for cost-savings, though it did save $$$, but it was super convenient and it's nice to have someone knowledgable in both. It totally depends on your area, but don't overthink it or get intimidated. It won't take as much $$$ as you think to hire someone, maybe $500-$1,000 or so upfront, then a small hourly fee probably every month if you need help with sales tax or accounts or whatever... you need to make sure the gov is getting theirs though from day 1 re: taxes, otherwise you're gonna regret it. Much cheaper to get it all in place now.", "topk_rank": 2 }, { "id": "450009", "score": 0.6379175186157227, "text": "You will probably not be able to figure out the bank from the account number. You can check for your name on registries of abandoned bank accounts or unclaimed money, but without more information, you don't have a lot of options.", "topk_rank": 3 }, { "id": "19794", "score": 0.6373527646064758, "text": "Systems to research that may help you out: Less Accounting and Wave are great because they can import data from banks / credit cards. I know you said your bank doesn't export it but it seems like something as a small business you would want.", "topk_rank": 4 }, { "id": "109203", "score": 0.6361810564994812, "text": "You could, but the bank won't let you... If you're a sole proprietor - then you could probably open a personal account and just use it, and never tell them that is actually a business. However, depending on your volume of operations, they may switch you on their own to business account by the pattern of your transactions. For corporations, you cannot use a personal account since the corporation is a separate legal entity that owns the funds. Also, you're generally required to separate corporate and personal funds to keep the limited liability protection (which is why you have the corporation to begin with). Generally, business accounts have much higher volumes and much more transactions than personal accounts, and it costs more for the banks to run them. In the US, some banks offer free, or very low-cost, business accounts for small businesses that don't need too many transactions. I'm sure if you shop around, you'll find those in Canada as well.", "topk_rank": 5 }, { "id": "242654", "score": 0.6360350251197815, "text": "Note: I am in the UK. I don't know specifically about australia but I expect the general principles will be much the same everywhere. What banks want is to be reasonablly confident that you have a steady income stream that will continue to pay the mortgate until it completes. In general employed are fairly easy to assess. Most employed people will have a steady basic pay that increases through their career. Payslips will usually seperate-out basic pay, overtime and bonuses. There is little opertunity to cook the books. The self-employed are harder to assess. Income can be bursty and there are far more opertunities for cooking the books to make it look like you are earning more than you really are. So banks are likely to be far more careful about lending to the self-employed, they will likely want to see multiple years of buisness records so that any bursts, whether natural due to the ebbs and flows of buisness or deliberatly created to cook the books average out and they can see the overall pattern. A large deposit will help because it reduces the risk to the bank in the event of a default. Similarly not being anywhere near your limit of affordability will help.", "topk_rank": 6 }, { "id": "147343", "score": 0.6351669430732727, "text": "Nope. Credit Unions are for the customers. Since the customers own them, the credit union does what is best for the members. They aren't giving you money, they are loaning it to you for for interest. Furthermore then judged you like any other bank would. High horse moment: I believe the only reason you have to open an account, is because the banking industry didn't want to compete and got legislation to limit the size and reach of a credit union. The credit union wants your business, and they want to work for you, but they are required to have these membership requirements because their lobby isn't as powerful as regular banks.", "topk_rank": 7 }, { "id": "226568", "score": 0.6345229744911194, "text": "\"It is unusual to need a consultant to open a bank account for you, and I would also be concerned that perhaps the consultant could take the money and do nothing, or continue to demand various sums of money for \"\"expenses\"\" like permits, licenses, identity check, etc. until you give up. Some of the more accepted ways to open a bank account are: A: Call up an established bank and follow their instructions to open a personal account . Make sure you are calling on a real bank, one that has been around a while. Hints: has permanent locations, in the local phone book, and has shares traded on a national stock exchange. Call the bank directly, don't use a number given to you by a 3rd party consultant, as it may be a trick... Discuss on the phone and find out if you can open an account by mail or if you need to visit in person. B: Create a company or branch office in the foreign country, assuming this is for business or investing. and open an account by appointing someone (like a lawyer or accountant or similar professional) in the foreign country to represent the company to open an account in person. If you are a US citizen, you will want to ask your CPA/accountant/tax lawyer about the TD F 90-22.1 Foreign Account Bank Report form, and the FATCA Foreign Account Tax Compliance Act. There can be very large fines for not making the required reports. The requirements to open a bank account have become more strict in many countries, so don't be surprised if they will not open an account for a foreigner with no local address, if that is your situation.\"", "topk_rank": 8 }, { "id": "152827", "score": 0.6340352296829224, "text": "\"Generally when you open a new account, you'd be given a checkbook (usually \"\"starter\"\" checks with no personal information, but some banks will later mail you a proper checkbook with your personal details) and a debit card (again, some banks will give you a \"\"starter\"\" one on the spot with a personalized following up in the mail, others will mail you). With the debit card you can use your bank's ATM to withdraw cash from your account, or use it for purchases (will debit, as the name says, directly from your account). You can also use it in other ATMs, but that will usually be with significant fees ($2-$5 per withdrawal to both the ATM owner and your bank). Checks - you can write a check to someone or use the check to go to the cashier in the bank and withdraw money (although usually they have special withdrawal slips for that in the branches, so you don't really need to waste your own checks). As to how to deposit money in your home country - you'll have to check with the bank you have an account at back at home. Usually, you can \"\"wire\"\" transfer money from your BoA account to the account back home, but that is usually comes at a fee of about $30-$50 per transfer (in the US, additional fees may be charged at the receiving end + currency conversion costs). You can also write yourself a check and deposit that check at the home country bank, but that depends on the specific bank whether it is possible, how much it would cost, and how long it would take for them to credit the money to your account after they take your check - may take weeks with personal checks.\"", "topk_rank": 9 }, { "id": "30006", "score": 0.6331733465194702, "text": "\"I think that your best option is to use the internet to look for sites comparing the various features of accounts, and especially forums that are more focused on discussion as you can ask about specific banks and people who have those accounts can answer. \"\"Requests for specific service provider recommendations\"\" are off-topic here, so I won't go into making any of my own bank recommendations, but there are many blogs and forums out there focusing on personal finance.\"", "topk_rank": 10 }, { "id": "397027", "score": 0.6329480409622192, "text": "If it's a small one person business he will have to sign a personal guarantee no matter what he does with respect to incorporating. Not saying your idea isn't worth looking into but no bank will lend him money without a personal guarantee.", "topk_rank": 11 }, { "id": "503419", "score": 0.6328651905059814, "text": "\"You're probably not going to be able to get a loan from any kind of bank if your credit is bad. On top of bad credit if you don't own a home or car that only decreases your chances of getting a loan. On top of all this you don't have a job. I don't mean to be blunt but I don't see any way you could get a loan from a bank of any kind. Also what makes this business a good investment? Have you read over the business plan? Have you looked over financials to see what your investment would be helping with? Are you familiar with the legality of the business and make sure they have proper documentation. There's no guarantees in business and you saying there's all this free money out there is honestly not true. Do your homework, don't just throw your money into something because there is \"\"free money\"\". Also money and friends is not kosher at all i would not suggest borrowing that kind of money from anyone close to you. One last question, will you be a part owner in this business if you invest this kind of money?\"", "topk_rank": 12 }, { "id": "88952", "score": 0.6324878334999084, "text": "\"Although not required, #2 would work best if you used magnetic ink... That is an extra cost which you may or may not want to pay for. You can often get a free checking account and a free set of checks if you can meet the minimum requirements. This often means a higher average daily balance, direct deposit, or some combination of multiple requirements. The bank is taking a risk that a client meeting those minimum requirements while likely earn the bank more in fees and services than what they give out for \"\"free\"\" such as the account and checks. My wife and I opened a Wells Fargo checking account two years ago. Back then, we were able to open the account for free along with a free set of 250 checks. I think the requirement now requires $7,500 average daily balance.\"", "topk_rank": 13 }, { "id": "558237", "score": 0.6320449709892273, "text": "\"Nope, anything is that has the required information is fine. At a minimum you need to have the routing number, account number, amount, \"\"pay to\"\" line and a signature. The only laws are that it can't be written on anything illegal, like human skin, and it has to be portable, not carved on the side of a building ( for example) https://www.theguardian.com/notesandqueries/query/0,5753,-20434,00.html http://www.todayifoundout.com/index.php/2013/12/people-actually-cash-big-novelty-checks-even-possible/ That said, the MICR line and standard sizes will make things eaiser for they bank, but are hardly required. You could write your check on notebook paper so long as it had the right information, and the bank would have to \"\"cash it\"\". Keep in mind that a check is an order to the bank to give your money to a person and nothing more. You could write it out in sentence form. \"\"Give Bill $2 from account 12344221 routing number 123121133111 signed _________\"\" and it would be valid. In practice though, it would be a fight. Mostly the bank would try to urge you to use a standard check, or could hold the funds because it looks odd, till they received the ok from \"\"the other bank\"\". But.... If you rant to fight that fight....\"", "topk_rank": 14 }, { "id": "65659", "score": 0.631680428981781, "text": "I work in banking for the private bank division for a major bank as a banker. I have been helping clients with these types of transactions for years. I believe that large transactions like this are best left to the big boys. That is where the talented bankers/loan officers/underwriters are, and that is the type of transaction they specialize in. I know for a fact that your credit union will not be able to suit your needs, and a smaller bank will be tough to deal with. I wouldn't worry at all about the credit pulls as much as picking a rock solid bank with lots of experiences doing these kinds of deals. That is my 2 cents, albeit a little bit biased, but it is also coming from experience. History with the bank definitely matters, but what business you can bring to the bank along with the lending (deposits, 401k management, personal investments, business services, etc) matter just as much and can make or break the approval/decline or even the terms being favorable or not favorable to your company.", "topk_rank": 15 }, { "id": "369240", "score": 0.631679356098175, "text": "For a small starting plumbing company 1500 is more than enough. He isnt after anything extremely flashy and doesnt need any extra features really. Pictures, services, small blog. Just needs to be clean and easy to follow. Start small and expand on it later depending on how the company does is usually the best bet.", "topk_rank": 16 }, { "id": "580624", "score": 0.6316114068031311, "text": "The bank won't let you because: Differences in required account features — Business accounts have different features (many of them legal features) that are required by businesses. For instances: Do you want to be able to deposit cheques that are written out to your business name? You need a business account for that. Your business could be sold. Then it wouldn't be your business, so it wouldn't make sense to put the business account under your personal name. The bank account and the cash it holds is a business asset and should be owned by the business, so when the business is sold the account goes with it. This is especially the case for a corporation that has shareholders, and not a sole proprietorship. For a business, you could also, in theory, assign other people as signing authorities on the business account (e.g. your corporate treasurer), and the individuals performing that role could change over time. Business accounts allow for this kind of use. Market segmentation — The bank has consciously undertaken to segment their product offerings in order to maximize their profit. Market segmentation helps the bottom line. Even if there were zero legal reasons to have separate personal vs. business accounts, banks would still make it their policy to sell different account types according to use because they can make more money that way. Consider an example in another industry: The plain-old telephone company also practices segmentation w.r.t. personal/business. Do you want a telephone line for a business and listed as such in the phone book? You need a business line. Do you want a phone line hooked up at a non-residential address? You need a business line. Here it's clear it is less of a legal issue than with the bank account, and it doesn't matter that the technical features of the phone line may be identical for the basic product offerings within each segment. The phone company has chosen to segment and price their product offerings this way. Q. Why do companies choose to charge some kinds of customers more than others for essentially the same underlying service? A. Because they can.", "topk_rank": 17 }, { "id": "344928", "score": 0.6313910484313965, "text": "\"Wyoming is a good state for this. It is inexpensive and annual compliance is minimal. Although Delaware has the best advertising campaign, so people know about it, the reality is that there are over 50 states/jurisdictions in the United States with their own competitive incorporation laws to attract investment (as well as their own legislative bodies that change those laws), so you just have to read the laws to find a state that is favorable for you. What I mean is that whatever Delaware does to get in the news about its easy business laws, has been mimicked and done even better by other states by this point in time. And regarding Delaware's Chancery Court, all other states in the union can also lean on Delaware case law, so this perk is not unique to Delaware. Wyoming is cheaper than Delaware for nominal presence in the United States, requires less information then Delaware, and is also tax free. A \"\"registered agent\"\" can get you set up and you can find one to help you with the address dilemma. This should only cost $99 - $200 over the state fees. An LLC does not need to have an address in the United States, but many registered agents will let you use their address, just ask. Many kinds of businesses still require a bank account for domestic and global trade. Many don't require any financial intermediary any more to receive payments. But if you do need this, then opening a bank account in the United States will be more difficult. Again, the registered agent or lawyer can get a Tax Identification Number for you from the IRS, and this will be necessary to open a US bank account. But it is more likely that you will need an employee or nominee director in the United States to go in person to a bank and open an account. This person needs to be mentioned in the Operating Agreement or other official form on the incorporation documents. They will simply walk into a bank with your articles of incorporation and operating agreement showing that they are authorized to act on behalf of the entity and open a bank account. They then resign, and this is a private document between the LLC and the employee. But you will be able to receive and accept payments and access the global financial system now. A lot of multinational entities set up subsidiaries in a number of countries this way.\"", "topk_rank": 18 }, { "id": "466460", "score": 0.631004273891449, "text": "Have a business plan. Even if this is just a piece of paper that you and your friend scratched on, you want a document that describes what you're going to do and how you're going to do it. Also have some note of how profits will be shared (most likely, this will be 50/50 but write it down!) Plan ahead and have some cash onhand. Not every one of your expenses will be something you will know about in advance. Plan your expenses so that you have money to cover them, but also have an emergency fund (you can build this with the profits you get in the beginning) in case your rake breaks and you don't have a backup. Also, if you use your emergency fund, REPLACE IT. Trust each other and communicate. All businesses should run on trust. You and your friend should trust that the other person is going to work hard and put in the work. If you don't trust that he will show up on time, the burden falls to you and you will need to work harder. If you're having problems with him, trust that you'll be able to approach him (be tactful and respectful though) and work it out. Have fun. Ultimately, starting a business like this should be fun. Yes, the work may seem like a drag, but if you and your friend are able to have fun while working you'll enjoy it more and it won't seem so bad. Also, don't be afraid to spend your profits on yourselves. I'm not saying blow every dollar you make, but going to dinner or going to see a movie together with your hard earned profits from that day's work can make it all worth it. These are just some ideas that I came up with at my desk at work. If you have any other questions, feel free to PM me. I'm happy to help out. Good luck!", "topk_rank": 19 } ]
88	Which r in perpetuity formula to pricing a business?	[ { "id": "415946", "score": 0.7777619361877441, "text": "In the equity markets, the P/E is usually somewhere around 15. The P/E can be viewed as the inverse of the rate of a perpetuity. Since the average is 15, and the E/P of that would be 6.7%, r should be 6.7% on average. If your business is growing, the growth rate can be incorporated like so: As you can see, a high g would make the price negative, in essence the seller should actually pay someone to take the business, but in reality, r is determined from the p and an estimated g. For a business of any growth rate, it's best to compare the multiple to the market, so for the average business in the market with your business's growth rate and industry, that P/E would be best applied to your company's income." } ]	[ { "id": "76695", "score": 0.7386971712112427, "text": "I don't have any experience in this, but this is my academic understanding of business pricing. The LOWEST amount a seller would accept is the liquidation value. For a B&B, what would the value of the land, the house, the furnishings, accounts payable, etc. be if it had to be sold today, minus any liabilities. The amount the seller would like to pay for is going to be a multiple of its annual earnings. One example of this is the discounted cash flow analysis. You determine the EBITDA, the earnings a company generated, before interest, depreciation, taxation and amortization. Once you have this amount, you can project it out in perpetuity, or you use an industry multiplier. Perpetuity: You project this value out in perpituity, discounted by the going interest rate. In other words, if you project the business will earn $100,000/year, the business should grow at a 5% rate, and the going interest rate is 8%. Using a growing perpetuity formula, one value of a business would be: 100,000 / (.08 - .03) = $2,000,000. This is a very high number, and the seller would love to get it. It's more common to do a multiple of the EBIDTA. You can do some research into the valuation of the particular industry to figure out the EBIDTA multiplier for the industry. For example, this article suggests that the 2011 EBITDA multiplier for hospitality industries is 13.8. (It's valuing large hotel chains, but it's a start). So the value of this B&B would be around $1,380,000. Here is an online SME valuation tool to help with the EBIDTA multiple based valuation. Also, from my research, it looks like many small business use Seller Discretionary Earnings (SDE) instead of EBITDA. I don't know much about it, but it seems to serve a similar purpose as EBITDA. A potential buyer should request the financial statements of the business for the last few years to determine the value of the business, and then can negotiate with the owner a price. You would probably want to enlist a broker to help you with the transaction.", "topk_rank": 0 }, { "id": "323519", "score": 0.7383689284324646, "text": "A perpetuity in the mathematical context is the equation in your link. A perpetuity in the legal sense is a liability that never matures, presumably paying endlessly, except for a banknote that pays nothing. An example would be UK war bonds during WWII. Real estate can be modeled like a perpetuity for convenience, but it is not a legal obligation to pay forever if one excludes taxes. If one starts with capital and ends with a perpetuity, one has bought a perpetuity. If one starts out with nothing and ends with capital by way of a perpetuity, one has sold a perpetuity.", "topk_rank": 1 }, { "id": "293822", "score": 0.7360233664512634, "text": "Thank you very much for this thoughtful response. In my opinion the judges care more about the why behind your valuation rather than a how. Anyone can use a formula, but it takes so much more to understand why to use the formula. Personally, the 'why' is going to be the toughest part for me understand and wrap my head around. Once again thank you for the advice and the tip.", "topk_rank": 2 }, { "id": "88201", "score": 0.7276683449745178, "text": "nowhere near enough information to really help you. Price it to an IRR of about 25% in 4 years as your business has little to no history. For small business in most sectors you can use a rule of thumb, 2x net + FFE. For me personally, I wouldn't touch a business only 6 months old.", "topk_rank": 3 }, { "id": "209838", "score": 0.7173423171043396, "text": "The short answer is that you would want to use the net inflow or net outflow, aka profit or loss. In my experience, you've got a couple different uses for IRR and that may be driving the confusion. Pretty much the same formula, but just coming at it from different angles. Thinking about a stock or mutual fund investment, you could project a scenario with an up-front investment (net outflow) in the first period and then positive returns (dividends, then final sale proceeds, each a net inflow) in subsequent periods. This is a model that more closely follows some of the logic you laid out. Thinking about a business project or investment, you tend to see more complicated and less smooth cashflows. For example, you may have a large up-front capital expenditure in the first period, then have net profit (revenue less ongoing maintenance expense), then another large capital outlay, and so on. In both cases you would want to base your analysis on the net inflow or net outflow in each period. It just depends on the complexity of the cashflows trend as to whether you see a straightforward example (initial payment, then ongoing net inflows), or a less straightforward example with both inflows and outflows. One other thing to note - you would only want to include those costs that are applicable to the project. So you would not want to include the cost of overhead that would exist even if you did not undertake the project.", "topk_rank": 4 }, { "id": "330856", "score": 0.7137918472290039, "text": "Ok so I used Excel solver for this but it's on the right track. Latest price = $77.19 Latest div = $1.50 3-yr div growth = 28% g = ??? rs = 14% So we'll grow out the dividend 3 years @ 28%, and then capitalize them into perpetuity using a cap rate of [rs - g], and take the NPV using the rs of 14%. We can set it up and then solve g assuming an NPV of the current share price of $77.19. So it should be: NPV = $77.19 = [$1.50 / (1+0.14)^0 ] + [$1.50 x (1+0.28)^1 / (1+0.14)^1 ] + ... + [$1.50 x (1+0.28)^3 / (1+0.14)^3 ] + [$1.50 x (1+0.28)^3 x (1+g) / (0.14-g) / (1+0.14)^4 ] Which gives an implied g of a little under 9%. Let me know if this makes sense, and definitely check the work...", "topk_rank": 5 }, { "id": "134110", "score": 0.7095481157302856, "text": "So, the price-earnings ratio is price over earnings, easy enough. But obviously earnings are not static. In the case of a growing company, the earnings will be higher in the future. There will be extra earnings, above and beyond what the stock has right now. You should consider the future earnings in your estimate of what the company is worth now. One snag: Those extra earnings are future money. Future-money is an interesting thing, it's actually worth less than present-money- because of things like inflation, but also opportunity cost. So if you bought $100 in money that you'll have 20 years from now, you'd expect to pay less than $100. (The US government can sell you that money. It's called a Series EE Savings Bond and it would cost you $50. I think. Don't quote me on that, though, ask the Treasury.) So you can't compare future money with present-money directly, and you can't just add those dollars to the earnings . You need to compute a discount. That's what discounted cash-flow analysis is about: figuring out the future cash flow, and then discounting the future figuring out what it's worth now. The actual way you use the discount rate in your formula is a little scarier than simple division, though, because it involves discounting each year's earnings (in this case, someone has asserted a discount of 11% a year, and five years of earnings growth of 10%). Wikipedia gives us the formula for the value of the future cash flow: essentially adding all the future cash flows together, and then discounting them by a (compounded) rate. Please forgive me for not filling this formula out; I'm here for theory, not math. :)", "topk_rank": 6 }, { "id": "452479", "score": 0.708868145942688, "text": "There is no formula for calculating a stock price based on the financials of a company. A stock price is set by the market and always has a component built into it that is based on something outside of the current valuation of a company using its financials. Essentially, the stock price of a company per share is whatever the best price it can get on the open market. If you are looking at how to evaluate if a stock is a good value at the current price, then look at some of the answers, but I wanted to answer this based on the way you phrased the question.", "topk_rank": 7 }, { "id": "110860", "score": 0.708823561668396, "text": "Having all of the numbers you posted is a start. It's what you need to perform the calculation. The final word, however, comes from the company itself, who are required to issue a determination on how the spin-off is valued. Say a company is split into two. Instead of some number of shares of each new company, imagine for this example it's one for one. i.e. One share of company A becomes a share each in company B and company C. This tell us nothing about relative valuation, right? Was B worth 1/2 of the original company A, or some other fraction? Say it is exactly a 50/50 split. Company A releases a statement that B and C each should have 1/2 the cost basis of your original A shares. Now, B and C may very well trade ahead of the stock splitting, as 'when issued' shares. At no point in time will B and C necessarily trade at exactly the same price, and the day that B and C are officially trading, with no more A shares, they may have already diverged in price. That is, there's nothing you can pull from the trading data to identify that the basis should have been assigned as 50% to each new share. This is my very long-winded was of explaining that the company must issue a notice through your broker, and on their investor section of their web site, to spell out the way you should assign your basis to each new stock.", "topk_rank": 8 }, { "id": "111867", "score": 0.7083002924919128, "text": "EDIT: After reading one of the comments on the original question, I realized that there is a much more intuitive way to think about this. If you look at it as a standard PV calculation and hold each of the cashflows constant. Really what's happening is that because of inflation the discount rate isn't the full value of the interest rate. Really the discount rate is only the portion of the interest rate above the inflation rate. Hence in the standard perpetuity PV equation PV = A / r r becomes the interest rate less the inflation rate which gives you PV = A / (i - g). That seems like a much better way to get to the answer than all the machinations I was originally trying. Original Answer: I think I finally figured this out. The general term for this type of system in which the payments increase over time is a gradient series annuity. In this specific example since the payment is increasing by a percentage each period (not a constant rate) this would be considered a geometric gradient series. According to this link the formula for the present value of a geometric gradient series of payments is: Where P is the present value of this series of cashflows. A_1 is the initial payment for period 1 (i.e. the amount you want to withdraw adjusted for inflation). g is the gradient or growth rate of the periodic payment (in this case this is the inflation rate) i is the interest rate n is the number of payments This is almost exactly what I was looking for in my original question. The only problem is this is for a fixed amount of time (i.e. n periods). In order to figure out the formula for a perpetuity we need to find the limit of the right side of this equation as the number of periods (n) approaches infinity. Luckily in this equation n is already well isolated to a single term: (1 + g)^n/(1 + i)^-n}. And since we know that the interest rate, i, has to be greater than the inflation rate, g, the limit of that factor is 0. So after replacing that term with 0 our equation simplifies to the following: Note: I don't do this stuff for a living and honestly don't have a fantastic finance IQ. It's been a while since I've done any calculus or even this much algebra so I may have made an error in the math.", "topk_rank": 9 }, { "id": "20335", "score": 0.7075042128562927, "text": "\"The textbook answer would be \"\"assets-liabilities+present discounted value of all future profit\"\". A&L is usually simple (if a company has an extra $1m in cash, it's worth $1m more; if it has an extra $1m in debt, it's worth $1m less). If a company with ~0 assets and $50k in profit has a $1m valuation, then that implies that whoever makes that valuation (wants to buy at that price) really believes one of two things - either the future profit will be significantly larger than $50k (say, it's rapidly growing); or the true worth of assets is much more - say, there's some IP/code/patents/people that have low book value but some other company would pay $1m just to get that. The point is that valuation is subjective since the key numbers in the calculations are not perfectly known by anyone who doesn't have a time machine, you can make estimates but the knowledge to make the estimates varies (some buyers/sellers have extra information), and they can be influenced by those buyers/sellers; e.g. for strategic acquisitions the value of company is significantly changed simply because someone claims they want to acquire it. And, $1m valuation for a company with $500m in profits isn't appropriate - it's appropriate only if the profits are expected to drop to zero within a couple years; a stagnant but stable company with $500m profits would be worth at least $5m and potentially much more.\"", "topk_rank": 10 }, { "id": "386437", "score": 0.7065925002098083, "text": "If the cash flow information is complete, the valuation can be determined with relative accuracy and precision. Assuming the monthly rent is correct, the annual revenue is $1,600 per year, $250/mo * 12 months - $1,400/year in taxes. Real estate is best valued as a perpetuity where P is the price, i is the income, and r is the rate of interest. Theoreticians would suggest that the best available rate of interest would be the risk free rate, a 30 year Treasury rate ~3.5%, but the competition can't get these rates, so it is probably unrealistic. Anways, aassuming no expenses, the value of the property is $1,600 / 0.035 at most, $45,714.29. This is the general formula, and it should definitely be adjusted for expenses and a more realistic interest rate. Now, with a better understanding of interest rates and expenses, this will predict the most likely market value; however, it should be known that whatever interest rate is applied to the formula will be the most likely rate of return received from the investment. A Graham-Buffett value investor would suggest using a valuation no less than 15% since to a value investor, there's no point in bidding unless if the profits can be above average, ~7.5%. With a 15% interest rate and no expenses, $1,600 / .15, is $10,666.67. On average, it is unlikely that a bid this low will be successful; nevertheless, if multiple bids are placed using this similar methodology, by the law of small numbers, it is likely to hit the lottery on at most one bid.", "topk_rank": 11 }, { "id": "369086", "score": 0.7041148543357849, "text": "In my original question, I was wondering if there was a mathematical convention to help in deciding on whether an equity offering OR debt offering would be a better choice. I should have clarified better in the question, I used Vs. which may have made it unclear.", "topk_rank": 12 }, { "id": "366509", "score": 0.7025204300880432, "text": "I hope that there are no significant differences between the things you list once the formulas for compounding interest are understood. I will, again, lay out these formulas below. First, definition of the variables: R means Total Return ratio. The sum of all money you get, both dividends (or interest payments) and return of initial capital. I is a ratio. It is the percent (10.4%) divided by 100 (0.104) then added to one (1.104). P means the number of periods in which the interest rate is paid and compounded. R = I^P I = R^(1/P) P = log(R) / log(I) Once you have R you multiply it by the amount of your initial investment to find out how much total money is returned. For simplicity the following amounts are approximate: 2 = 1.104^7 1.104 = 2^(1/7) 7 = log(2) / log(1.104) So to double your money in seven years you need a yearly interest rate of 10.4, if compounded yearly.", "topk_rank": 13 }, { "id": "26846", "score": 0.7023829221725464, "text": "\"By the sounds of things, you're not asking for a single formula but how to do the analysis... And for the record you're focusing on the wrong thing. You should be focusing on how much it costs to own your car during that time period, not your total equity. Formulas: I'm not sure how well you understand the nuts and bolts of the finance behind your question, (you may just be a pro and really want a consolidated equation to do this in one go.) So at the risk of over-specifying, I'll err on the side of starting at the very beginning. Any financial loan analysis is built on 5 items: (1) # of periods, (2) Present Value, (3) Future Value, (4) Payments, and (5) interest rate. These are usually referred to in spreadsheet software as NPER, PV, FV, PMT, and Rate. Each one has its own Excel/google docs function where you can calculate one as a function of the other 4. I'll use those going forward and spare you the 'real math' equations. Layout: If I were trying to solve your problem I would start by setting up the spreadsheet up with column A as \"\"Period\"\". I would put this label in cell A2 and then starting from cell A3 as \"\"0\"\" and going to \"\"N\"\". 5 year loans will give you the highest purchase value w lowest payments, so n=60 months... but you also said 48 months so do whatever you want. Then I would set up two tables side-by-side with 7 columns each. (Yes, seven.) Starting in C2, label the cells/columns as: \"\"Rate\"\", \"\"Car Value\"\", \"\"Loan Balance\"\", \"\"Payment\"\", \"\"Paid to Interest\"\", \"\"Principal\"\", and \"\"Accumulated Equity\"\". Then select and copy cells C2:I2 as the next set of column headers beginning in K2. (I usually skip a column to leave space because I'm OCD like that :) ) Numbers: Now you need to set up your initial set of numbers for each table. We'll do the older car in the left hand table and the newer one on the right. Let's say your rate is 5% APR. Put that in cell C1 (not C3). Then in cell C3 type =C$1/12. Car Value $12,000 in Cell D3. Then type \"\"Down Payment\"\" in cell E1 and put 10% in cell D1. And last, in cell E3 put the formula =D3(1-D$1). This should leave you with a value for the first month in the Rate, Car Value, and Loan Balance columns. Now select C1:E3 and paste those to the right hand table. The only thing you will need to change is the \"\"Car Value\"\" to $20,000. As a check, you should have .0042 / 12,000 / 10,800 on the left and then .0042 / 20,000 / 18,000 on the right. Formulas again: This is where spreadsheets become amazing. If we set up the right formulas, you can copy and paste them and do this very complicated analysis very quickly. Payment The excel formula for Payment is =PMT(Rate, NPER, PV, FV). FV is usually zero. So in cell F3, type the formula =PMT(C3, 60, E3, 0). Obviously if you're really doing a 48 month (4 year) loan then you'll need to change the 60 to 48. You should be able to copy the result from cell F3 to N3 and the formula will update itself. For the 60 months, I'm showing the 12K car/10.8K loan has a pmt of $203.81. The 20K/18K loan has a pmt of 339.68. Interest The easiest way to calculate the interest is as =E3C3. That's (Outstanding Loan Balance) x (Periodic Interest Rate). Put this in cell G4, since you don't actually owe any interest at Period 0. Principal If you pay PMT each month and X goes to interest, then the amount to principal is \"\"PMT - X\"\". So in H4 type =-F3 - G3. The 'minus' in front of F3 is because excel's PMT function returns a negative amount. If you want to, feel free to type \"\"=-PMT(...)\"\" for the formula that's actually in F3. It's your call. I get 159 for the amount to principal in period 1. Accumulated Equity As I mentioned in the comment, your \"\"Equity\"\" comes from your initial Loan-to-Value and the accumulated principal payments. So the formula in this cell should reflect that. There are a variety of ways to do this... the easiest is just to compare your car's expected value to your loan balance every time. In cell I3, type =(D3-E3). That's your initial equity in the car before making any payments. Copy that cell and paste it to I4. You'll see it updates to =(D4-E3) automatically. (Right now that is zero... those cells are empty, but we're getting there) The important thing is that as JB King pointed out, your equity is a function of accumulated principal AND equity, which depreciates. This approach handles those both. Finishing up the copy-and-paste formulas I know this is long, but we're almost done. Rate // Period 1 In cell C4 type =C3. Payment // Period 1 In cell F4 type =F3. Loan Balance // Period 1 In cell E4 type =E3-H4. Your loan balance at the end of period is reduced by the principal you paid. I get 10,641. Car Value // Period 1 This will vary depending on how you want to handle depreciation. If you ignore it, you're making a major error and it's not worth doing this entire analysis... just buy the prettiest car and move on with life. But you also don't have to get it scientifically accurate. Go to someplace like edmunds.com and look up a ballpark. I'm using 4% depreciation per year for the old (12K) car and 7% for the newer car. However, I pulled those out of my ass so figure out what's a better ballpark. In G1 type \"\"Depreciation\"\" and then put 4% in H1. In O1 type \"\"Depreciation\"\" and then 7% in P1. Now, in cell D4, put the formula =D3 * (1-(H$1/12)). Paste formulas to flesh out table As a check, your row 4 should read 1 / .0042 / 11,960 / 10,641 / 203.81 / 45 / 159 / 1,319. If so, you're great. Copy cells C4:I4 and paste them into K4:Q4. These will update to be .0042 / 19,883 / 17,735 / 339.68 / 75 / 265 / 2,148. If you've got that, then copy C4:Q4 and paste it to C5:C63. You've built a full amortization table for your two hypothetical loans. Congratulations. Making your decision I'm not going to tell you what to decide, but I'll give you a better idea of what to look at. I would personally make the decision based on total cost to own during that time period, plus a bit of \"\"x-factor\"\" for which car I really liked. Look at Period 24, in columns I and Q. These are your 'equities' in each car. If you built the sheet using my made-up numbers, then you get \"\"Old Car Equity\"\" as 4,276. \"\"New Car Equity\"\" is 6,046. If you're only looking at most equity, you might make a poor financial decision. The real value you should consider is the cost to own the car (not necessarily operate it) during that time... Total Cost = (Ending Equity) - (Payment x 24) - (Upfront Cash). For your 'old' car, that's (4,276) - (203.81 * 24) - (1,200) = -1,815.75 For the 'new' car, that's (6,046) - (339.68 * 24) - (2,000) = -4,106.07. Is one good or bad? Up to you to decide. There are excel formulas like \"\"CUMPRINC\"\" that can consolidate some of the table mechanics, but I assumed that if you're here asking you would have gotten stuck running some of those. Here's the spreadsheet: https://docs.google.com/spreadsheet/ccc?key=0Ah0weE0QX65vdHpCNVpwUzlfYjlTY2VrNllXOS1CWUE#gid=1\"", "topk_rank": 14 }, { "id": "401266", "score": 0.7022219300270081, "text": "\"Your company actually will most likely use some sort of options pricing model, either a binomial tree or black-scholes to determine the value for their accounting and, subsequently, for their issuance and realization. First, market value of equity will be determined. Given you're private (although \"\"pre-IPO could mean public tomorrow,\"\"), this will likely revolve around a DCF and/or market approaches. Equity value will then be compared to a cap table to create an equity waterfall, where the different classes of stock and the different options will be valued along tranches. Keep in mind there might be liquidation preferences that would make options essentially further out of the money. As such, your formulae above do not quite work. However, as an employee, it might be difficult to determine the necessary inputs to determine value. To estimate it, however, look for three key pieces of information: 1. Current equity value 2. Option strike price 3. Maturity for Options If the strike is close to the current equity value, and the maturity is long enough, and you expect the company to grow, then it would look like the options have more value than not. Equity value can be derived from enterprise value, or by directly determining it via a DCF or guideline multiples. Reliable forecasts should come from looking at the industry, listening to what management is saying, and then your own information as an insider.\"", "topk_rank": 15 }, { "id": "21786", "score": 0.7003275156021118, "text": "The value of a share depends on the value of the company, which involves a lot more than the value of its assets -- it requires making decisions about what you think will happen to the company in the future. That's inherently not something that can be reduced to a single formula, at least not unless you can figure out how to represent your guesses and your confidence in them in the formula ... and even if you could do all that it would only say what you think the stock is worth; others will be using different numbers and legitimately get different results. Disagreement over value is what the stock market is all about, I'm afraid.", "topk_rank": 16 }, { "id": "162389", "score": 0.6998729109764099, "text": "The IRR is the Discount Rate r* that makes Net Present Value NPV(r)==0. What this boils down to is two ways of making the same kind of profitability calculation. You can choose a project with NPV(10%)>0, or you can choose based on IRR>10%, and the idea is you get to the same set of projects. That's if everything is well behaved mathematically. But that's not the end of this story of finance, math, and alphabet soup. For investments that have multiple positive and negative cash flows, finding that r becomes solving for the roots of a polynomial in r, so that there can be multiple roots. Usually people use the lowest positive root but really it only makes sense for projects where NPV(r)>0 for r<r and NPV(r)<0 for r>r. To try to help with your understanding, you can evaluate a real estate project with r=10%, find the sum future discounted cash flows, which is the NPV, and do the project if NPV>0. Or, you can take the future cash flows of a project, find the NPV as a function of the rate r, and find r where NPV(r)==0. That r is the IRR. If IRR=r>10% and the NPV function is well behaved as above, you can also do the project. When we don't have to worry about multiple roots, the preceding two paragraphs will select the same identical sets of projects as meeting the 10% return requirement.", "topk_rank": 17 }, { "id": "209257", "score": 0.6997069716453552, "text": "The question lacks specificity, i.e. when does the initial investment occur, now or one period from now? If now then it is a perpetuity due. I will consider under 2 scenarios, A and B, relating to the size of the initial investment. A. Assuming that the initial investment (C_0) occurs now and each payment thereafter has the relationship (1+g) with this investment then the relevant base equation is that for the present value of a growing perpetuity due, expressed in terms of C_0, i.e. PVGPD= [C_0(1+g)(1+i)]/(i-g). Now, to suit the question asked, we can see that i=fixed rate of return (f) and g = expected inflation rate (e) such that we can rewrite the equation as PVGPD = [C_0(1+e)(1+i)]/(i-e]. We know that f = is a fixed nominal rate and must be adjusted for e to calculate the real rate (r) according to the equation f=(1+r)(1+e)-1. Therefore PVGPD = [C_0(1+e)(1+(1+r)(1+e)-1)]/((1+r)(1+e)-1-e] Tidying up PVGPD = {C_0(1+r)(1+e)^2}/[r(1+e)] PVGPD = [C_0(1+r)(1+e)]/r B. Assuming that the initial investment (X) is not equal to each subsequent perpetual payment (C_1) then the relevant base equation is that for the the initial investment plus the present value of a growing perpetuity, i.e. PVGP= X + [C_1/(i-g)] Rewriting PVGP = X + [C_1/(f-e)] Substituting PVGPD = X + {C_1/[(1+r)(1+e)-1-e]} Tidying up PVGPD = X + C_1/[r*(1+e)]", "topk_rank": 18 }, { "id": "526110", "score": 0.6996355652809143, "text": "Book value = sell all assets and liquidate company . Then it's the value of company on book. Price = the value at which it's share gets bought or sold between investors. If price to book value is less than one, it shows that an 100$ book value company is being traded at 99$ or below. At cheaper than actually theoretical price. Now say a company has a production plant . Situated at the most costliest real estate . Yet the company's valuation is based upon what it produces, how much orders it has etc while real estate value upon which plant is built stays in book while real investors don't take that into account (to an extend). A construction company might own a huge real estate inventory. However it might not be having enough cash flow to sustain monthly expense. In this scenario , for survival,i the company might have to sell its real estate at discount. And market investors are fox who could smell trouble and bring price way below the book value Hope it helps", "topk_rank": 19 } ]
91	US Double Taxation - Business Trips and the Foreign Tax Credit	[ { "id": "523431", "score": 0.7982928156852722, "text": "\"If you're a US citizen, money earned while in the US is sourced to the US. So you can't apply FTC/FEIE to the amounts attributable to the periods of your work while in the US even if it is a short business trip. Tax treaties may affect this. Most tax treaties have explicit provisions to exclude short trips from the sourcing rules, however due to the \"\"saving clause\"\" these would probably not apply to you if you're a US citizen - you'll need to read the relevant treaty. Your home country should allow credit for the US taxes paid on the US-sourced income, and the double-taxation avoidance provision should apply in this case. The technicalities depend on your specific country. You would probably not just remove it from the taxable income, there probably is a form similar to the US form 1116 to calculate the available credit.\"" } ]	[ { "id": "510599", "score": 0.7478997111320496, "text": "A) a tax treaty probably covers this for the avoidance of double taxation. Tax treaties can be very cryptic and have little precedence clarifying them http://www.irs.gov/businesses/international/article/0,,id=169552,00.html B) I'm going to say NO since the source of your income is going to be US based. But the UK tax laws might also have specific verbage for resident source income. sorry it is an inconclusive answer, but should be some factors to consider and point you in the right direction.", "topk_rank": 0 }, { "id": "489383", "score": 0.7466022968292236, "text": "We don't have all the details, but individuals and corporations can either deduct or elect to get a credit for foreign taxes paid. What if this stays and the state/local deduction is eliminated. The IRS directly states the intent is to avoid double taxation. https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit-choosing-to-take-credit-or-deduction And ya, the system you make reference to was tried in the Articles of Confederation and proved unworkable. The initial point is that it makes no sense to eliminate the state and local tax deduction unless the intent is to punish blue states and localities in order to offset a reduction in taxes for the wealthy.", "topk_rank": 1 }, { "id": "104464", "score": 0.7402580976486206, "text": "\"Disclaimer: My answer is based on US tax law, but I assume Australian situation would be similar. The IRS would not be likely to believe your statement that \"\"I wouldn't have gone to the country if it wasn't for the conference.\"\" A two-week vacation, with a two-day conference in there, certainly looks like you threw in the conference in order to deduct vacation expenses. At the very least, you would need a good reason why this conference is necessary to your business. If you can give that reason, it would then depend on the specifics of Australian law. The vacation is clearly not just incidental to the trip. The registration for the conference is always claimable as a business expense.\"", "topk_rank": 2 }, { "id": "68190", "score": 0.7366287112236023, "text": "In cases like this you should be aware that tax treaties may exist and that countries are generally willing to enter into them. Their purpose is to help prevent double taxation. Tax treaties often times give you a better tax rate than even being a resident of the countries in question! (For instance, the Italy to US tax rate is lower than simply doing business in many United States) This should guide your google search, here is something I found for Germany/Spain http://tmagazine.ey.com/wp-content/uploads/2011/03/2011G_CM2300_Spain-Germany-sign-new-tax-treaty.pdf It appears that the dividend tax rate under that treaty is 5% , to my understanding, the income tax rates are often multiples higher! I read that spain's income tax rate is 18% So what I would do is see if there is the possibility of deferring taxes in the lower tax jurisidiction and then doing a large one time dividend when conveninet. But Germany isn't really known for its low taxes, being a Federal Republic, the taxes are levied by both the states and the federal government. Look to see if your business structure can avoid being taxed as the entity level: ie. your business' earnings are always distributed to the owners - which are not germany citizens or residents - as dividends. So this way you avoid Germany's 15% federal corporate tax, and you avoid Spain's 18% income tax, and instead get Spanish dividends at 5% tax. Anyway, contact a tax attorney to help interpret the use of the regulations, but this is the frame of mind you should be thinking in. Because it looks like spain is willing to do a tax credit if you pay taxes in germany, several options here to lower your tax footprint.", "topk_rank": 3 }, { "id": "73666", "score": 0.7364362478256226, "text": "\"I'm working on similar problem space. There seems to be some working ambiguity in this space - most focus seems to be on more complex cases of income like Dividends and Capital Gains. The US seems to take a position of \"\"where the work was performed\"\" not \"\"where the work was paid\"\" for purposes of the FEIE. See this link. The Foreign Tax Credit(FTC) is applied (regardless of FEIE) based on taxes paid in the other Country. In the event you take the FEIE, you need to exclude that from the income possible to claim on the FTC. i.e. (TOTAL WAGES(X) - Excluded Income) There is a weird caveat on TOTAL WAGES(X) that says you can only apply the FTC to foreign-sourced income which means that potentially we are liable for the on-US-soil income at crazy rates. See this link.. Upon which... there is probably not a good answer short of writing your congressperson.\"", "topk_rank": 4 }, { "id": "586326", "score": 0.7346919178962708, "text": "I agree that double taxation makes no sense regardless of individual or corporation. Having said that, it's my understanding that Murca offers corporations tax credits on foreign taxes paid to avoid double taxation. I'm pretty sure that a similar vehicle exists for individuals as well. My issue is entirely with corporations paying off legislators to avoid taxes that they have an obligation to pay in the country that they operate.", "topk_rank": 5 }, { "id": "421301", "score": 0.73320472240448, "text": "\"Worksheets/ Documentation: (From my experience filing my business deductions through several tax preparers.) Keep all your calculations, but only submit the calculations and worksheets requested by the tax form. Most travel deductions are just a category total. If the IRS wants more info, it will ask for it. Information from the book Home Business Tax Deductions (from Nolo) (2012): Traveling with kids: In chapter 9 (\"\"Leaving Town: Business Travel\"\"), in the section \"\"Taking People With You\"\", it specifically discusses your situation. Paraphrasing, it says that you can deduct the amount any eligible expenses would have cost you if you were traveling without your kids. So, you can deduct the cost the smaller hotel room that you and your wife would have normally rented if you were alone. How your side trips affect your business deductions: According to the book, since you spent 50% or more of your time on business activities while traveling in the U.S.: Deducting meals shared with your kids: You can deduct meals as either entertainment or travel expenses. I would recommend you buy one of Nolo's books on deductions, as it goes into much more detail than I do here.\"", "topk_rank": 6 }, { "id": "237262", "score": 0.7322118878364563, "text": "With something this complicated you are going to want to consult professionals. Either a professional with international experience, who will tell you the best tax arrangement overall but might come expensive, or one professional in each country who will optimize for that country. You will have to pay US taxes, and depending on your residency probably some in Spain. Double tax agreements should kick in to prevent you paying tax on the same money twice. You do not have to pay separate 'European' taxes. If you do substantial business in another country you might have to pay there, but one of your professionals should sort it out.", "topk_rank": 7 }, { "id": "420846", "score": 0.7313547730445862, "text": "\"Your wages are an expense to your employer and are therefore 100% tax deductible in the business income. The company should not be paying tax on that, so your double-tax scenario, as described, isn't really correct. [The phrase \"\"double taxation\"\" with respect to US corporations usually comes into play with dividends. In that case, however, it's the shareholders (owners) that pay double. The answer to \"\"why?\"\" in that case can only be \"\"because it's the law.\"\"]\"", "topk_rank": 8 }, { "id": "141738", "score": 0.7263713479042053, "text": "\"About deducting mortgage interest: No, you can not deduct it unless it is qualified mortgage interest. \"\"Qualified mortgage interest is interest and points you pay on a loan secured by your main home or a second home.\"\" (Tax Topic 505). According to the IRS, \"\"if you rent out the residence, you must use it for more than 14 days or more than 10% of the number of days you rent it out, whichever is longer.\"\" Regarding being taxed on income received from the property, if you claim the foreign tax credit you will not be double taxed. According to the IRS, \"\"The foreign tax credit intends to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the United States and the foreign country from which the income is derived.\"\" (from IRS Topic 856 - Foreign Tax Credit) About property taxes: From my understanding, these cannot be claimed for the foreign tax credit but can be deducted as business expenses. There are various exceptions and stipulations based on your circumstance, so you need to read the official publications and get professional tax advice. Here's an excerpt from Publication 856 - Foreign Tax Credit for Individuals: \"\"In most cases, only foreign income taxes qualify for the foreign tax credit. Other taxes, such as foreign real and personal property taxes, do not qualify. But you may be able to deduct these other taxes even if you claim the foreign tax credit for foreign income taxes. In most cases, you can deduct these other taxes only if they are expenses incurred in a trade or business or in the production of income. However, you can deduct foreign real property taxes that are not trade or business expenses as an itemized deduction on Schedule A (Form 1040).\"\" Note and disclaimer: Sources: IRS Tax Topic 505 Interest Expense, IRS Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses) , IRS Topic 514 Foreign Tax Credit , and Publication 856 Foreign Tax Credit for Individuals\"", "topk_rank": 9 }, { "id": "185384", "score": 0.7251209616661072, "text": "Technically, if you earn in US (being paid there, which means you have a work visa) and live in other country, you must pay taxes in both countries. International treaties try to decrease the double-taxation, and in this case, you may pay in your country the difference of what you have paid in US. ie. your Country is 20% and USA is 15%, you will pay 5%, and vice-versa. This works only with certain areas. You must know the tax legislation of both countries, and I recommend you seek for advisory. This site have all the basic information you need: http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion Good luck.", "topk_rank": 10 }, { "id": "207531", "score": 0.724648654460907, "text": "There are just too many variables here... Will you legally be considered a permanent resident from the moment you move? Will you work from home as a contractor or as an employee? Those are not questions you can answer yourself, they really depend on your circumstances and how the tax authorities will look at them. I strongly encourage you to speak to an advisor. Very generally spoken, at your place of residence you pay taxes for your worldwide income, at the place of your work base (which is not clear if this really would be Turkey) you pay taxes on the income generated there. If it's one and the same country, it's simple. If not, then theoretically you pay twice. However, most countries have double taxation treaties to avoid just that. This usually works so that the taxes paid abroad (in Turkey) would be deducted from your tax debt at your place of residence. But you might want to read the treaty to be sure how this would be in your specific case (all treaties are publicly available), and you should really consider speaking to a professional.", "topk_rank": 11 }, { "id": "245447", "score": 0.722680926322937, "text": "\"For simplicity, let's start by just considering cash back. In general, cash back from credit cards for personal use is not taxable, but for business use it is taxable (sort of, I'll explain later). The reason is most personal purchases are made with after tax dollars; you typically aren't deducting the cost of what you purchased from your personal income, so if you purchase something that costs $100 and you receive $2 back from the CC company, effectively you have paid $98 for that item but that wouldn't affect your tax bill. However, since businesses typically deduct most expenses, that same $100 deduction would have only been a $98 deduction for business tax purposes, so in this case the $2 should be accounted for. Note, you should not consider that $2 as income though; that would artificially inflate your revenue. It should be treated as a negative expense, similar to how you would handle returning an item you purchased and receiving a CC refund. Now for your specific questions: Part 1: As a small business owner, I wish to attend an annual seminar to improve my business. I have enough credit card reward points to cover the airfare, hotel, and rental car. Will those expenses still be deductible at the value displayed on the receipt? Effectively no, these expenses are not deductible. If you deduct them they will be completely counter-acted by the \"\"refund\"\" you receive for the payments. Part 2: Does it matter if those points are accrued on my personal credit card, rather than a business credit card? This is where it gets hairy. Suppose your company policy is that employees make purchases with their own personal credit cards and submit receipts for reimbursement. In this case the employer can simply reimburse and would not know or care if the employee is racking up rewards/points/cashback. The trick is, as the employee, you must always purchase business related items normally so you have receipts to show, and if you receive cashback on the side there seems to be a \"\"don't ask, don't tell\"\" rule that the IRS is OK with. It works the same way with heavy business travelers and airline miles- the free vacations those users get as perks are not treated as taxable income. However, I would not go out of my way to abuse this \"\"loophole\"\". Typically, things like travel (airfare, hotel, car rental, meals) are expected. But I wouldn't go purchase 100 company laptops on your personal card and ask the company to reimburse you. The company should purchase those 100 laptops on a company card and effectively reduce the sale price by the cashback received. (Or more realistically, negotiate a better discount with your account rep and just cut them a check.) Part 3: Would there be any difference between credit card points and brand-loyalty points? If the rental car were paid for with points earned directly on the rental car company's loyalty system (not a CC), would that yield a different result? There is no difference. Perhaps the simplest way to think about this is you can only deduct an expense that you actually incur. In other words, the expense should show up on a bank or CC statement. This is why when you volunteer and work 10 hours for a charity, you can't call that a \"\"donation\"\" of any amount of money because there is no actual payment made that would show up on a bank statement. Instead you could have billed the charity for your 10 hours of work, and then turned around and donated that same amount back to them, but it ends up being a wash.\"", "topk_rank": 12 }, { "id": "531578", "score": 0.7205902934074402, "text": "\"It depends on what the \"\"true\"\" reason for the trip is. If you decide to deduct the trip as a business expense, then during an audit you will be asked why you had to go there. If there was nothing accomplished via the travel (that is, you worked from the hotel, met with no clients, visited no tradeshows, etc) then the expense is unlikely to be allowed. Yes, on a business trip you can do sightseeing if you wish (though you can't deduct any sightseeing specific expenses, like admission to a tourist attraction), but if you are just working while on vacation, then the trip itself is not deductible, since there was no business benefit to traveling in the first place.\"", "topk_rank": 13 }, { "id": "372744", "score": 0.7202152609825134, "text": "If you want to prove the actual tax liability you have in the US - you have to file a tax return. If the Romanian government believes you that the withholding is your actual tax - fine, but that would be a lie. Withholding is not a tax. The American payers must withhold from foreigners enough to have transferred more than the actual tax the foreigners would have paid. The standard withholding is 30%, but the actual tax on dividends varies. In case the tax treaty limits the tax on dividends - the withholding is usually up to the maximum of the tax allowed by the treaty. But allowed doesn't mean that would be the actual tax. In many cases it is not. So if you want to claim the US tax paid as a credit towards your Romanian tax - you'll need to file a tax return in the US, calculate the actual tax liability and that would be the amount of credit you can claim. The difference between that amount and the amount withheld by the payer will be refunded to you by the IRS. You don't have to file a US tax return, that is true. But the withholding is not the tax, the actual tax liability may have been less, and the Romanian tax authority may deny your credit, in whole or in part, based on the fact that you haven't filed a US tax return and as such have no proof of your actual tax paid. You had some experience with the UK tax treaty, and you think all the treaties are the same. That may be a reasonable line of thought, but it is incorrect. Treaties are not the same. More importantly, even if the treaty is the same - the tax law is not. While in the UK the tax on dividends may be flat and from the first pound - in the US it is neither flat nor from the first dollar. Thus, while in the UK you may have been used to paying tax at source and that's it - in the US it doesn't work that way at all.", "topk_rank": 14 }, { "id": "93744", "score": 0.719593346118927, "text": "Yes you do. You're under the jurisdiction of at least one country where you're resident, or where you're citizen. You may be under jurisdiction of more than one country. Each country has its own laws about what and how should be taxed and countries have treaties between them to resolve jurisdiction issues and double taxation situations, so you should talk to a tax accountant licensed to provide you with an advice.", "topk_rank": 15 }, { "id": "541682", "score": 0.7187831997871399, "text": "If you are paid by foreigners then it is quite possible they don't file anything with the IRS. All of this income you are required to report as business income on schedule C. There are opportunities on schedule C to deduct expenses like your health insurance, travel, telephone calls, capital expenses like a new computer, etc... You will be charged both the employees and employers share of social security/medicare, around ~17% or so, and that will be added onto your 1040. You may still need a local business license to do the work locally, and may require a home business permit in some cities. In some places, cities subscribe to data services based on your IRS tax return.... and will find out a year or two later that someone is running an unlicensed business. This could result in a fine, or perhaps just a nice letter from the city attorneys office that it would be a good time to get the right licenses. Generally, tax treaties exist to avoid or limit double taxation. For instance, if you travel to Norway to give a report and are paid during this time, the treaty would explain whether that is taxable in Norway. You can usually get a credit for taxes paid to foreign countries against your US taxes, which helps avoid paying double taxes in the USA. If you were to go live in Norway for more than a year, the first $80,000/year or so is completely wiped off your US income. This does NOT apply if you live in the USA and are paid from Norway. If you have a bank account overseas with more than $10,000 of value in it at any time during the year, you owe the US Government a FinCEN Form 114 (FBAR). This is pretty important, there are some large fines for not doing it. It could occur if you needed an account to get paid in Norway and then send the money here... If the Norwegian company wires the money to you from their account or sends a check in US$, and you don't have a foreign bank account, then this would not apply.", "topk_rank": 16 }, { "id": "38585", "score": 0.713003396987915, "text": "This is something better asking a licensed professional (EA/CPA licensed in the US) who's also familiar with your home country tax law and the tax treaty your home country has with the US. Assuming no tax treaty and adverse tax consequences at home, you can have this scenario: The last step is critical - unless there's a tax treaty, not every country allows foreign tax credit (tax treaties usually have a provision to avoid double taxation), and you may end up paying both the US tax and local tax on the same money. If there's a tax treaty - step #4 is most likely guaranteed. Step #4 may not work in some places that would not consider the penalty as tax. Again - check it with an accountant proficient with the local law. Step #3 depends on your country. Some countries ignore foreign deferred compensation rules and consider the 401k amounts income to you when it was deposited (the US treats foreign tax deferred accounts this way, I believe that is also the case in India). So you should check locally. In this case you have probably paid taxes (or were exempt) on this amount when you earned it and will not pay taxes again. But then you might also not be able to claim the 10% back as credit. Leaving it is an option, although with such an amount is hardly worth it. You'll have to check how your country deals with foreign accounts of its citizens (the US, for example, puts an enormous reporting and tax burden on these, some countries forbid them altogether). This also applies to step #1.", "topk_rank": 17 }, { "id": "385221", "score": 0.7123920321464539, "text": "As the name says, its for income earned in a Foreign country. If you have been paying US income tax on this while living in the US, nothing is going to change here. You should be informing yourself on how to avoid double taxation in your new country of residence. Passive income earned abroad (dividends, interest) also do not fall under this exemption. The purpose of the Foreign Earned Income Exclusion is to make it easy for expats who work abroad to avoid double income taxation without going through the complicated process of applying for tax credits. The US is the only industrial country that taxes its residents regardless of where they reside. That is also why it only goes to about $100,000 a year. If you are a high earner, they want to make it more difficult. Also as a side note, since you are going to be abroad for a year. I will point out that if you have more than $10,000 in foreign accounts at any point in the year you need to declare this in an FBAR form. This is not advertised as well as it should be and carries ridiculous penalties for non-compliance. I can't count the number of times I have heard a US expat say that they were unaware of this.", "topk_rank": 18 }, { "id": "114102", "score": 0.7121179699897766, "text": "You can do that, you aren't missing anything. It is supposed to be punishment, but as you are moving to a European country your non-penalized income would likely be taxed higher as is. I don't have info on whether you will be taxed a second time by the European country.", "topk_rank": 19 } ]
92	Can I use my Roth IRA to start a business?	[ { "id": "465787", "score": 0.7522523999214172, "text": "Read the Forbes article titled IRA Adventures. While it's not the detailed regulations you certainly need, the article gives some great detail and caution. You may be able to do what you wish, but it must be structured to adhere to specific rules to avoid self dealing. Those rules would be known by the custodians who would help you set up the right structure, it's well buried within IRS regs, I'm sure. Last, in general, using IRA funds to invest in the non-traditional assets adds that other layer of risk, that the investment will be deemed non-allowed and/or self-dealing. So, even if you have the best business idea going, be sure you get proper council on this." } ]	[ { "id": "340113", "score": 0.7145251035690308, "text": "You can withdraw the contributions you made to Roth IRA tax free. Any withdrawals from Roth IRA count first towards the contributions, then conversions, and only then towards the gains which are taxable. You can also withdraw up to $10000 of the taxable portion penalty free (from either the Traditional IRA or the Roth IRA, or the combination of both) if it is applied towards the purchase of your first primary residence (i.e.: you don't own a place yet, and you're buying your first home, which will become your primary residence). That said, however, I cannot see how you can buy a $250K house. You didn't say anything about your income, but just the cash needed for the down-payment will essentially leave you naked and broke. Consider what happens if you have an emergency, out of a job for a couple of months, or something else of that kind. It is generally advised to have enough cash liquid savings to keep you afloat for at least half a year (including mortgage payments, necessities and whatever expenses you need to spend to get back on track - job searching, medical, moving, etc). It doesn't look like you're anywhere near that. Remember, many bankruptcies are happening because of the cash-flow problem, not the actual ability to repay debts on the long run.", "topk_rank": 0 }, { "id": "523521", "score": 0.7142208814620972, "text": "\"You have several questions in your post so I'll deal with them individually: Is taking small sums from your IRA really that detrimental? I mean as far as tax is concerned? Percentage wise, you pay the tax on the amount plus a 10% penalty, plus the opportunity cost of the gains that the money would have gotten. At 6% growth annually, in 5 years that's more than a 34% loss. There are much cheaper ways to get funds than tapping your IRA. Isn't the 10% \"\"penalty\"\" really to cover SS and the medicare tax that you did not pay before putting money into your retirement? No - you still pay SS and medicare on your gross income - 401(k) contributions just reduce how much you pay in income tax. The 10% penalty is to dissuade you from using retirement money before you retire. If I ... contributed that to my IRA before taxes (including SS and medicare tax) that money would gain 6% interest. Again, you would still pay SS and Medicare, and like you say there's no guarantee that you'll earn 6% on your money. I don't think you can pay taxes up front when making an early withdrawal from an IRA can you? This one you got right. When you file your taxes, your IRA contributions for the year are totaled up and are deducted from your gross income for tax purposes. There's no tax effect when you make the contribution. Would it not be better to contribute that $5500 to my IRA and if I didn't need it, great, let it grow but if I did need it toward the end of the year, do an early withdrawal? So what do you plan your tax withholdings against? Do you plan on keeping it there (reducing your withholdings) and pay a big tax bill (plus possibly penalties) if you \"\"need it\"\"? Or do you plan to take it out and have a big refund when you file your taxes? You might be better off saving that up in a savings account during the year, and if at the end of the year you didn't use it, then make an IRA contribution, which will lower the taxes you pay. Don't use your IRA as a \"\"hopeful\"\" savings account. So if I needed to withdrawal $5500 and I am in the 25% tax bracket, I would owe the government $1925 in taxes+ 10% penalty. So if I withdrew $7425 to cover the tax and penalty, I would then be taxed $2600 (an additional $675). Sounds like a cat chasing it's tail trying to cover the tax. Yes if you take a withdrawal to pay the taxes. If you pay the tax with non-retirement money then the cycle stops. how can I make a withdrawal from an IRA without having to pay tax on tax. Pay cash for the tax and penalty rather then taking another withdrawal to pay the tax. If you can't afford the tax and penalty in cash, then don't withdraw at all. based on this year's W-2 form, I had an accountant do my taxes and the $27K loan was added as earned income then in another block there was the $2700 amount for the penalty. So you paid 25% in income tax for the earned income and an additional 10% penalty. So in your case it was a 35% overall \"\"tax\"\" instead of the 40% rule of thumb (since many people are in 28% and 35% tax brackets) The bottom line is it sounds like you are completely unorganized and have absolutely no margin to cover any unexpected expenses. I would stop contributing to retirement today until you can get control of your spending, get on a budget, and stop trying to use your IRA as a piggy bank. If you don't plan on using the money for retirement then don't put it in an IRA. Stop borrowing from it and getting into further binds that force you to make bad financial decisions. You don't go into detail about any other aspects (mortgage? car loans? consumer debt?) to even begin to know where the real problem is. So you need to write everything down that you own and you owe, write out your monthly expenses and income, and figure out what you can cut if needed in order to build up some cash savings. Until then, you're driving across country in a car with no tires, worrying about which highway will give you the best gas mileage.\"", "topk_rank": 1 }, { "id": "279121", "score": 0.7138133645057678, "text": "From what these people are saying, it is impossible for you to put $5,500 in if it were a Roth though, because the money has to be taxed. You are correct that this is wrong. You can still put $5,500 in a Roth - the tax payment comes when you file, not when you make the investment. This is when the Roth is better than a Traditional IRA, when you can invest the max either way. Yes you get the tax break for the Traditional investment, and if you invest the tax savings you'll be in the same spot, all else being equal. If you only have a certain amount (after taxes) to invest, say $3,000 in a 25% marginal tax bracket, then it works out the same either way. You can either invest $3,000 in a Roth and let it grow tax free, or put $4,000 in a traditional IRA since you can deduct $1,000 (15%) from your taxes when you file. Then your tax-adjusted balance when you withdraw is the same, since you'll have a lot more (33% more in fact) in your traditional IRA but will have to pay tax on the withdrawals.", "topk_rank": 2 }, { "id": "363306", "score": 0.7136469483375549, "text": "\"People often have the wrong idea about how taxes apply to their money. There's not really any such thing as \"\"pre-tax\"\" or \"\"post-tax\"\" income, only pre-tax and post-tax uses of your income. This is somewhat hidden by the fact that we pay income tax based on our income for the year; but if you look a bit closer, you'll notice that come April 15th, (almost) every dollar you get to subtract from your gross income isn't defined by where it comes from, but rather, where it went (there are a few special cases there, like qualified dividends, that that's an entirely different issue). Perhaps the most clear example of this is a traditional IRA that you self-fund from your savings account on April 14th, for the prior tax year - You're putting dollars you've already taken home, into a pre-tax account, after the end of the calendar tax-year; and yet it all works out exactly the same (tax-liability wise - There's certainly an opportunity cost there) as if you had contributed those dollars via a weekly payroll deduction. So when you manually fund a Roth IRA, it has no effect on your tax liability (except insofar as you don't get to deduct it from your taxable income, which you wouldn't if you had left it in a savings account, etiher). In the year you earned that money, you paid taxes on it; when you take it out, you won't.\"", "topk_rank": 3 }, { "id": "499552", "score": 0.7135518789291382, "text": "you can begin drawing retirement income from 401k, ira and roth accounts at any age. the key is that it must be retirement income. you can't blow it all on an epic party, but you can withdraw a modest amount every year while preserving enough capital to last the rest of your life. there are 3 common strategies for doing this: side notes: techinical details: roth conversion ladder: substantially equal periodic payment plans:", "topk_rank": 4 }, { "id": "9403", "score": 0.7133966684341431, "text": "\"I am a CPA. Yes you can do what you are contemplating. Be careful that they do not take any taxes out of the money when you go to do the \"\"rollover\"\". If they do you will have to dip into your own pocket to put that back into the IRA.\"", "topk_rank": 5 }, { "id": "573935", "score": 0.7130451202392578, "text": "There is nothing wrong with self directed IRA's the problem is that most of the assets they specialize in are better done in other ways. Real estate is already extremely tax advantaged in the US. Buying inside a Traditional IRA would turn longterm capital gains (currently 15%) into ordinary income taxed at your tax rate when you withdraw this may be a plus or minus, but it is more likely than not that your ordinary income tax rate is higher. You also can't do the live in each house for 2 years before selling plan to eliminate capital gains taxes (250k individual 500k married couple). The final problem is that you are going to have problems getting a mortgage (it won't be a conforming loan) and will likely have to pay cash for any real estate purchased inside your IRA. Foreign real estate is similar to above except you have additional tax complexities. The key to the ownership in a business is that there are limits on who can control the business (you and maybe your family can't control the business). If you are experienced doing angel investing this might be a viable option (assuming you have a really big IRA you want to gamble with). If you want to speculate on precious metals you will probably be better offer using ETF's in a more traditional brokerage account (lower transactions costs more liquidity).", "topk_rank": 6 }, { "id": "74283", "score": 0.7129837870597839, "text": "May I suggest putting it in a Roth IRA ($5,500 per year. Right now you can contribute to both 2015 and 2016 so that's $11K.)? Based on your description it sounds like your tax rate is very low, so it is awesome to put it away now and avoid taxes later on any gains you make on it. You can use Roth IRA money to pay for college, a home, or retirement. Within your Roth IRA, any of the investment options mentioned here will work. For example, CD's or money market accounts if you just want it to grow in a pretty much savings-account-like manner. You could also buy diversified mutual funds or have some fun buying individual stocks with some of it. I'm sorry to say that in the current market conditions you are not going to find a completely safe, cash-like investment or account that makes your money grow substantially. To do that you have to bear risk by buying risky stuff like stocks.", "topk_rank": 7 }, { "id": "152354", "score": 0.7128044366836548, "text": "Answering for just the US part, yes, you should be able to do this and it's a good strategy. The only additional gotcha I can think of is that if you've made after-tax contributions to your traditional IRA, you need to prorate the conversion, you can't just convert all the pre-tax or all the after-tax. I'm not familiar with Oregon personal income tax so there may be additional gotchas there.", "topk_rank": 8 }, { "id": "218304", "score": 0.7121590971946716, "text": "You may withdraw your contributions to a Roth IRA at any time for any reason without penalty. Any gains you withdraw may be subject to tax or penalties though, but there is a $10,000 exclusion (from the 10% penalty, not the taxes) for a first time home purchase.", "topk_rank": 9 }, { "id": "579644", "score": 0.711922287940979, "text": "You can take out the contributions to your Roth tax and penalty free. That's the good thing. Anything above the amount you contributed that you withdraw early will cost you ordinary income tax (which is higher than capital gains tax) plus a 10 percent penalty on that amount. So if you have $15,000 in the account and $5,000 is gains and you withdraw $11,000, then you owe tax and penalty on $1,000. The penalty is 10% and your taxes (high taxes!) are added to that. Pretty bad deal. If you kept it in a normal account and paid capital gains tax, you just pay 15% (or whatever) on your gains and you get to offset income tax with your losses via tax loss harvesting. So back to your question: your idea works even better than you suggested if you only withdraw up to the amount that you contributed (you pay no tax!). Take out any of the gains and you will be penalized more than you would if you just paid capital gains on them. Leave those in until you are old enough to take them out penalty and tax free. To me, contributing to a Roth, making a bunch of gains on it, and withdrawing only the contribution part whenever you want seems to make good sense.", "topk_rank": 10 }, { "id": "436884", "score": 0.7116944193840027, "text": "Luke, I'd like to point out some additional benefits of the Roth IRA accounts 1) Going Roth, you can effectively increase the amount of your contribution to your IRA account. In your example, you are assuming that your contribution to Roth IRA is in fact $ 85 ($100 less $ 15 tax paid). In reality, albeit more costly, Roth IRA allows you to contribute full $ 100 ($117.65 less $ 17.65 tax incurred.) Using this method you can in fact grow your tax-free funds to $ 1.006.27 over 30 years. The larger you effective tax rate is, the larger will be the difference between your maximum effective Traditional vs Roth IRA contribution will be. 2) Should you need to access your IRA funds in case of emergency (unqualified event of not buying your first home, nor paying for your college education), Roth IRA account contributions can be withdrawn without incurring the 10% penalty charge, that would be imposed on your unqualified Traditional IRA distribution. 3) As other contributors noted it's hard to believe that lower US tax rates would prevail. Chances are you will be contributing to Traditional 401k later throughout your work life. Having a Roth IRA account would afford you a tax diversification needed to hedge against possible tax rate hikes coming in the future. Considering the gloomy future of the Social Security funding, and ever-growing US national debt, can we really expect for there to not be any tax rate increases in the next 20-40 years?! By the way, as others pointed out your effective tax rate will always be lower than your marginal tax bracket.", "topk_rank": 11 }, { "id": "5778", "score": 0.7116791009902954, "text": "IRA is an account. You can open as many as you want. What's limited is the contributions: you cannot deposit to the IRA (all of them combined) more than what you've earned during the year, or $5500 (for 2013), the lowest. There are also limits on how much you can deduct, depending on your income and availability of other retirement programs at your work. You can open as many IRAs as you want in your child's name, but if your child had only earned $500 this year - that's how much you can put in these accounts. Your wife and you share the earned income limit, so if your wife is not working, you can still contribute to the IRA in her name, based on your own earnings (i.e.: if you earned more than $11000 - you can contribute the maximum $5500 for each of you). The limits are for all the IRA combined, doesn't matter how many accounts you have, and how many of them are Roth.", "topk_rank": 12 }, { "id": "259227", "score": 0.7115768194198608, "text": "\"To summarize your starting situation: You want to: Possible paths: No small business Get a job. Invest the 300K in safe liquid investments then move the maximum amount each year into your retirement accounts. Depending on which company you work for that could include 401K (Regular or Roth), deductible IRA, Roth IRA. The amount of money you can transfer is a function of the options they give you, how much they match, and the amount of income you earn. For the 401K you will invest from your paycheck, but pull an equal amount from the remainder of the 300K. If you are married you can use the same procedure for your spouse's account. You current income funds any vacations or splurges, because you will not need to put additional funds into your retirement plan. By your late 30's the 300K will now be fully invested in retirement account. Unfortunately you can't touch much of it without paying penalties until you are closer to age 60. Each year before semi-retirement, you will have to invest some of your salary into non-retirement accounts to cushion you between age 40 and age 60. Invest/start a business: Take a chunk of the 300K, and decide that in X years you will use it to start a small business. This chunk of money must be liquid and invested safely so that you can use it when you want to. You also don't want to invest it in investments that have a risk of loss. Take the remaining funds and invest it as described in the no small business section. You will completely convert funds to retirement funds earlier because of a smaller starting amount. Hopefully the small business creates enough income to allow you to continue to fund retirement or semi-retirement. But it might not. Comment regarding 5 year \"\"rules\"\": Roth IRA: you have to remain invested in the Roth IRA for 5 years otherwise your withdrawal is penalized. Investing in stocks: If your time horizon is short, then stocks are too volatile. If it drops just before you need the money, it might not recover in time. Final Advice: Get a financial adviser that will lay out a complete plan for a fixed fee. They will discuss investment options, types not particular funds. They will also explain the tax implications of investing in various retirement accounts, and how that will impact your semi-retirement plans. Review the plan every few years as tax laws change.\"", "topk_rank": 13 }, { "id": "469688", "score": 0.7109577655792236, "text": "Yes. Here is the chart: This will tell you if the IRA is deductible. Above these numbers, and you might be able to deposit to Roth, or to an IRA but not take a deduction.", "topk_rank": 14 }, { "id": "586756", "score": 0.71036696434021, "text": "Your approach sounds solid to me. Alternatively, if (as appears to be the case) then you might want to consider devoting your tax-advantaged accounts to tax-inefficient investments, such as REITs and high-yield bond funds. That way your investments that generate non-capital-gain (i.e. tax-expensive) income are safe from the IRS until retirement (or forever). And your investments that generate only capital gains income are safe until you sell them (and then they're tax-cheap anyway). Of course, since there aren't really that many tax-expensive investment vehicles (especially not for a young person), you may still have room in your retirement accounts after allocating all the money you feel comfortable putting into REITs and junk bonds. In that case, the article I linked above ranks investment types by tax-efficiency so you can figure out the next best thing to put into your IRA, then the next, etc.", "topk_rank": 15 }, { "id": "553031", "score": 0.7103578448295593, "text": "Your question seems like you don't understand what a Roth IRA is. A Roth IRA isn't an investment, per se. It is just a type of account that receives special tax treatment. Just like a checking and savings account are different at a bank, a ROTH IRA account is just flagged as such by a brokerage. It isn't an investment type, and there aren't really different ROTH IRA accounts. You can invest in just about anything inside that account so that is what you need to evaluate. One Roth IRA account is as good as any other.As to what to invest your money in inside a ROTH, that is a huge question and off-topic per the rules against specific investing advice.", "topk_rank": 16 }, { "id": "57457", "score": 0.7103442549705505, "text": "Since you are paying taxes on the distributions from your mutual funds anyway, instead of reinvesting the distributions back into the mutual funds, you could receive them as cash, then contribute them to your Roth IRA once you are able to open one.", "topk_rank": 17 }, { "id": "101902", "score": 0.7100467085838318, "text": "Assuming you max-out your Roth IRA with $5000 in inflation-adjusted contributions every year from 25-65, your balance at age 65 will depend on the post-inflation return you get in the account. Assuming you withdraw 4% per year after that, here is what your income will be: (All numbers are in inflation-adjusted 2011 dollars.) If your post-inflation return is zero - if you buy treasury bonds, money-market accounts, or something like that - you'll have a simple $5000 * 40 = $200,000, which will give you an income of around $8000 per year. If you get a 3% post-inflation return - e.g. fairly safe Muni bonds, corporate bonds, and boring stocks - you'll approximately double your money to around $393,000, giving you an income of over $15,000 per year. If you get a 6% return - e.g. more aggressive stocks and more risk-taking - you'll approximately double your money again to over $825,000. A 4% withdrawal rate will give you an income of around $33,000 per year. Stocks have historically returned around inflation + 8% - that will get you over $1.4 million - and an annual income of over $56,000 per year. So, yes, it is feasible to retire on nothing but a maxed-out Roth IRA.", "topk_rank": 18 }, { "id": "127622", "score": 0.7099335789680481, "text": "Yes, eligibility for contributing to a Roth IRA is determined by your Modified Adjusted Gross Income (MAGI) which is based on your Adjusted Gross Income (AGI). Now, AGI includes the net capital gains from your transactions and MAGI adds back in things that were subtracted off (e.g. tuition deductions, foreign earned income exclusion) in arriving at the AGI. There is a worksheet in Publication 590 that has the details. You are always entitled to contribute to a Traditional IRA. The MAGI affects how much of your contribution is tax-deductible on that year's tax return, but not your eligibility to contribute. Both the above paragraphs assume that you have enough compensation (wages, salary, self-employment income) to contribute to an IRA: the contribution limit is $5500 or total compensation, whichever is smaller. (If you earned only $2K as wages, you can contribute all of it; not just your take-home pay which is what is left after Social Security and Medicare taxes, Federal taxes etc have been withheld from that $2K). If your entire income is from capital gains and stock dividends, you cannot contribute to any kind of IRA at all.", "topk_rank": 19 } ]
93	Really have to use business credit card for personal expenses	[ { "id": "292748", "score": 0.8358352780342102, "text": "\"I really have to use the business card for personal expenses, please assume that in your answer. This is very hard to believe. You must do that? Why not just have the company pay you $1600 each month? Then you can use that money for whatever you want. Why can't you do this? (I cannot think of a legitimate reason...) How to integrate the personal expenses in company? Anyway, to answer your question, what I've done when I accidentally used my corporate card for a personal expense is to code the expense as a payment to me similar to if a check had been written to me. If you aren't ever paying yourself, then you should just pay the company back the $1600 every month. As a side note, I highly recommend you don't do this. By doing this on a regular basis you are opening the door for piercing the corporate veil. This means that the financial protections provided by the LLC could potentially be stripped away since personal and corporate funds are being mixed. The unfortunate end result is that personal assets could end up being fair game too in a judgement against the company. Even if you aren't an owner, your relative could be considered to be \"\"using business money for personal expenses\"\", namely, letting a relative spend business funds for personal use. How to show more expenses and lessen the profit? If you're referring to the personal expenses, then you absolutely do not want to do this! That's illegal and worthy of stiff penalties, which possibly include jail time for tax evasion. Better to just have the company pay you and then the entire payment is deductible and reduces the profit of the company.\"" } ]	[ { "id": "85517", "score": 0.7722175121307373, "text": "Early on, one might not be able to get credit for their business. For convenience, and the card perks, it makes sense to use the personal card. But for sake of a clean paper trail, I'd choose 1 card and use it exclusively, 100% for the business. Not one card here, one card there.", "topk_rank": 0 }, { "id": "233751", "score": 0.7716694474220276, "text": "If you are just starting out, I would say there is no disadvantage to using a personal card for business expenses. In fact, the advantage of doing so is that the consumer protections are better on personal cards than on business cards. One possible advantage to business credit cards, is that many (but not all) will not show up on your personal credit report unless you default. This might help with average age of accounts if you have a thin credit file, but otherwise it won't make much difference. Issuers also expect higher charge volumes on business cards, so as your business grows might question a lot of heavy charges on a personal card. Whether this would ever happen is speculation, but it's worth being aware of it.", "topk_rank": 1 }, { "id": "274721", "score": 0.7701435089111328, "text": "If your business is a Sole Proprietorship and meets the criteria, then you would file form Schedule C. In this case you can deduct all eligible business expenses, regardless of how you pay for them (credit/debit/check/cash). The fact that it was paid for using a business credit card isn't relevant as long as it is a true business expense. The general rules apply: Yes - if you sustain a net loss, that will carry over to your personal tax return. Note: even though it isn't necessary to use a business credit card for business expenses, it's still an extremely good idea to do so, for a variety of reasons.", "topk_rank": 2 }, { "id": "114494", "score": 0.7683788537979126, "text": "I would try to avoid mixing business expenditure with personal expenditure so a second credit card might be a good idea. That said, I did get a business credit card for my company in the UK as I didn't want to be personally liable for the money that was spent on the business card (even though I owned 100% of the business) in case things went horribly wrong. As I didn't fancy signing a personal guarantee, this meant that the limit was quite low but it was good enough in most cases.", "topk_rank": 3 }, { "id": "268747", "score": 0.7671025395393372, "text": "Use one journal entry, and split the expenses into the appropriate accounts. This can happen even if you never mix business and personal on the same receipt: say you order office supplies (which where I live are immediately deductible as an expense) and software or hardware (which must be depreciated because they are assets) on the same order. We have an account called Proprietors Loan which represents money the company is lending to the humans who own it, or that the humans are lending to the company. Were I to pay for my personal lunch on a business credit card, it would go through that account, increasing the amount the company has lent me or decreasing the amount I have lent it. Similarly if I made a business purchase with a personal card it would go through that account in the other direction. Where I live, I can lend my company all the money I want any time, but if the company lends me money there can't be an outstanding balance over the corporate year end. If you make two credit card entries of 5 and 10 when you go to reconcile your accounts it will be harder because you'll have to realize they together match the single 15 line on your statement. Making a single entry (your A option) will make reconciling your statement much easier. And that way, you'll probably reconcile your statements, which is vital to knowing you actually recorded everything.", "topk_rank": 4 }, { "id": "195207", "score": 0.7660895586013794, "text": "Do you have a separate bank account for your business? That is generally highly recommended. I have a credit card for my single-member LLC. I prefer it this way because it makes the separation of personal and business expenses very clear. Using a personal credit card, but using it for only business expenses seems to be a reasonable practice. You may be able to do one better though... For your sole proprietorship, you can file a DBA which establishes the business name. The details of this depend on your state. With a DBA, I believe you can open a bank account in the name of your business and you may also be able to open a credit card account in the name of the business. I'm not sure what practical difference it makes, but it does make the personal/business distinction clearer. Though, at that point, you might as well just do the LLC...", "topk_rank": 5 }, { "id": "468959", "score": 0.7569193840026855, "text": "Can he use an existing credit card in his name for all his business expenses, or does that pierce the corporate veil? That would be a question to a lawyer, since there's no definitive answer but rather circumstantial. Generally it is safer to separate the finances completely than to try and guess what the court would rule if it comes to that. It is not hard to get a separate card for a LLC (especially if it is a sole proprietorship). We are going to buy a house soon, so I don't want any extra inquiries. I guess it depends on the bank and the type of card. My Citi business card doesn't show up on my personal credit report.", "topk_rank": 6 }, { "id": "262524", "score": 0.7538593411445618, "text": "Try to get a second card in your business' name, with a separate card number (like you would get one for a spouse). They may or may not allow that free (you wouldn't want to pay a second fee), and it might be only possible with the second card bearing the same number, which makes it useless. But it is worth a try.", "topk_rank": 7 }, { "id": "427849", "score": 0.7531014680862427, "text": "There is no strict need to do that, you can consider yourself to be consulting, a 10% of your payment will be withheld and paid as tax by the company, you can deduct up to 60% of your income as expenses and pay tax on the rest (factoring the tax deducted at source). In another approach, you could register for service tax and charge service tax on your invoice and pay to the service tax department, the tax calculations are similar to above. It will be good if you speak to a chartered accountant and get more clarity. As for business card, you could print it with your name and qualification, there are no restrictions on that.", "topk_rank": 8 }, { "id": "425487", "score": 0.751924991607666, "text": "You can look into getting a business credit card. When I had my Chase business credit card, I could add authorized users to the main account and set a spending limit on each card.", "topk_rank": 9 }, { "id": "381151", "score": 0.7513514161109924, "text": "Chris, since you own your own company, nobody can stop you from charging your personal expenses to your business account. IRS is not a huge fan of mixing business and personal expenses and this practice might indicate to them that you are not treating your business seriously, and it should classify your business as a hobby. IRS defines deductible business expense as being both: ordinary AND necessary. Meditation is not an ordinary expense (other S-corps do not incur such expense.) It is not a necessary expense either. Therefore, you cannot deduct this expense. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses", "topk_rank": 10 }, { "id": "290687", "score": 0.7488194704055786, "text": "I would suggest opening a new account (credit card and bank) for just your business. This protects you in multiple ways, but is no bigger burden for you other than carrying another card in your wallet. Then QB can download the transactions from your website and reconciling is a cinch. If you got audited, you'd be in for a world of pain right now. From personal experience there are a few charges that go unnoticed that reconciling finds every month at our business. We have a very strict process in place, but some things slip through the cracks.", "topk_rank": 11 }, { "id": "378484", "score": 0.7427477836608887, "text": "To quote the answer you linked to: Perhaps the simplest way to think about this is you can only deduct an expense that you actually incur. In other words, the expense should show up on a bank or CC statement. So, if your business purchased the $1000 gift card for $800, you should see a $800 charge appearing on a business CC or bank statement. You would therefore be able to deduct the $800, but not the full $1000 of items that you purchase with it. Side Notes:", "topk_rank": 12 }, { "id": "109203", "score": 0.7422677278518677, "text": "You could, but the bank won't let you... If you're a sole proprietor - then you could probably open a personal account and just use it, and never tell them that is actually a business. However, depending on your volume of operations, they may switch you on their own to business account by the pattern of your transactions. For corporations, you cannot use a personal account since the corporation is a separate legal entity that owns the funds. Also, you're generally required to separate corporate and personal funds to keep the limited liability protection (which is why you have the corporation to begin with). Generally, business accounts have much higher volumes and much more transactions than personal accounts, and it costs more for the banks to run them. In the US, some banks offer free, or very low-cost, business accounts for small businesses that don't need too many transactions. I'm sure if you shop around, you'll find those in Canada as well.", "topk_rank": 13 }, { "id": "100764", "score": 0.7422172427177429, "text": "\"You don't specify which country you are in, so my answers are more from a best practice view than a legal view.. I don't intend on using it for personal use, but I mean it's just as possible. This is a dangerous proposition.. You shouldn't co-mingle business expenses with personal expenses. If there is a chance this will happen, then stop, make it so that it won't happen. The big danger is in being able to have traceability between what you are doing for the business, and what you are doing for yourself. If you are using this as a \"\"staging\"\" account for investments, etc., are those investments for yourself? Or for the business? Is tax treatment on capital gains and/or dividends the same for personal and business in your jurisdiction? If you buy a widget, is the widget an expense against business income? Or is it an out of pocket expense for personal consumption? The former reduces your taxable income, the latter does not. I don't see the benefit of a real business account because those have features specific to maybe corporations, LLC, and etc. -- nothing beneficial to a sole proprietor who has no reports/employees. The real benefit is that there is a clear delineation between business income/expenses and personal income/expenses. This account can also accept money and hold it from business transactions/sales, and possibly transfer some to the personal account if there's no need for reinvesting said amount/percentage. What you are looking for is a commonly called a current account, because it is used for current expenses. If you are moving money out of the account to your personal account, that speaks to paying yourself, which has other implications as well. The safest/cleanest way to do this is to: While this may sound like overkill, it is the only way to guarantee that income/expenses are allocated to the correct entity (i.e. you, or your business). From a Canadian standpoint:\"", "topk_rank": 14 }, { "id": "562777", "score": 0.7389068603515625, "text": "There is no law that requires you to have a separate bank account for your business, or to pay all expenses from a business bank account. It is a GOOD IDEA to have a separate bank account and pay all business expenses from that account and all personal expenses from your personal account, because that makes sorting out what is what much simpler, both in case of an audit and for your own accounting. Whether a particular expenditure is a deductible business expense has nothing to do with what account you pay it from. If you pay advertising expenses for your business from your personal account, that's still (almost certainly) a deductible business expense. If you buy groceries from your business account, that's almost certainly not a deductible business expense. In your case, there are all kinds of rules about when and how much travel is deductible.", "topk_rank": 15 }, { "id": "444590", "score": 0.7382931113243103, "text": "I was hoping to comment on the original question, but it looks to me like the asker lives in the EU, where credit cards are a lot less common and a lot of the arguments (car rental, building up of credit etc) brought forward by people living in the US just don't apply. In fact especially airlines (and other merchants) will charge you extra when using a credit card instead of a debit card and this can add up fairly quickly. I hold a credit card purely for travelling outside the EU and occasionally I will travel for work and make my own arrangements, then it can come in handy as I am able to reclaim my expenses before I have to pay my credit card bill (in this case I will also claim the extra credit card fees from my employer). This however is for my personal convenience and not strictly necessary. (I could fill out a bunch of paperwork and claim the costs from my employer as an advance.) In the EU I find that if my VISA debit card will not work in a shop, neither will my credit card, so on that note it's pretty pointless. So to answer the asker question: If you live (and travel) in the EU you don't need a credit card, ever. If you travel to the US, it would be advantageous to get one. Occasionally banks will offer you a credit card for free and there's no harm in taking it (apart from the fact that you have one more card to keep track off), but if you do, set up a direct debit to pay it off automatically. And as other people have said: Don't spend money you don't have. If you are not absolutely sure you can't do this, don't get a credit card.", "topk_rank": 16 }, { "id": "245447", "score": 0.7368671894073486, "text": "\"For simplicity, let's start by just considering cash back. In general, cash back from credit cards for personal use is not taxable, but for business use it is taxable (sort of, I'll explain later). The reason is most personal purchases are made with after tax dollars; you typically aren't deducting the cost of what you purchased from your personal income, so if you purchase something that costs $100 and you receive $2 back from the CC company, effectively you have paid $98 for that item but that wouldn't affect your tax bill. However, since businesses typically deduct most expenses, that same $100 deduction would have only been a $98 deduction for business tax purposes, so in this case the $2 should be accounted for. Note, you should not consider that $2 as income though; that would artificially inflate your revenue. It should be treated as a negative expense, similar to how you would handle returning an item you purchased and receiving a CC refund. Now for your specific questions: Part 1: As a small business owner, I wish to attend an annual seminar to improve my business. I have enough credit card reward points to cover the airfare, hotel, and rental car. Will those expenses still be deductible at the value displayed on the receipt? Effectively no, these expenses are not deductible. If you deduct them they will be completely counter-acted by the \"\"refund\"\" you receive for the payments. Part 2: Does it matter if those points are accrued on my personal credit card, rather than a business credit card? This is where it gets hairy. Suppose your company policy is that employees make purchases with their own personal credit cards and submit receipts for reimbursement. In this case the employer can simply reimburse and would not know or care if the employee is racking up rewards/points/cashback. The trick is, as the employee, you must always purchase business related items normally so you have receipts to show, and if you receive cashback on the side there seems to be a \"\"don't ask, don't tell\"\" rule that the IRS is OK with. It works the same way with heavy business travelers and airline miles- the free vacations those users get as perks are not treated as taxable income. However, I would not go out of my way to abuse this \"\"loophole\"\". Typically, things like travel (airfare, hotel, car rental, meals) are expected. But I wouldn't go purchase 100 company laptops on your personal card and ask the company to reimburse you. The company should purchase those 100 laptops on a company card and effectively reduce the sale price by the cashback received. (Or more realistically, negotiate a better discount with your account rep and just cut them a check.) Part 3: Would there be any difference between credit card points and brand-loyalty points? If the rental car were paid for with points earned directly on the rental car company's loyalty system (not a CC), would that yield a different result? There is no difference. Perhaps the simplest way to think about this is you can only deduct an expense that you actually incur. In other words, the expense should show up on a bank or CC statement. This is why when you volunteer and work 10 hours for a charity, you can't call that a \"\"donation\"\" of any amount of money because there is no actual payment made that would show up on a bank statement. Instead you could have billed the charity for your 10 hours of work, and then turned around and donated that same amount back to them, but it ends up being a wash.\"", "topk_rank": 17 }, { "id": "297467", "score": 0.7356385588645935, "text": "Most corporate policies strictly prohibit the card's use for personal use, even if the intent is to re-pay in full, on or before the due date. I'm certain it has something to do with limitation of liability, i.e. the monetary risk the company is willing to put itself at, in order to offer a corporate card program. In my experience, AMEX Corporate Card Services is the most widely-used card, and in my experience, it is your employer that determines and administers the policy that outlines the card's appropriate use, not the credit card provider, so you're best to check with your employer for a definitive answer to this.", "topk_rank": 18 }, { "id": "357037", "score": 0.7351370453834534, "text": "You should be careful about mingling your personal money and that of the business, even if it is a sole prop right now. It is a good habit to keep separate business and personal bank/credit accounts just so that when you change to an LLC, it is simpler for you to separate what belongs to the company and what is yours personally. What you're doing makes it more difficult (although only marginally so) to itemize business deductions that were paid with an ostensibly personal credit account. The better habit to get into now is keeping that distinct separation between personal and business. That being said, there's nothing illegal in what you're doing, but it would make an accountant cringe, that's for sure. (chuckle) Hope this helps. Good luck!", "topk_rank": 19 } ]
95	Do Affordable Care Act business requirements apply to “control groups?”	[ { "id": "586355", "score": 0.7247883081436157, "text": "\"Yes, it applies to control groups. If I remember correctly common ownership rules are used to determine \"\"Applicable Large Employer\"\" status but if the time comes to owe a penalty, only the actual entity missing the mark will owe a penalty, not the entire control group. This is an excerpt from Section 4980H (the section that lays out employer requirements and penalties) (16) Employer. The term employer means the person that is the employer of an employee under the common-law standard. See § 31.3121(d)-1(c). For purposes of determining whether an employer is an applicable large employer, all persons treated as a single employer under section 414(b), (c), (m), or (o) are treated as a single employer. Thus, all employees of a controlled group of entities under section 414(b) or (c), an affiliated service group under section 414(m), or an entity in an arrangement described under section 414(o), are taken into account in determining whether the members of the controlled group or affiliated service group together are an applicable large employer. For purposes of determining applicable large employer status, the term employer also includes a predecessor employer (see paragraph (a)(36) of this section) and a successor employer. Link to the Federal Register\"" } ]	[ { "id": "422199", "score": 0.6846056580543518, "text": "My father owns a small business that employees ~50 people. He's been in business for over thirty years as an agricultural establishment. Because the threshold on Obama care for small businesses to pay for employee coverage is 50+ employees we will have to fire people who don't deserve to be fired - all because we could not possibly afford an additional 50-60k per month expense for covering all employees healthcare", "topk_rank": 0 }, { "id": "260198", "score": 0.684439480304718, "text": "I think the biggest issue here is why are employees still dependent on their jobs to order to receive health care? Why should businesses be responsible for providing this? What needs to happen in order for us to free businesses from this burdensome requirement? Single payer? Insurance sales across state lines? The number one problem here is cost of medical plans, how can that be lowered?", "topk_rank": 1 }, { "id": "268597", "score": 0.6782808899879456, "text": "Depends on the insurance company itself, as well as the costs of treatments. Imagine an ideal scenario where costs of treatments stayed the same, and that all insurance plans were segregated and pulled from the same pool of funds to pay for treatments. Then employer subsidized health insurance plans would be unaffected by the drama in the ACA plans. Those are the factors to consider, from my understanding. But I wouldn't be surprised if the burdens of accepting people that would previously never have been serviced by these companies has greatly distorted the market as a whole.", "topk_rank": 2 }, { "id": "58741", "score": 0.673429548740387, "text": "Many big companies self insure. They pay the insurance company to manage the claims, and to have access to their network of doctors, hospitals, specialists, and pharmacies; but cover the costs on a shared basis with the employees. Medium sized companies use one of the standard group policies. Small companies either have expensive policies because they are a small group, or they have to join with other small companies through an association to create a larger group. The bigger the group the less impact each individual person has on the group cost. The insurance companies reprice their policies each year based on the expected demographics of the groups, the negotiated rates with the network of providers, the required level of coverage, and the actual usage of the group from the previo year.. If the insurance company does a poor job of estimating the performance of the group, it hits their profits; which will cause them to raise their rates the next year which can impact the number of companies that use them. Some provisions of the new health care laws in the US govern portability of insurance regarding preexisting conditions, minimum coverage levels, and the elimination of many lifetime cap. Prior to these changes the switching of employers while very sick could have a devastating impact on the finances of the family. The lifetime cap could make it hard to cover the person if they had very expensive illnesses. If the illness doesn't impact your ability to work, there is no need to discuss it during the interview process. It won't need to be discussed except while coordinating care during the transition. There is one big issue though. If the old company uses Aetna, and the new company doesn't then you might have to switch doctors, or hospitals; or go out-of-network at a potentially even bigger cost to you.", "topk_rank": 3 }, { "id": "340714", "score": 0.6698746085166931, "text": "Hi /u/snappykr22. Thanks for responding. It has a critical effect. If the mandate is not enforced then fewer healthy people sign up and the death spiral begins. [The insurance companies are saying they are raising premiums in 2017 because of President Trump's actions](https://www.bloomberg.com/news/articles/2017-05-09/obamacare-premiums-rise-as-insurers-fret-over-law-s-shaky-future).", "topk_rank": 4 }, { "id": "224282", "score": 0.666006326675415, "text": "While I get the concepts you are using, I don't think there is a purely, or even mostly, economically strong company in the US right now. Large companies have seen that regulatory capture is a loaded gun on the table. They can either use it or have it used against them.", "topk_rank": 5 }, { "id": "588509", "score": 0.665930986404419, "text": "The insurance company is must assume you do have a preexisting condition you are unaware of. The reason for that is that Affordable Care Act precludes the Insurance company from denying coverage of them if you do. Insurance companies are businesses. They are in business to make money(unless you have a nonprofit insurer). They can not do that if you can buy insurance only when you need for them to pay out. So even though you may not have a preexisting condition, they are precluded from requiring an examination that would detect the most expensive preexisting conditions (hidden cancers, neurological, autoimmune disorders). So the companies must do what takes business sense and either deny you coverage or charge a rate that covers the risk they would be forced to take. In your question on travel there was a response that suggested you get international health insurance instead of travel health insurance that would be considered credible coverage. You are trying to save money which on a personal level is a good idea. However that is against the societal and business need that you maintain health coverage during your healthy times to cover the costs of those who need expensive treatment. So you will be monetarily penalized should you choose to reenter the society of insured people. Once you have paid the higher rate for up to 18 months you should be able to get a better policy for people who have had continuous coverage. Alternately you may be lucky enough to start working for a company that provides health insurance with out requiring continuous coverage.", "topk_rank": 6 }, { "id": "546634", "score": 0.662558376789093, "text": "\"I was in the health insurance game for 10 years and never heard of this until the Affordable Care Act came about. To my knowledge, there is no rule or regulation prohibiting it, however trying to get an insurer underwrite that risk is extremely unlikely. It's the same reason why you don't see AAA offering health insurance. There isn't a contractual relationship between the church and their constituents, so no underwriter worth their salt would put a reasonable price on that risk. Members can easily come and go, and since insurance through your employer is still the dominant distribution channel for health insurance, it would be seen as an adverse risk, meaning that people who couldn't get it through \"\"normal\"\" channels must be getting it through the church, which it would then be assumed that this person applying for coverage is an \"\"adverse risk\"\" or someone who is abnormally unhealthy. There are faith-based healthcare reimbursement programs that are NOT health insurance and do not satisfy the ACA required minimum coverages. From what I've seen and read, it's basically members of the religion or faith that pay money into the system (like paying an insurance premium) and they elect a board that basically evaluates each claim and pays or doesn't pay it, either partially or in full. While this is a nice way to get your bills paid, odds are it won't cover your $300,000 cancer treatment or your $50,000 cesarean section birth.\"", "topk_rank": 7 }, { "id": "318653", "score": 0.6607972383499146, "text": "The special rights for corporations come automatically when US companies become a multinational. And that binds the US, just like it did, for example, Slovakia, [blocking their right to have affordable health care](http://www.italaw.com/sites/default/files/case-documents/italaw3206.pdf), because an insurance company had silently, invisibly finagled a SUPERIOR right to massive compensation, basically free money.", "topk_rank": 8 }, { "id": "443960", "score": 0.6588845252990723, "text": "\"Even though this isn't really personal finance related I still feel like there are some misconceptions here that could be addressed. I don't know where you got the phrase \"\"pass-through\"\" insurance from. What you're describing is a self-funded plan. In a self-funded arrangement an employer contracts a third-party-administrator (TPA), usually one of the big health insurance carriers, to use it's provider network, process and adjudicate claims, etc. In addition to the TPA there will be some sort of stop-loss insurance coverage on each participant. Stop-loss coverage usually provides a maximum amount of risk on a given member and on the entire population for a given month and/or year and/or lifetime. The employer's risk is in between the plan deductible and the stop loss coverage (assuming the stop-loss doesn't have a maximum). Almost all of the claim dollars in a given plan will come from very very few people. These costs typically arise out of very unforeseen diagnoses not chronic issues. A cancer patient can easily cost $1,000,000 in a year. Someone's diabetes maintenance medicine or other chronic maintenance will cost no where near what a botched surgery will in a year. If we take a step back there are really four categories of employer insurance. Small group is tightly regulated. Usually plan premiums are filed with a state authority, there is no negotiating, your group's underwriting performance has zero impact on your premiums. Employers have no way of obtaining any medical/claim information on employees. Mid-market is a pooled arrangement. The overall pool has a total increase, and your particular group performs better or worse than the pool which may impact premiums. Employers get very minor claims data, things like the few highest claims, or number of claims over a certain threshold, but no employee specific information. Large-group is a mostly unpooled arrangement. Generally your group receives it's own rating based on its individual underwriting performance. In general the carrier is offloading some risk to a stop-loss carrier and employer's get a fair amount of insight in to claims, though again, not with employee names. Self-funded is obviously self-contained. The employer sets up a claims checking account. The TPA has draft authority on the account. The employee's typically have no idea the plan is self funded, their ID cards will have the carrier logo, and the carrier deals with them just as it would any other member. Generally when a company is this size it has a separate benefits committee, those few people will have some level of insight in to claims performance and stop-loss activity. This committee will have nothing to do with the hiring process. There are some new partially self-funded arrangements, which is just a really low-threshold (and relatively expensive) stop-loss program, that's becoming somewhat popular in the mid-market group size as employers attempt to reduce medical spend. I think when you start thinking on a micro, single employee level, you really lose sight of the big picture. Why would an employer hire this guy who has this disease/chronic problem that costs $50,000 per year? And logically you can get to the conclusion that with a self-funded plan it literally costs the company the money so the company has an incentive not to hire the person. I understand the logic of the argument, but at the self funded level the plan is typically costing north of half a million dollars each month. So a mid-level HR hiring manager 1. isn't aware of specific plan claims or costs and is not part of the benefits executive committee, 2. won't be instructed to screen for health deficiencies because it's against the law, 3. a company generally won't test the water here because $50,000 per year is less than 1% of the company's annual medical expenses, 4. $50,000 is well below the cost to litigate a discrimination law-suit. Really the flaw in your thought process is that $50,000 in annual medical expense is a lot. A harsh child-birth can run in the $250,000 range, so these companies never hire women? Or never hire men who could add a spouse who's in child bearing years? Or never hire women who might have a female spouse who could be in child bearing years? A leukemia diagnosis will ratchet up $1,000,000 in a year. Spend a bit of time in intensive care for $25,000 per day and you're fired? A few thousand bucks on diabetes meds isn't anything relative to the annual cost of your average self-funded plan. The second flaw is that the hiring managers get insight in to specific claims. They don't. Third, you don't hand over medical records on your resume anyway. I typed this out in one single draft and have no intention of editing anything. I just wanted paint a broad picture, I'm sure things can be nit-picked or focused on.\"", "topk_rank": 9 }, { "id": "253492", "score": 0.6574709415435791, "text": "The idea is that the premiums (or costs) associated with the plan are a business expense, you know that already. The distinction here is that employees don't pay premiums, they elect to contribute. The company sponsors a plan, the employees then choose to accept less salary in order to participate in the employer's plan. The idea is that you're foregoing income. Why is the employee not taxed on this cost? One major reason is that the employee has no say in, and often no idea, what the gross costs are (some find out if they ever receive COBRA election paperwork). There are more benefits than strict healthcare that are Section 125 eligible. The government has a vested interest in keeping the population healthy, and when the ERISA laws and Section 125 were written it was (and still is) a pretty low friction way to get health insurance out to more people. At this point, taking away the tax break from the employees would be a huge government take away from most of the population. Try to get a politician to take something away from taxpayers. Why doesn't the deduction exist in kind to people buying individual coverage? Ask your legislators. There are thousands of preferential tax treatment oddities, where some industry will get some sort of benefit or break. I'm not sure what leads you to think there needs to be some supremely logical reason for this oddity to exit.", "topk_rank": 10 }, { "id": "17215", "score": 0.6573635339736938, "text": "The answer seems to depend on where you live. Perhaps you already found this, but the summary from the IRS is: The insurance laws in some states do not allow a corporation to purchase group health insurance when the corporation only has one employee. Therefore, if the shareholder was the sole corporate employee, the shareholder had to purchase his health insurance in his own name. The IRS issued Notice 2008-1, which ruled that under certain situations the shareholder would be allowed an above-the-line deduction even if the health insurance policy was purchased in the name of the shareholder. Notice 2008-1 provided four examples, including three examples in which the shareholder purchased the health insurance and one in which the S corporation purchased the health insurance. Notice 2008-1 states that if the shareholder purchased the health insurance in his own name and paid for it with his own funds, the shareholder would not be allowed an above-the-line deduction. On the other hand, if the shareholder purchased the health insurance in his own name but the S corporation either directly paid for the health insurance or reimbursed the shareholder for the health insurance and also included the premium payment in the shareholder’s W-2, the shareholder would be allowed an above-the-line deduction. The bottom line is that in order for a shareholder to claim an above-the-line deduction, the health insurance premiums must ultimately be paid by the S corporation and must be reported as taxable compensation in the shareholder’s W-2. https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/S-Corporation-Compensation-and-Medical-Insurance-Issues I understand this to mean that you can only get the deduction in your case (having purchased it in your own name) if your state does not allow your S-Corp to purchase a group health plan because you only have one employee. (I don't know specifically if Illinois fits that description or not.) In addition, there are rules about reporting health insurance premiums for taxes for S-Corp share members that you should also check. Personally, I think that it's complicated enough that advice from a CPA or other tax advisor specific to your situation would be worth the cost.", "topk_rank": 11 }, { "id": "59687", "score": 0.6549983024597168, "text": "\"For the person being hired this is a tricky situation. Specially with the new laws. There is no real magic number that can be applied as a lot will depend on what benefits you want, and what is actually available. This will really shift the spectrum quite a bit. Under the affordibal care act, everyone has to have insurance or pay a ?fine? (were really not sure what to call this yet) but there are two provisions that really mess with the numbers you look at as an employee. First, the cost of heath care has skyrocketed. So the same benefits that you had 5 years ago now cost maybe 10-15 times as much as they used to. This gets swept under the rug a bit because the \"\"main costs\"\" of insurance has only increased a tiny amount. What this actually comes down to is does your new ACA approved heath plan cover exactly the benefits you need, or does it cut corners. Sorry this is complicated, and I don't mean it to come off as a speech against the ACA so I will give an example. My wife has RA, she really has it under control with the help of her RA doctor. This is not something she ever wants to change. Because she has had RA from the age of 15, and because it's degenerative, she doesn't want to spend 5 years working with a new doctor to get to the same place she is with her current doctor. In addition, the main drugs she takes for RA are not covered under any ACA plan, nor are the \"\"substitutions\"\" that her doctor makes (we are trying to have kids so she has to be off the main meds, and a couple of the things this doctor has tried has been meds that reduce inflammation, are pregnancy safe, but are not for the treatment of RA) You now have to take into effect rather the cost of health insurance + the cost of the things now not covered by the heath insurance + the out of pocket expenses is worth the insurance. Second the ACA has set up provisions to straight up trick those people that have lower income and are not paying close attention. When shopping for insurance, they get quotes like \"\"$50 a month\"\" or \"\"$100 a month\"\". The truth is that the remainder of the actual cost is deducted from their tax returns. This takes consideration, because if you thing your paying $50 a month for insurance but your really paying $650 then you need to make sure your doing your math right. Finally, you need to understand how messed up things are right now in the US with heath care. Largely this goes unreported. I'm not really sure why. But in order to do this I will have to give examples. For my wife to see a specialist (her RA doctor) the co-pay is $75. So she goes to the doctor, he charges her $75 and bills the insurance $200. The insurance pays the doctor $50. With out insurance, the visit costs $50. At first you want to blame the doctor for cheating the system, but the doctor has to pay for hours of labor to get the $50 back from the insurance company. From the doctors perspective it's cheaper to take the $50 then it is to charge the insurance company. And by charging the insurance company he has no control over the cost of the co pay. He essentially has to charge more to make the same money and the patient gets the shaft in the process. Another example, I got strep throat last year. I went to the walk in clinic, paid $75, saw the doctor got my Z-Pack for $15, went home crawled in bed and got better. My wife (who still had separate insurance from before the marriage) got strep throat (imagen that) went to the same clinic, they charged her $200 for the visit ($50 co-pay) and $250 for the z-pack ($3 co-pay). The insurance paid the clinic $90 for the visit and $3 for the drugs. Again the patient is left out in this scenario. In this case it worked better for my wife, unless you account for the fact that to get that coverage she had to pay $650/month. My point is that when comparing costs of heathcare with insurance, and without out insurance, its often times much cheaper for the practices to have you self pay then it is for them to go through the loops of trying to insurance to make them whole. This creates two rates. Self pay rates and Insured rates. When your trying to figure out the cost of not having insurance then you need to use the self pay rates. These can be vastly different. So as an employee you need to figure out your cost of heath care with insurance, and your cost of heath care without insurance. Then user those numbers when your trying to negotiate a salary. The problem is that there is no magic number to use for this because the cost will very a lot. For us, it was cheaper to not have insurance. Even with a pre-existing condition that takes constant attention, it's just better if we set aside $500 a month then it is to try to pay $750 a month. That might not hold true for everyone. For some people or conditions it may be better to pay the $750 then to try to handle it themselves. So for my negotiations I would go with x+$6,000 without insurance or x+$4,500 with insurance. Now as an employer it's a lot simpler. Usually you have a \"\"group plan\"\" that offers you a pretty straight $x per year per person or $y per year per family. So you can offer exactly that. Salary - $x or Salary - $y. AS a starting point. However this is where negotiations start. If your offering me $50,500 and insurance, I would rather just have $57,000 and no insurance. Of course your real cost is only $55,000 cause you don't care about my heath care costs only about insurance costs. So you try to negotiate down towards $55,000 and no insurance. But that's not good enough for me. So I either go else where and you loose talent, or I accept $50,500 and insurance (or somewhere in between).\"", "topk_rank": 12 }, { "id": "440297", "score": 0.6530308723449707, "text": "I don't have preexisting conditions. I am only speaking of how my own personal healthcare situation got worse because of the ACA. I did used to use the dental and vision portions of my company-provided insurance regularly but I don't have that as part of my ACA insurance because again, it is unaffordable.", "topk_rank": 13 }, { "id": "302560", "score": 0.6524724960327148, "text": "If the company pays for Group Term Life Insurance, some of that premium payment may be taxable. If memory serves, that's what's included in W-2 Box C. W-2 Box C has no bearing on Schedule C.", "topk_rank": 14 }, { "id": "292331", "score": 0.6523400545120239, "text": "I'm an independent tech contractor in Canada. The single payer health care makes it so much easier to be a contractor or to create a startup. I have to wonder if the lack of healthcare in the US is the result of businesses trying to retain white collar workers that would otherwise go independent. In this environment, it's little surprise that I prefer getting those big cheques over getting benefits. Usually the benefit packages are little more than dental, many of which only provide partial coverage.", "topk_rank": 15 }, { "id": "70315", "score": 0.6505013108253479, "text": "Despite the ACA offering generous deductions, a lot of small businesses still cannot afford the initial capital involved in offering health insurance plan to their employees... Therefore we cannot take advantage of these deductions... Putting us at a disadvantage for finding low-to-mid skilled workers, to the larger corporations that are now mandated to offer the benefits..", "topk_rank": 16 }, { "id": "572685", "score": 0.6495035290718079, "text": "A big part of why the insurers are pulling is is the uncertainty. The ACA model worked in MA and is based on market forces. There is no reason it shouldn't succeed other that being actively sabotaged by the GOP. No legislation this big works out of the box yet this one has not been allowed to improve for 8 years and the GOP was rewarded for that sabotage. If the insurance companies had clear understanding of the marketplace for the next few years you would not have this problem. There are changes that are needed. IMO first thing is to get rid of the employee mandate. If it was up to me Id change it so no company would offer health insurance. I don't get my car insurance through work why do i get my health insurance from them. But that is long term and we need to ease into it. There are other issues as well but they are all fixable. The overall costs are an issue and that is not addressed in ACA at all. That I don't have an answer for but the ACA didn't make it worse.", "topk_rank": 17 }, { "id": "244856", "score": 0.6494160890579224, "text": "No. When you file your Articles of Organization, simply state that your business will operate under the law. You don't need to give any further specification.", "topk_rank": 18 }, { "id": "462218", "score": 0.648719847202301, "text": "No, what I'm saying is that the extant regulations have created such massive overheads to compliance that only big businesses can operate in that market because of the expenses required to be compliant. Eliminating that overhead would reduce expenses and make it possible for a greater diversity of firms to exist, reducing the average size of any individual firm, and increasing stability through diversity.", "topk_rank": 19 } ]
96	As a contractor, TurboTax Business-and-Home or Basic?	[ { "id": "328863", "score": 0.7772238254547119, "text": "\"Assuming you file state tax returns, you shouldn't buy Basic. Ever. Your choice is probably between the \"\"Premier\"\" version and the \"\"Business and Home\"\" version. Price difference is insignificant (I have a comparison on my blog, including short descriptions as to who might find each version useful the most). The prices have gone down significantly, since when I wrote the article, its cheaper now.\"" } ]	[ { "id": "482165", "score": 0.7249596118927002, "text": "It depends on the structure of your business. Are you a sole proprietor filing Schedule C on your 1040, or an S-corp, or part of a partnership? The treatment of a home office will differ depending on business entity.", "topk_rank": 0 }, { "id": "184559", "score": 0.7212276458740234, "text": "I've done my taxes using turbotax for years and they were not simple, Schedule C (self-employed), rental properties, ESPP, stock options, you name it. It's a lot of work and occasionally i did find bugs in TurboTax. ESPP were the biggest pain surprisingly. The hardest part is to get all the paperwork together and you'd have to do it when you hire an accountant anyway. That said this year i am using an accountant as i incorporated and it's a whole new area for me that i don't have time to research. Also in case of an audit i'd rather be represented by a pro. I think the chance of getting audited is smaller when a CPA prepares your return.", "topk_rank": 1 }, { "id": "542213", "score": 0.7112106680870056, "text": "\"From the IRS perspective, there's no difference between \"\"your taxes\"\" and \"\"your sole proprietorship's taxes\"\", they're all just \"\"your taxes\"\". While I could see it being very useful and wise to track your business's activities separately, and use separate bank accounts and the like, this is just a convenience to help you in your personal accounting, and not something that needs to relate directly to how tax forms are completed or taxes are paid. When calculating your taxes, if you want to figure out how much \"\"you\"\" owe vs. how much \"\"your business\"\" owes, you'll have to do so yourself. One approach might be just to take the amount that your Schedule C puts as income on your return and multiply by your marginal tax rate. Another approach might be to have your tax software run the calculations as though you had no business income, and see what just \"\"your personal\"\" taxes would have been without the business. If you think of the business income as being \"\"first\"\" and should use up the lower brackets rather than your personal income, maybe do it the other way around and have your software run the calculations as though you had only the business income and no other personal/investment income, and see what the amount of taxes would be then. Once you've figured out a good allocation, the actual mechanics of paying some \"\"personal tax amount\"\" from your personal bank account and some \"\"business tax amount\"\" from your business bank account are up to you. I'd probably just transfer the money from my business account to my personal account and pay all the taxes from the personal account. Writing two separate checks, one from each account, that total to the correct amount, I'm sure would work just fine as well. You can probably make separate payments from each account electronically through Direct Pay or EFTPS as well. As long as all taxes are paid by the deadline, I don't think the IRS is too picky about the details of how many payments are made.\"", "topk_rank": 2 }, { "id": "220063", "score": 0.7102741599082947, "text": "\"If you are talking about a home office, you don't \"\"charge\"\" the business anything. If the area is used exclusively as an office you pro-rate by square footage just the actual expenses. TurboTax recent published an article \"\"Can I Take the Home Office Deduction?\"\" which is a must read if you don't understand the process. (Note: I authored said article.)\"", "topk_rank": 3 }, { "id": "287398", "score": 0.7077127695083618, "text": "\"I would advise against \"\"pencil and paper\"\" approach for the following reasons: You should e-file instead of paper filing. Although the IRS provides an option of \"\"Fillable Forms\"\", there's no additional benefit there. Software ensures correctness of the calculations. It is easy to make math errors, lookup the wrong table It is easy to forget to fill a line or to click a checkbox (one particular checkbox on Schedule B cost many people thousands of dollars). Software ask you questions in a \"\"interview\"\" manner, and makes it harder to miss. Software can provide soft copies that you can retrieve later or reuse for amendments and carry-overs to the next year, making the task next time easier and quicker. You may not always know about all the available deductions and credits. Instead of researching the tax changes every year, just flow with the interview process of the software, and they'll suggest what may be available for you (lifetime learners credit? Who knows). Software provides some kind of liability protection (for example, if there's something wrong because the software had a bug - you can have them fix it for you and pay your penalties, if any). It's free. So why not use it? As to professional help later in life - depending on your needs. I'm fully capable of filling my own tax returns, for example, but I prefer to have a professional do it since I'm not always aware about all the intricacies of taxation of my transactions and prefer to have a professional counsel (who also provides some liability coverage if she counsels me wrong...). Some things may become very complex and many people are not aware of that (I've shared the things I learned here on this forum, but there are many things I'm not aware of and the tax professional should know).\"", "topk_rank": 4 }, { "id": "12987", "score": 0.7063273787498474, "text": "Unfortunately, if your taxes are too complicated for the 1040EZ form, then your tax situation is effectively unique and you need to try both options and see for yourself which one is better. If you do your taxes yourself, you may be more likely to do a more thorough job in digging everything up. You might even find that you can deduct some things that you hadn't thought of before. On the other hand, whenever I've gone to a tax professional, it's always been pretty much an all-or-nothing proposal. You sit down with them and hand them your records, they ask a couple simple questions, and they either give you your completed tax return on-the-spot or they have you come back in a week for a brief review of the final numbers. If they don't prepare your return on-the-spot, you can usually send additional items later on if you think of something that you forgot the first time around, but for the most part it's still a one-time shot. That said, I'm beginning to think the difference in monetary cost of completing even a mildly complex tax return is going to be insignificant, and the main factors to consider are the value of your own time and how much of the tax code you want to learn (because, in my experience, the software always refers to additional IRS forms or codes that are not automated in the software). In theory, your tax return should be the same regardless of whether you have a tax professional do your taxes or, if you do them yourself, which software you use. Given the same inputs, you should get about the same outputs. Even though that theory doesn't always hold exactly true, all the options should get you in the same ballpark--close enough that it doesn't make much difference in the grand scheme of things, unless your tax return is done incorrectly (e.g., you choose the wrong filing status or forget to take a major deduction). Suppose you're married and you or your spouse is a partner in an LLC. Maybe a tax professional wants to charge you $500 for your tax return (this will vary based on your circumstances). You could alternatively buy the tax software for $40-$300 and spend 20+ hours navigating through the interviews and reviewing tax codes for the decisions and worksheets that are not automated in the software. Depending on how much time you personally have to spend on the tax return, one option might be better than the other. Maybe you have to pay your in-house accounting person to use the tax software, or you have to pay an employee to cover for you while you use the software. Keep in mind that the tax professional and the tax software are probably deductible, whereas your time may not be. In the end, even if you save money up front, it might be a wash on the following year's tax return, especially after you consider the uncompensated time that you could have spent with your family, on your business.", "topk_rank": 5 }, { "id": "141511", "score": 0.7062170505523682, "text": "Largely it comes down to the complexity of your return (likely relatively simple if it's your first time filing) and your comfort level with using software. More complex returns would include filing business claims, handling stocks and investments, special return forms, etc. One benefit to most of the software options out there such as TurboTax, HR Block, and Tax Slayer, are that they are free to use and you only pay when you're ready to file. You could give them a shot to see how easy/difficult they are and if you feel overwhelmed, then contact a CPA (whose time won't be free). Also remember that those HR Block seasonal places that open up are not CPA's, but are temps hired and trained to use the software that you would find online. You didn't indicate they were an option, but I like to point that out to those who might not know otherwise. My opinion would be to use one of the online options because of cost and their ease of use. They also allow you to take your time and save your progress, so you can start using it and go ask questions/do research on your own time.", "topk_rank": 6 }, { "id": "90290", "score": 0.7014103531837463, "text": "I think you're making a mistake. If you still want to make this mistake (I'll explain later why I think its a mistake), the resources for you are: IRS.GOV - The IRS official web site, that has all the up-to-date forms and instructions for them, guiding publications and the relevant rules. You might get a bit overwhelmed through. Software programs - TurboTax (Home & Business for a sole propriator or single member LLC, Business for more complicated business), or H&R Block Business (only one version that should cover all) are for your guidance. They provide tips and interactive guidance in filling in all the raw data, and produce all the forms filled for you according to the raw data you entered. I personally prefer TurboTax, I think its interface is nicer and the workflow is more intuitive, but that's my personal preference. I wrote about it in my blog last year. Both also include plug-ins for the state taxes (If I remember correctly, for both the first state is included in the price, if you need more than 1 state - there's extra $30-$40 per state). Your state tax authority web site (Minnesota Department of Revenue in your case). Both Intuit and H&R Block have on-line forums where people answer each others questions while using the software to prepare the taxes, you might find useful information there. As always, Google is your friend. Now, why I think this is a mistake. Mistakes that you make - will be your responsibility. If you use the software - they'll cover the calculation mistakes. But if you write income in a wrong specification or take a wrong deduction that you shouldn't have taken - it will be on your head and you're the one to pay the fines and penalties for that. Missed deductions and credits - CPA's (should) know about all the latest deductions and credits that you or your business might be entitled to. They also (should) know which one got canceled and you shouldn't be continuing taking them if you had before. Expenses - there are plenty of rules of what can be written off as an expense and how. Some things should be written off this year, others over several years, for some depreciation formula should be used, etc etc. Tax programs might help you with that, but again - mistakes are your responsibility. Especially for the first time and for the newly formed business, I think you should use a (good!) CPA. The CPA should take responsibility over your filing. The CPA should provide guarantee that based on the documents you provided, he filled all the necessary forms correctly, and will absorb all the fees and penalties if there's an audit and mistakes were found not because you withheld information from your CPA, but because the CPA made a mistake. That costs money, and that's why the CPA's are more expensive than using a program or preparing yourself. But, the risk is much higher, especially for a new business. And after all - its a business expense.", "topk_rank": 7 }, { "id": "466213", "score": 0.7008760571479797, "text": "\"You file taxes as usual. W2 is a form given to you, you don't need to fill it. Similarly, 1099. Both report moneys paid to you by your employers. W2 is for actual employer (the one where you're on the payroll), 1099 is for contractors (where you invoice the entity you provide services to and get paid per contract). You need to look at form 1040 and its instructions as to how exactly to fill it. That would be the annual tax return. It has various schedules (A, B, C, D, E, F, H, etc) which you should familiarize yourself with, and various additional forms that you attach to it. If you're self employed, you're expected to make quarterly estimate payments, but if you're a salaried employee you can instruct your employer to withhold the amounts you expect to owe for taxes from your salary, instead. If you're using a tax preparation software (like TurboTax or TaxAct), it will \"\"interview\"\" you to get all the needed information and provide you with the forms filled accordingly. Alternatively you can pay someone to prepare the tax return for you.\"", "topk_rank": 8 }, { "id": "531442", "score": 0.6996450424194336, "text": "\"According to this post on TurboTax forums, you could deduct it as an \"\"Unreimbursed Employee\"\" expense. This would seem consistent with the IRS Guidelines on such deductions: An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense does not have to be required to be considered necessary. Office rent is not listed explicitly among the examples of deductible unreimbursed employee expenses, but this doesn't mean it's not allowed. Of course you should check with a tax professional if you want to be sure.\"", "topk_rank": 9 }, { "id": "112045", "score": 0.699583113193512, "text": "You will need Premier, since it is the first one to include Schedule E. Deluxe used to support Schedule E for investments, but not anymore. Most taxpayers know Schedule E as the schedule used for rentals, but you're going to need it to report your S-Corp income.", "topk_rank": 10 }, { "id": "533808", "score": 0.6982446908950806, "text": "\"There are way too many details missing to be able to give you an accurate answer, and it would be too localized in terms of time & location anyway -- the rules change every year, and your local taxes make the answer useless to other people. Instead, here's how to figure out the answer for yourself. Use a tax estimate calculator to get a ballpark figure. (And keep in mind that these only provide estimates, because there are still a lot of variables that are only considered when you're actually filling out your real tax return.) There are a number of calculators if you search for something like \"\"tax estimator calculator\"\", some are more sophisticated than others. (Fair warning: I used several of these and they told me a range of $2k - $25k worth of taxes owed for a situation like yours.) Here's an estimator from TurboTax -- it's handy because it lets you enter business income. When I plug in $140K ($70 * 40 hours * 50 weeks) for business income in 2010, married filing jointly, no spouse income, and 4 dependents, I get $30K owed in federal taxes. (That doesn't include local taxes, any itemized deductions you might be eligible for, IRA deductions, etc. You may also be able to claim some expenses as business deductions that will reduce your taxable business income.) So you'd net $110K after taxes, or about $55/hour ($110k / 50 / 40). Of course, you could get an answer from the calculator, and Congress could change the rules midway through the year -- you might come out better or worse, depending on the nature of the rule changes... that's why I stress that it's an estimate. If you take the job, don't forget to make estimated tax payments! Edit: (some additional info) If you plan on doing this on an ongoing basis (i.e. you are going into business as a contractor for this line of work), there are some tax shelters that you can take advantage of. Most of these won't be worth doing if you are only going to be doing contract work for a short period of time (1-2 years). These may or may not all be applicable to you. And do your research into these areas before diving in, I'm just scratching the surface in the notes below.\"", "topk_rank": 11 }, { "id": "586026", "score": 0.6940279603004456, "text": "Forms 1099 and W2 are mutually exclusive. Employers file both, not the employees. 1099 is filed for contractors, W2 is filed for employees. These terms are defined in the tax code, and you may very well be employee, even though your employer pays you as a contractor and issues 1099. You may complain to the IRS if this is the case, and have them explain the difference to the employer (at the employer's expense, through fines and penalties). Employers usually do this to avoid providing benefits (and by the way also avoid paying payroll taxes). If you're working as a contractor, lets check your follow-up questions: where do i pay my taxes on my hourly that means does the IRS have a payment center for the tax i pay. If you're an independent contractor (1099), you're supposed to pay your own taxes on a quarterly basis using the form 1040-ES. Check this page for more information on your quarterly payments and follow the links. If you're a salaried employee elsewhere (i.e.: receive W2, from a different employer), then instead of doing the quarterly estimates you can adjust your salary withholding at that other place of work to cover for your additional income. To do that you submit an updated form W4 there, check with the payroll department on details. Is this a hobby tax No such thing, hobby income is taxed as ordinary income. The difference is that hobby cannot be at loss, while regular business activity can. If you're a contractor, it is likely that you're not working at loss, so it is irrelevant. what tax do i pay the city? does this require a sole proprietor license? This really depends on your local laws and the type of work you're doing and where you're doing it. Most likely, if you're working from your employer's office, you don't need any business license from the city (unless you have to be licensed to do the job). If you're working from home, you might need a license, check with the local government. These are very general answers to very general questions. You should seek a proper advice from a licensed tax adviser (EA/CPA licensed in your state) for your specific case.", "topk_rank": 12 }, { "id": "476632", "score": 0.6931979060173035, "text": "\"Rob - I'm sorry your first visit here has been unpleasant. What you are asking for is beyond the capability of most software. If you look at Fairmark.com, you find the standard deduction for married filing joint is $12,200 in 2012, and $12,400 in 2013. I offer this anecdote to share a 'deduction' story - The first year I did my MIL's taxes, I had to explain that she didn't have enough deductions to itemize. Every year since, she hands me a file full of paper substantiating medical deductions that don't exceed 7.5% of her income. In turn, I give her two folders back, one with the 5 or so documents I needed, and the rest labeled \"\"trash\"\". Fewer than 30% of filers itemize. And a good portion of those that do, have no question that's the right thing to do. e.g. my property tax is more than the $12K, so anything else I have that's a deduction adds right to the number. It's really just those people who are at the edge that are likely frustrated. I wrote an article regarding Standard Deduction vs Itemizing, in which I describe a method of pulling in one's deductible expenses into Odd years, reducing the number in Even years, to allow a bi-annual itemization. If this is your situation, you'll find the concept interesting. You also ask about filing status. Think on this for a minute. After pulling in our W2s (TurboTax imports the data right from ADP), I do the same for our stock info. The stock info, and all Schedule A deductions aren't assigned a name. So any effort to split them in search of savings by using Married Filing Separate, would first require splitting these up. TurboTax has a 'what-if' worksheet for this function, but when the 'marriage penalty' was lifted years ago, the change in status had no value. Items that phaseout over certain income levels are often lost to the separate filer anyway. When I got married, I found my real estate losses each year could not be taken, they accumulated until I either sold, or until our income dropped when the Mrs retired. So, while is respect your desire for these magic dials within the software, I think it's fair to say they would provide little value to most people. If this thread stays open, I'd be curious if anyone can cite an example where filing separately actually benefits the couple.\"", "topk_rank": 13 }, { "id": "350839", "score": 0.6913767457008362, "text": "A computer is a special case because the IRS thinks that you might be using it for personal applications. You may need to keep a log, or be able to state that you also have another computer for non-business use. That said, if your schedule C shows a small profit then you don't need to itemize expenses, just state the total.", "topk_rank": 14 }, { "id": "333681", "score": 0.6906113624572754, "text": "I did my own taxes previously using both H&R Block Tax Cut and TurboTax. When I had a simple return and was single, it worked great. Once I got married it was a little more complicated. When I started a small side business, I switched to an accountant. He does a great job of adjusting deductions between my wife and I and filing separately. This minimizes the amount of taxes we have to pay. It has been a few years since I used the software, but I did not see the ability to easily make adjustments like that.", "topk_rank": 15 }, { "id": "327202", "score": 0.690592885017395, "text": "So there are a lot of people that get into trouble in your type of self employment situation. This is what I do, and I use google drive so there are no cost for tools. However, having an accounting system is better. Getting in trouble with the IRS really sucks bad.", "topk_rank": 16 }, { "id": "244104", "score": 0.6905882358551025, "text": "If you've been using TurboTax, let me suggest a compromise: Let TTax fill out the forms, but then print them out and go through it again by hand. If you don't get the same numbers, investigate why. If you do, you can probably conclude that you could do it by hand if you really want to, especially if you have the previous year's returns as a reference. (I've gone through every version of this from before personal tax software existed thru hand-constructed spreadsheets to commercial software and e-filing (federal only; I refuse to pay for something that reduces THEIR work). I can't use the free online version -- my return's got complications it won't handle -- and I'm uncomfortable putting that much data on a machine I don't control, so I'm still buying software each year. I COULD save the money, but it's worth a few bucks to me to make the process less annoying.) Late edit: Note that a self-constructed spreadsheet is one answer to the annoyance of pencil and paper -- you're still doing all the data manipulation yourself, but you're recording HOW you manipulated it as you go, and if numbers change you don't have to redo all the work. And it avoids raw math errors. It does require that you enter all the formulas rather than just their results, and figuring out how to express some things in stylesheet form can be a nuisance, but it isn't awful... and once you've done it (assuming you got it right) updating it for the next year is usually not hard unless you've introduced a completely new set of issues.", "topk_rank": 17 }, { "id": "491829", "score": 0.6904512643814087, "text": "\"On your tax return's Schedule C, Line B, you need to enter the Principal Business or Professional Activity Code that corresponds to your business's activities. There is a list of these 6-digit codes at the end of the Schedule C instructions. (HTML version here, or you can look at the last two pages of the PDF version.) The directions at the top of this list reads: Select the category that best describes your primary business activity (for example, Real Estate). Then select the activity that best identifies the principal source of your sales or receipts (for example, real estate agent). Now find the six-digit code assigned to this activity (for example, 531210, the code for offices of real estate agents and brokers) and enter it on Schedule C or C-EZ, line B. (Emphasis mine.) Although there are a lot of codes, it is entirely possible that you won't find one that exactly matches what you do. The directions say to pick the \"\"best\"\" one that you can. First, pick the broad category. You haven't specified your business, but let's say that you are a freelance programmer (a common occupation for Stack Exchange users). The category you decide is best might be \"\"Professional, Scientific, & Technical Services.\"\" There are several subcategories and activity codes under this, and you might find one that fits your business. However, if you don't, at the end of most categories, there is an \"\"Other\"\" code. For our example, there is code 541990, which is \"\"All other professional, scientific, & technical services.\"\" If you can't even find a broad category that describes your business, there is the last code in the list: 999999, which is for \"\"Unclassified establishments (unable to classify).\"\"\"", "topk_rank": 18 }, { "id": "361908", "score": 0.6889587044715881, "text": "I prefer TaxAct. I find it simpler to use and more helpful in helping answer the questionnaire. I have a fairly complex tax return and it handles it just fine.", "topk_rank": 19 } ]
97	Peer to peer lending business model (i.e. Lending Club)	[ { "id": "578529", "score": 0.6711602807044983, "text": "This is all answered in the prospectus. The money not yet invested (available/committed to a note but not yet funded) is held in pooled trust account insured by FDIC. Money funded is delivered to the borrower. Lending Club service their notes themselves. Read also my reviews on Lending Club." }, { "id": "77352", "score": 0.7059863805770874, "text": "The best description of P2P lending process I saw comes from the SEC proceedings. They are very careful about naming things that are happening in the process. Prosper got back to business after this order, but the paper describes succinctly how Prosper worked when its notes haven't yet been registered by the SEC. These materials contain a lot of responsible comments on how crowdfunding, including P2P lending, works." } ]	[ { "id": "271459", "score": 0.6541285514831543, "text": "\"Why isn't the above the business model of a loan? It is the model of some types of loans. It's called a \"\"Line of credit\"\" (LOC). I have two them, one for my business, and one for me personally. (Why does this question exist:) Is it an 30-year loan or a 10-year loan? As you mentioned, the concept of term doesn't exist for these types of loans. As long as I pay the interest and don't go over the max of my credit limit, I could keep the money indefinitely. Due to this, lines of credit almost always have a variable interest rate. (In the US they are tied to the Prime rate.) (Why does this question exist:) If you pay extra, do you want the extra to go toward the interest or toward the principal? Again, this concept also doesn't exist with a LOC. There is a minimum payment that you must make each month, but there is nothing that prevents you from making the minimum payment and then immediately taking the exact payment you made back out again. Of course this increases the total you owe, and eventually you would hit your maximum credit limit and would no longer be able to take the full payment back out. Years ago I maxed out my business line and didn't have enough money to make the payment so my bank was nice enough to raise my limit for me (so I could take enough out to make the payment), but if I did that multiple times I'm sure they would have eventually said no. Fortunately my clients finally paid me and I paid off the line, but I still keep the LOC today even though I rarely use it. By the way, beyond traditional LOCs, they also exist in other forms, both secured and unsecured. A common secured product in the US is a 2nd lien holder to a home (the first being the mortgage), called a HELOC (Home Equity Line Of Credit). Many banks also offer unsecured LOCs on a checking account which they sometimes call \"\"overdraft protection\"\". Update: based on a comment to this answer, I now realize that the full question now becomes something similar to: Given that the Line of Credit loan model exists, why aren't all loans like this? or, refining it further: What advantages do other loan types have over the Line of Credit model, specifically finite term loans? A main advantage of a term loan over a line of credit is that the bank knows when they will get the money back. If every loan a bank made was a LOC product, and no one ever paid it back, then they'd eventually run out of money. That's obviously an oversimplification but the principle (pun intended) holds. To prevent this the bank would have to call due the loan, and doing this usually leaves customers angry. Years ago I had a business LOC with a bank that discontinued their business LOC product, and called every customer's loan due. I had a balance and they offered to convert it to a 5 year term loan, which I did, but I was so mad at them that I switched banks and paid off the term loan shortly after. Another advantage of a term loan is it forces the customer to be a little more responsible. Lines of credit can be dangerous for those that misuse it because if the amount owed is driven up due to bad behavior, there is nothing to force the bad behavior to stop. A perfect example of this can be found with governments. Some governments borrow money until their line of credit is used up, and then they just keep increasing their credit limit. There is no incentive for the officials in charge of the government to stop doing this because it isn't even their money. If those lines of credits were converted to term loans, the government would be forced to increase revenue and/or decrease expenses, which is the only way to get out of debt. Some other advantages of term loans over a LOC:\"", "topk_rank": 0 }, { "id": "202990", "score": 0.6540282964706421, "text": "We were close to doing something like this but we ultimately find it cheaper and more profitable to find those who are just looking to sell off their accounts. Within the past five years I believe we have done this six or seven times which benefits us greatly but at the same time more competition comes in, people quit their business and cancel, the business is transferred to a new owner and they cancel, etc etc. We do well, but are always looking for more.", "topk_rank": 1 }, { "id": "146643", "score": 0.6539970636367798, "text": "For questions 1 and 2. 1) If you are packing the loans into a CDO, they are being sold on the open market. Once it achieves a AAA rating, as most did even though they were mostly subprime, alt a, or arm, it is sold and shipped off the originator's books (While the originator of the CDO collects X% in fees) Basically how the originator makes their money is by X amount of CDOs they sell. There was no incentive to pick and choose the best borrowers to sell a loan to because how the CDOs were sold they achieved the best rating regardless of the borrowers credit risk. Due to this model, people are going to try and get as many people into the homes and sell the CDO asap. This caused questionable lending practices to result, NINJA (no income, no job, no assets) loans, manipulating borrowers income, assets, etc. Things that could be changed to help not have this occur again: a) Feds monetary policy was pretty meh during this period, due to low interest rates the banks had pretty much an endless supply of money and when all the reasonable ventures dried up they had to explore other opportunities to lend. b) Ratings agencies need an overhaul in how they receive their commission, preferably they should be being paid by the investor not the person issuing the security. This will help to eliminate the bias that results. c) Having X% (2-5) remain on the institutions books who created the CDO will help to make them responsibly lend. This is because if they are required to have it remain on their books, they will make better longer term decisions in who to lend to. I'm pretty sure all of these issues are discussed in Nouriel Roubini's book [Crisis Economics](http://www.amazon.com/Crisis-Economics-Course-Future-Finance/dp/1594202508) Another Great book already mentioned in this thread is by Michael Lewis [The Big Short](http://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393338827/ref=sr_1_1?s=books&ie=UTF8&qid=1324140607&sr=1-1) If your interested in the European Crisis Michael Lewis also just came out with [Boomerang](http://www.amazon.com/Boomerang-Travels-New-Third-World/dp/0393081818/ref=sr_1_1?s=books&ie=UTF8&qid=1324140665&sr=1-1)", "topk_rank": 2 }, { "id": "124403", "score": 0.6539266109466553, "text": "You have a good point, right now the way people raise money at the micro level is hitting up relatives or shmoozing the boys at the country club. It would be cool if there were local exchanges, but I guess the reason there isn't right now is the costs to run such a thing would have to be borne by small companies and investors, and it's 'cheaper' to just raise money informally. But with the internet revolution, seems like that would lower the costs somewhat.", "topk_rank": 3 }, { "id": "384658", "score": 0.6533142924308777, "text": "The loan is very likely to be syndicated, yes. I only state 7-10 because all of our loans to this point have been 7 year terms. And in many ways, this loan is just one of those loans, multiplied out in a modular sense.", "topk_rank": 4 }, { "id": "389820", "score": 0.653289794921875, "text": "They didn't report it was six figures a month, but I work in the industry and know that is the minimum cost for this type of service. Putting Auto credit freezes on everyone seems like a good idea but I imagine the lenders would go up in arms if that happens because it would hault all new consumer debt.", "topk_rank": 5 }, { "id": "70689", "score": 0.6532377600669861, "text": "It is certainly interesting to look at MLM in the context of the Gig Economy. I hadn't thought of it that way but it is very much a valid comparison (for better and for worse). As for the middleman, the large number of those is exactly why I think MLM is a silly business model for all but those at the top.", "topk_rank": 6 }, { "id": "114304", "score": 0.6531602740287781, "text": "There's a primer on valuing community banks by oddball Stocks, an investor who specializes in that kind of stuff. I can't link it cause I'm on my phone, but just search it up on Google and I'm sure you'll find it.", "topk_rank": 7 }, { "id": "226232", "score": 0.6526138782501221, "text": "I worked at Wells Fargo Home Mortgage right before all the ARM loan stuff hit the news. Everyone on the board was constantly talking about increasing their portfolios. One of the main ways they aimed to do this was by creating new loan products aimed at non-traditional borrowers (read: people who didn't meet the requirements for their traditional loan products). We had quarterly company-wide meetings to inform us about this kind of thing and it never really seemed like a great plan to me. Two years later, and the banks started failing.", "topk_rank": 8 }, { "id": "275249", "score": 0.6523990631103516, "text": "\"There are three (or four) ways that a company can grow: (Crowdfunding is a relatively new (in mainstream businesses) alternative financing method where people will finance a company with the expectation that they will benefit from the product or service that they provide.) Obviously a startup has no prior income to use, so it must either raise money through equity or debt. People say that one must borrow contingent on their salary. Banks lend money based on the ability to pay the loan back plus interest. For individuals, their income is their primary source of cash flow, so, yes, it is usually the determining factor in getting a loan. For a business the key factor is future cash flows. So a business will borrow money, say, to buy a new asset (like a factory) that will be used to generate cash flows in the future so that they can pay down the debt. If the bank believes that the use of the money is going to be profitable enough that they will get their money back with interest, they'll loan the money. Equity investors are essentially the same, but since they don't get a guaranteed payback (they only get paid through non-guaranteed dividends or liquidation), their risk is higher and they are looking for higher expected returns. So the question I'd have as a bank or equity investor is \"\"what are you going to do with the money?\"\" What is your business strategy? What are you going to do that will make profits in the future? Do you have a special idea or skill that you can turn into a profitable business? (Crowdfunding would be similar - people are willing to give you money based on either the social or personal benefit of some product or service.) So any business either starts small and grows over time (which is how the vast majority of businesses grow), or has some special idea, asset, skill, or something that would make a bank willing to take a risk on a huge loan. I know, again, that people here tend to turn blind eyes on unfortunate realities, but people do make giant businesses without having giant incomes. The \"\"unfortunate reality\"\" is that most startups fail. Which may sound bad, but also keep in mind that most startups are created by people that are OK with failing. They are people that are willing to fail 9 times with the thought that the 10th one will take off and make up for the losses of the first 9. So I would say - if you have some great idea or skill and a viable strategy and plan to take it to market, then GO FOR IT. You don't need a huge salary to start off. You need something that you can take to market and make money. Most people (myself included) either do not have that idea or skill to go out on their own, or don't have the courage to take that kind of risk. But don't go in assuming all you need is a loan and you'll be an instant millionaire. You might, but the odds are very long.\"", "topk_rank": 9 }, { "id": "206109", "score": 0.6523187756538391, "text": "maybe it would turn into an Oligopoly on it's own, but regulation as that pervasive is what I'm trying to avoid here. I advocate Worker Co-ops as the best examples for these firms because they actually allow a sense of welfare taken up by the workers who can self provide with actual trades (and because their co-ownership allows a voluntary loophole in minimum wage laws, you get a real chance to vindicate/prove Adam Smith's theory of flexible prices and wages based on economic activity.). With self-provided welfare, the Government can pull out of both transfer payments as well as financial regulations because these markets have become more differentiated to a diversity of opinions, so Government can step back and focus on its more important role of Researcher and Developer, which it tends to do better at than other roles. Firms can't do this if they are breaking even, like they would in perfect competition.", "topk_rank": 10 }, { "id": "175824", "score": 0.6521039009094238, "text": "Lending isn't profitable when interest rates are this low. Consider what's involved to offer a savings or checking account. The bank must maintain branches with tellers. The bank has to pay rent (or buy and pay property taxes and utilities). The bank has to pay salaries. The bank has to maintain cash so as to make change. And pay for insurance against robbery. All of that costs money. At 6% interest, a bank can sort of make money. Not great money, but it takes in more than it has to pay out. At 4% interest, which is about where ten year mortgage rates are in Canada, the bank doesn't make enough margin. They are better off selling the loan and closing their branches than offering free checking accounts. An additional problem is that banks tend to make money from overdraft fees. But there's been a move to limit overdraft fees, as they target the most economically vulnerable. So Canadian banks tend to charge monthly fees instead. UK banks may also start charging monthly fees if interest rates stay low and other fees get curtailed.", "topk_rank": 11 }, { "id": "202864", "score": 0.65192711353302, "text": "What do you mean by professional? Seems like you want to hire people to work and you to manage. This is fine but your costs will rise significantly. Seems like first you need more business to hire more people. Be careful that your market can support a larger buisness. Ive heard of many 2 bay car garage types going bankrupt after moving to a 4-6 bay because they couldnt keep the bays full 100% of the time", "topk_rank": 12 }, { "id": "91201", "score": 0.6518741846084595, "text": "In this example you are providing 4x more collateral than you are borrowing. Credit score shouldn't matter, regardless of how risky a borrower you are. Sure it costs time and money to go to auction, but this can be factored into your interest rate / fees. I don't see how the bank can lose.", "topk_rank": 13 }, { "id": "263934", "score": 0.6518244743347168, "text": "I wish this was the case in Canada. I lost about 60k on my home in one year and have to sell now to move for work. In the US I could simply default and the bank takes the loss. In Canada if I default, CMHC pays the bank, then I'm sued by CMHC and stuck with the bad debt. Simply put - here the onus of repayment is on the lender, not the lending institution. It sounds good until you are the one looking at losing your shirt.", "topk_rank": 14 }, { "id": "260060", "score": 0.6514837741851807, "text": "Dave Ramsey has a list of ELPs (Endorsed Local Providers) of which I've only heard good things. You can request an investment ELP here.", "topk_rank": 15 }, { "id": "551155", "score": 0.6512205600738525, "text": "I believe that kind of micro-tuning for every participant would make the operating costs of the fund intolerable. A better approach, if this is important to you, would be to find a fund or funds designed for people who share your criteria. If the goals and criteria aren't mutual, a mutual fund -- traditional or ETF -- is probably not the right tool.", "topk_rank": 16 }, { "id": "103030", "score": 0.6511944532394409, "text": "In the United Kingdom, there is a leading company that has been offering Progressive business funding solutions to the businesses for the last 120 years. Their service areas are South Africa, New Zealand, Ireland, Canada, Australia, USA, etc.", "topk_rank": 17 }, { "id": "334391", "score": 0.6510807871818542, "text": "The idea you present is not uncommon, many have tried it before. It would be a great step to find landlords in your area and talk to them about lessons learned. It might cost you a lunch or cup of coffee but it could be the best investment you make. rent it out for a small profit (hopefully make around 3 - 5k a year in profit) Given the median price of a home is ~220K, and you are investing 44K, you are looking to make between a 6 and 11% profit. I would not classify this as small in the current interest rate environment. One aspect you are overlooking is risk. What happens if a furnace breaks, or someone does not pay their rent? While some may advocate borrowing money to buy rental real estate all reasonable advisers advocate having sufficient reserves to cover emergencies. Keep in mind that 33% of homes in the US do not have a mortgage and some investment experts advocate only buying rentals with cash. Currently owning rental property is a really good deal for the owners for a variety of reasons. Markets are cyclical and I bet things will not be as attractive in 10 years or so. Keep in mind you are borrowing ~220K or whatever you intend to pay. You are on the hook for that. A bank may not lend you the money, and even if they do a couple of false steps could leave you in a deep hole. That should at least give you pause. All that being said, I really like your gumption. I like your desire and perhaps you should set a goal of owning your first rental property for 5 years from now. In the mean time study and become educated in the business. Perhaps get your real estate license. Perhaps go to work for a property management company to learn the ins and outs of their business. I would do this even if I had a better paying full time job.", "topk_rank": 18 }, { "id": "322430", "score": 0.6508823037147522, "text": "Aside from everyone else's explanation about bundling them with other mortgages, a buddy of mine who worked at a boutique lending group basically said that they KNOW these people can't pay the loans back and thus the bank will be able to take over ownership of the home. Since housing prices are guaranteed to go up, they'll be able to make money once they re-sell the property.", "topk_rank": 19 } ]
99	In what cases can a business refuse to take cash?	[ { "id": "474248", "score": 0.8013370037078857, "text": "The Federal Reserve website notes that creditors must accept cash for debts on services already rendered, but that businesses may refuse cash for services not yet rendered unless prohibited by local law. The Treasury website includes examples of businesses limiting what cash they will accept: For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy." }, { "id": "193081", "score": 0.756741464138031, "text": "You have to take legal tender to settle a debt. If your business model doesn't involve the customer incurring a debt that is then settled, you don't have to take cash. For example, in a restaurant where you pay after eating, you can insist on paying cash, because you're settling a debt. But in McDonald's they can refuse your cash at the counter, because you've not received your food yet and so no debt has been incurred." }, { "id": "341413", "score": 0.7242625951766968, "text": "\"They don't have to take cash if they reasonably told you in advance they don't take cash, because they made fair effort to prevent you from incurring a debt. They don't have to take cash if the transaction hasn't yet happened (not a debt) or if it can be easily undone at no cost to either party - such as a newspaper subscription they can just stop delivering. Both of these reasons are limited by the rules against discrimination, see below. They don't have to take cash if it's impracticable. For instance a transit bus when fares first went to $1.00, it took years to fund new fareboxes able to take paper money. You don't have to take a mortgage payment in pennies. Liquor stores don't have to take $100 bills. (it requires them to keep too much change in the till, which makes them a robbery target). Trouble arises when it appears there's an ulterior motive for the rule. Suppose a Landlord Jim requires rent to be paid with EFT. Rent-controlled Marcie tells the judge \"\"It's a scheme to oust me, he knows I'm unbanked\"\". Jim counters \"\"No. I got mugged last month because criminals know when I collect cash rents.\"\" It will turn on whether Jim can show good-faith effort to work with his unbanked tenants to find other ways to pay. If Jim does a particularly bad job of this, he could find himself paying Marcie's legal bills! Even worse if the ulterior motive is discrimination. Chet the plumber hates Muslims. Alice the feed supplier hates the Amish. So they decide to take credit cards only, knowing those people's religions don't allow them. Their goose is cooked once they can't show any other reasonable reason to refuse cash.\"" }, { "id": "136662", "score": 0.636181116104126, "text": "\"Apartment complexes have had a long history of not accepting cash for payment of rent. This eliminates the problem of robbery and strongly reduces the risks of embezzlement. THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE Article 1, Section 10 of the US Constitution states: No State shall ... make any Thing but gold and silver Coin a Tender in Payment of Debts Previous editions of banknotes stated that the notes were redeemable in gold or in lawful money. The Mint Act of 1792 set gold and silver as legal currency (and that one did not have to accept \"\"base metal coins\"\" for more than $10 which is why coin rolls only go up to $10). The Coinage Act of 1873 dropped silver and made gold the legal standard for currency. In 1933, the \"\"redeemable in gold\"\" was changed by federal statute and the legend you mention was added. Prior to 1933, someone could demand that you pay them in gold and not with a bank note. Legislation in 1933 ended that. This clause in the Constitution leads some political groups to wish to return to a gold standard. I recommend reading the book Greenback as it describes how our currency got the way it did and why that clause appears on currency.\"" }, { "id": "153679", "score": 0.7888043522834778, "text": "\"A business can refuse cash (paper currency) payment pretty much in all cases provided it's a reasonable policy and/or notified during/in advance of contracting. Details in this link. \"\"all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services.\"\" Even if the payment is being made to settle a debt or other obligation, the creditor may refuse payment if their rationale is reasonable (as determined by the courts).\"" } ]	[ { "id": "53649", "score": 0.7031496167182922, "text": "I think cash, travelers checks (little iffy about this one: they're legal tender cash equivalents), and money orders are the only ones that you'd be a little weird to not accept. You certainly don't have to accept regular checks, credit cards, or barter. In the end though, you don't HAVE to accept anything. Accept only small bills, accept only checks from certain banks, accept only the diners card. Your sale, your rules.", "topk_rank": 0 }, { "id": "290236", "score": 0.6980082988739014, "text": "\"The confusion comes from ambiguity in popular belief -- that businesses are required to accept x_y_x as payment. In reality, a business can state the terms of a transaction to their pleasure. On the other hand, debt is different -- no lender can refuse cash or other legal tender for repayment of debt. Sometimes, people try to split hairs and argue \"\"Well, if I eat a steak and I owe the restaurant $100, they should have to accept my $100 as tender for the debt of my meal.\"\" Not true. The restaurant isn't giving you a line of credit, they're billing you after services rendered, and your payment is due on their terms.\"", "topk_rank": 1 }, { "id": "103680", "score": 0.6898834109306335, "text": "Many small businesses are still cash and check. For example my landlord does not take credit card or online transfer. My choices are cash and check, and I prefer checks for the paper trail.", "topk_rank": 2 }, { "id": "438976", "score": 0.6818938851356506, "text": "Accepting cash isn't free to the merchant's either. It needs to be counted, reconciled, stored, and taken to the bank each day. There is a certain amount that needs to be on-hand, not in the bank earning interest. There is more of a worry about employees taking cash from the register. There is the chance of inadvertently accepting counterfeit currency. I'm not sure how the cost of cash compares to the cost of accepting credit card, but there is a cost that cannot be ignored.", "topk_rank": 3 }, { "id": "524313", "score": 0.6809850931167603, "text": "This happened to me in the mid 90's. I wanted to withdraw enough cash from my account to buy a new car and they nearly panicked. I took a bank draft instead. I discovered afterward that they can require up to a week's notice for any withdrawl.", "topk_rank": 4 }, { "id": "482503", "score": 0.6801941990852356, "text": "\"In the US, Section 3.114 of the Uniform Commercial Code sets the rules for how any confusion in checks or other business transactions is handled: “If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers.” If there was any ambiguity in the way you wrote out the amount, the institution will compare the two fields (the written words and the courtesy box (digits)) to see if the ambiguity can be resolved. The reality is that the busy tellers and ATM operators typically are going to look at the numeric digits first. So even if they happen to notice the traditional \"\"and...\"\" missing, it seems highly unlikely that such an omission would cause enough ambiguity between these the two fields to reject the payment. Common sense dictates here. I wouldn't worry about it.\"", "topk_rank": 5 }, { "id": "487988", "score": 0.6801578402519226, "text": "The funny thing is that mom & pop type establishments usually prefer cash due to the merchant charges they have to pay to the credit card companies. Some of these are percentage-based & others are fixed like a per-transaction charge. In the long run, accepting 10k USD wouldn't be enough. They would lose more than that in people who don't have a card on them vs accepting both cash and cards.", "topk_rank": 6 }, { "id": "167222", "score": 0.6795412302017212, "text": "Legal Tender means you have to accept that money as payment for a legal (as in not illegal) debt. If I'm in country X, and we go to court over a dispute of a debt, the law in most places is that the court will insist the debt be paid in the local legal tender at a specific amount. As others already said below - taxes, etc -those are debts. Eating at a restaurant is a debt (you ate it already) Filling up with gas without paying first is a debt. Employees work for you build up debt. But in any private transaction where there is no debt, people are free to do whatever they want (let's ignore discrimination laws and whatnot for this discussion, mmkay?). You can come into my store and I can insist that today I'll only accept euros. Or jelly beans. Or I can choose to simply not do business with you. We are two free people who are under no obligation to do business with each other, and if we choose to, how we choose to remunerate each other for that business is completely up to us. (How I pay the sales tax on that transaction, though, well, thats' between me and the tax authorites, and will be in the local legal tender)", "topk_rank": 7 }, { "id": "66397", "score": 0.6776725053787231, "text": "\"~~Not only would it be illegal, but~~ the $10k doesn't even sound like it would be a \"\"bonus\"\" of any sort for doing so. From the article: > If a restaurant opts in, it'll get a $10,000 gift from Visa (V) to help pay for technology upgrades, the company said. Emphasis is mine. --- Edit :: I was curious about this, so I started doing a little reading-up on businesses not accepting cash. It turns out that it is legal to refuse cash, but only if there is no debt to pay. If you get your product first, then there's a debt to pay, and the business must accept cash. If the customer pays first, then there's no debt to pay (the customer is already paid up), so the business does not have to accept cash. Link for the info: https://u.osu.edu/zagorsky.1/2016/08/05/do-businesses-have-to-accept-cash/ There are plenty of additional articles that talk about it, but I opted to link this one as it's a recent article by an economic researcher at a university. I figured that, if I'm going to link something, a primary source is probably better than a news agency reporting on it. It's kind of interesting, really, and I wonder how it would work in a place such as a restaurant. You typically get your food first, and pay later. This creates a scenario where the customer is in debt to the restaurant, so the restaurant would theoretically have to accept cash. However, if you pay first, then get your food, you don't have an outstanding debt, and thus the restaurant doesn't have to accept cash. Looking at the article again about Visa's offer, two of the types of groups it mentions are cafes and food trucks, which typically require you to pay before you get your food. This would mean that the customer isn't in debt to the service, and thus cash can be refused. How that would work out at a restaurant is another question entirely, as the vast majority of the American restaurant-goers expect to pay after they eat. This may be why the article specifically mentions small business restaurants. A local mom'n'pop restaurant is going to have a much easier time going cashless than a national chain would (and the $10k would do more for them to update their systems than it would for the national chain). Additionally, people might be more willing to accept the different practices at a mom'n'pop restaurant than they would at a nation-wide chain. Definitely an interesting bit of reading, and a fun bit of learning!\"", "topk_rank": 8 }, { "id": "213236", "score": 0.6756905913352966, "text": "I don't carry cash at all unless I know I'm going somewhere which requires it - this includes going to the corner shop for some milk or going to other countries for a week. Cards are easier for me - if a merchant wants my business they will take my money through whatever means they can. I don't think etiquette comes into it.", "topk_rank": 9 }, { "id": "110387", "score": 0.6755217909812927, "text": "\"Yes. \"\"There is, ...no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services.\"\" Taken from the US Department of the Treasury.\"", "topk_rank": 10 }, { "id": "443487", "score": 0.668960452079773, "text": "Generally, credit card networks (as opposed to debit/ATM cards that may or may not have Visa/MC logos) have a rule that a merchant must accept any credit card with their logo. Visa rules for merchants in the US say it explicitly: Accept all types of valid Visa cards. Although Visa card acceptance rules may vary based on country specific requirements or local regulations, to offer the broadest possible range of payment options to cardholder customers, most merchants choose to accept all categories of Visa debit, credit, and prepaid cards.* Unfortunately the Visa site for China is in Chinese, so I can't find similar reference there. You can complain against a merchant who you think had violated Visa rules here. That said, its not a law, its a contract between the merchant processor and the Visa International organization, and merchants are known to break these rules here and there (most commonly - refusing to accept foreign cards, including in the US). Also, local laws may affect these contracts (for example, in the US it is legal to set minimum amount requirements when accepting credit cards). This only affects credit card processing, and merchants that don't accept credit cards may still accept debit cards since those work in different networks, under a different set of rules. Those who accept credit cards, are also required to accept debit cards (at least if used as credit).", "topk_rank": 11 }, { "id": "57891", "score": 0.6688589453697205, "text": "In my experience, this choice is entirely up to the bank itself. There was a time when, given my mothers ATM card I could go to the bank and pull money for her, but the bank has since changed their rules and now they only will allow people listed on the account to access it, card or no card. If the bank is aware of who you are and knows that your friend is not you, they may be skeptical of allowing your friend to withdraw any money, or they might not care, it's at their discretion. If they do not know who either of you are, if your friend has the card and information needed, that will likely be sufficient, unless they ask for identification.", "topk_rank": 12 }, { "id": "580624", "score": 0.6679677367210388, "text": "The bank won't let you because: Differences in required account features — Business accounts have different features (many of them legal features) that are required by businesses. For instances: Do you want to be able to deposit cheques that are written out to your business name? You need a business account for that. Your business could be sold. Then it wouldn't be your business, so it wouldn't make sense to put the business account under your personal name. The bank account and the cash it holds is a business asset and should be owned by the business, so when the business is sold the account goes with it. This is especially the case for a corporation that has shareholders, and not a sole proprietorship. For a business, you could also, in theory, assign other people as signing authorities on the business account (e.g. your corporate treasurer), and the individuals performing that role could change over time. Business accounts allow for this kind of use. Market segmentation — The bank has consciously undertaken to segment their product offerings in order to maximize their profit. Market segmentation helps the bottom line. Even if there were zero legal reasons to have separate personal vs. business accounts, banks would still make it their policy to sell different account types according to use because they can make more money that way. Consider an example in another industry: The plain-old telephone company also practices segmentation w.r.t. personal/business. Do you want a telephone line for a business and listed as such in the phone book? You need a business line. Do you want a phone line hooked up at a non-residential address? You need a business line. Here it's clear it is less of a legal issue than with the bank account, and it doesn't matter that the technical features of the phone line may be identical for the basic product offerings within each segment. The phone company has chosen to segment and price their product offerings this way. Q. Why do companies choose to charge some kinds of customers more than others for essentially the same underlying service? A. Because they can.", "topk_rank": 13 }, { "id": "9814", "score": 0.6655042171478271, "text": "\"Ever wonder why certain businesses won't accept certain credit cards? (The sign above the register saying \"\"Sorry, we don't accept AmericanExpress\"\"). It's because they don't want to pay that credit card company's transaction fees. One of the roles of the credit card company is to facilitate the transaction process between the customer (you) and the store. And now that using credit cards over cash or check is so ingrained in our culture, it creates extra work for the customer to make purchases at an establishment that is cash-only. Credit card companies know this, and so do businesses. So businesses will partner with credit card companies so that customers can use their cards. This way, everything is handled electronically (this can also benefit the business, since there's added security as they're not dealing with cash directly, and they don't have to manually count as much cash later). However a business may only budget a certain amount of their profits they want taken by credit card transactions. So if a company's fees are too high (say AmericanExpress, for example) and they are banking on you already having a Visa card, the company isn't going to go out of its way to provide the AmericanExpress option for you. If it were free for the business to use a credit card company's service at their stores, then they would all just provide the option for every card! So the credit card company making money is all contingent on you spending your money by using their credit card. You use the card, and the store pays the company for the transaction.\"", "topk_rank": 14 }, { "id": "67716", "score": 0.6652394533157349, "text": "A lot of stores, especially smaller ones, won't accept card payments under $10.00. They pay a fee for taking cards and for small transactions it is not worth it.", "topk_rank": 15 }, { "id": "395995", "score": 0.6639572381973267, "text": "\"Understood. But based on the OP, it's not categorically clear what they were refusing. If they refused to quote the balance and/or refused to take a phone payment that was otherwise in keeping with the cardholder agreement (i.e., the cardmember called the correct number for phone payments and balance-checking, etc), then yeah, they were not only being unreasonable, but also violating the contract. What I read as ambiguous is whether the cardholder was specifically asking for the payoff balance/amount, and whether they were following process for phone-payments and balance-checking, etc. IOW, it's not necessarily \"\"illegal\"\" and might not even be unreasonable for the customer-service number to have different departments for balance-checking and phone-payments versus card-cancellation. It's not falsifiably clear from the OP that the cardholder was not asking the person on the other end of the phone for categorical statements of fact that they were obligated to make. I'm not accusing anyone of lying or saying that the CC company was acting reasonably, I'm just saying that language such as \"\"They do not provide mid-cycle payoff quotes\"\" is not evidence that they were doing any kind of funny-business.\"", "topk_rank": 16 }, { "id": "480287", "score": 0.659079372882843, "text": "If you or she can't answer this or don't have access to someone who can, then I fear for the business. That said, it really depends on where you are and how your business is incirporared, but I can't think of any law prohibiting it where I am. I was an employee of my dad's business as soon as I was legal.", "topk_rank": 17 }, { "id": "160612", "score": 0.6582288146018982, "text": "\"The store owners don't know what your intentions are. All they know is they gave you good cash for a bad check. Part of this is that you're paying for the bad acts of others in the past, and these people aren't in the business of trying to understand your intentions. If you show good faith by going in and paying whatever you can, it will go a long way toward getting them to work with you on the balance. I don't know if they'd have much of a criminal case if the check you gave them was clearly marked as \"\"void\"\" and you've shown a willingness to resolve the situation. Of course you can't blame them for not wanting to accept another check from you. Good old hard cash, even if it isn't the full amount, will be a better sign of your intent to repay the debt.\"", "topk_rank": 18 }, { "id": "122701", "score": 0.6572536826133728, "text": "This might be useful http://ec.europa.eu/taxation_customs/individuals/cash-controls_en As far as I am aware there should be no issues with anything below 10000. But anything after that you have to declare.", "topk_rank": 19 } ]
102	Maintaining “Woman Owned Business” while taking on investor	[ { "id": "494264", "score": 0.7597600817680359, "text": "To qualify as a woman owned business, a woman or group of women must own shares worth 51% of the business. If your investor was a woman, the entire 5% could come from her share of the company without affecting the 51% ownership requirement. Could you find a woman to add as an investor? If you each had your shares diluted 5%, She would be down to 48.45% ownership, and you would be down to 46.55% ownership. The only way for you to get back to a 51% female ownership situation would be to give a 2.55% ownership stake (from your share) to a wife, sister, mom, girlfriend, or any other woman who you think should benefit from this arrangement. This would still put you down at 44% (effectively taking the whole 5% from you) but by giving some of your share to someone else, it does require your partner to make some of the sacrifice, while still benefiting someone you care about (if you have someone you would like to give that benefit to). In summary, this is what it would look like:" }, { "id": "187073", "score": 0.7708746790885925, "text": "In addition to finding another woman investor, you have an equitable option that is not unreasonable: ask your partner to buy out 3% worth of shares from you (which then gives her 54%, allowing you to then sell 5% to an investor and have it not dilute her below 51%: .54 * .95 = .513). That keeps you whole but also keeps your woman-owned-business status." } ]	[ { "id": "1656", "score": 0.7095694541931152, "text": "Many partnership agreements include a shotgun clause: one person sets a price, the other can either buy at that price or sell at it. It's rather brutal. You can make offers that you know are less than the company is worth if you're sure the other person will have to take that money from you, say if you know they can't run the company without you. He has asked for $X to be bought out, and failing that he would like to keep owning his half and send his wife (who may very well be competent, but who among other things has a very ill husband to deal with) to take his place. If he can occasionally contribute to the overall vision, and she can do the day to day, then keeping things as they are may be the smart move. But if that's not possible, it doesn't mean you have to buy him out for twice what you think it's worth. In the absence of a partnership agreement, it's going to be hard to know what to do. But one approach might be to pretend there is a shotgun clause. Ask him, if he thinks half the company is worth $X, if he's willing to buy you out for that price and have his wife run it without you. He is likely to blurt out that it isn't worth that and she can't do that. And at that point, you'll actually be negotiating.", "topk_rank": 0 }, { "id": "385881", "score": 0.7076243162155151, "text": "It's clearly a risk, but is it any different than investing in your own business? Yes, it is different. If you own a business, you determine the path of the business. You determine how much risk the business takes. You can put in extra effort to try to make the business work. You can choose to liquidate to preserve your capital. If you invest without ownership, perhaps the founder retains a 50% plus one share stake, then whomever controls the business controls all those things. So you have all the risks of owning the business (in terms of things going wrong) without the control to make things go right. This makes investing in someone else's business inherently riskier. Another problem that can occur is that you could find out that the business is fraudulent. Or the business can become fraudulent. Neither of those are risks if you are the business owner. You won't defraud yourself. Angel investing, that is to say investing in someone else's startup, is inherently risky. This is why it is difficult to find investors, even though some startups go on to become fabulously wealthy (Google, YouTube, Facebook, Twitter, etc.). Most startups fail. They offer the possibility of great returns because it's really hard to determine which ones will fail and which will succeed. Otherwise the business would just take out the same loan that Jane's getting, and leave Jane out of it.", "topk_rank": 1 }, { "id": "177194", "score": 0.7056688070297241, "text": "I thought that as well. Not sure. As I stated she may be just unable to due to the relationship they have or she may know my current financial situation and is looking out for me and throwing me a bone. Initially if I'd found someone else I would've gotten a percentage of the monthly profits but I'm looking to be the sole investor so I can get out of my current living situation and become a productive member of society. Also to move to California and be closer to it only friends I have out there but also closer to the business itself. I fully plan to learn all about weed and what and why and how etc but for now I just wanna invest", "topk_rank": 2 }, { "id": "150450", "score": 0.7028548121452332, "text": "First of all, I've raised VC money before so I have experience in this area. The other commenter who said they'll only cause trouble is wrong, as a general statement. Some may, but that just means you've chosen your investors poorly. Choosing an investor is a very important decision and you should choose someone who you think will be able truly add value to your business, rather than just someone who is willing to write a check. Cultural alignment is important, and having a shared set of goals and timelines for the business is important. That said, no one here is going to be able to tell you how to structure your deal because it varies so much based on the business. In general I think it's a good idea to only take money when you need it and have a solid plan for how you're going to use it. Every time you take money you're diluting your ownership and reducing your long-term upside. Keep in mind that, as the other commenter said, if you take a deal now that means that you maintain 51% and then you take more money in the future, that 51% will be diluted further. That said with more investors in the mix you still are likely to be the largest shareholder, but again, that depends on how the deals are structured. My advice: seek out as much advice from as many sources as you can. And hire a good law firm to handle your financing transaction because their advice is invaluable as you negotiate terms. Finally, you should have more conditions than just retaining 51% ownership -- there are a lot of terms that get baked into these deals that have an impact on the long-term upside. Learn those terms. Do a bunch of googling and a bunch of reading. And ask for more advice. :)", "topk_rank": 3 }, { "id": "147375", "score": 0.6997408866882324, "text": "Also, is seems the wife that's doing the taxes is very reluctant on giving me access to the statements. As an owner, I do have the legal right to those statements do I not? What power would a majority owner of a bar (40%) hold over the other two minority owners (each with 30%)? According to her, she's broken even on her investment, whereas I've collected not even half of my initial investment. The fact that you feel this is fishy reconfirms my belief that she not being truthful to some degree.", "topk_rank": 4 }, { "id": "504419", "score": 0.6949408650398254, "text": "For sure you should get a lawyer on this one, but it would seem to me that the simplest path forward would be to convert the business to a partnership where both spouses are owners, and to write a clause into the partnership agreement stipulating what happens upon death of a partner. Such an approach really should be done with a lawyer to make sure that it's all legally sound and will stand up in court if needed.", "topk_rank": 5 }, { "id": "200211", "score": 0.6939607262611389, "text": "You actually have a few options. First, you can do a share split and then sell an equal number of shares from both you and your wife to maintain parity. Second, you can have the company issue additional shares/convert shares and then have the company sell the appropriate percentage to the third party while the rest is distributed to you and your wife. Third, you can have the company issue a separate class of stock. For example there are companies that have voting stock and non-voting stock. Depending on your goal, you could just issue non-voting stock and sell that. Best bet is to contact a lawyer who specializes in this type of work and have them recommend a course of action. One caveat that has not been mentioned is that what/how you do this will also depend on the type of corporation that you have created.", "topk_rank": 6 }, { "id": "530749", "score": 0.6923655867576599, "text": "I'm not necessarily saying that VC is the way to go. It works for some, not for others. Personally, if my company idea takes off, I'd try to avoid it if at all possible. However, the article was written in a way that any point she had in her post was overshadowed by her bitterness and excessive obscenities that it comes off as unprofessional and not worth reading. It takes away from the valid points therein.", "topk_rank": 7 }, { "id": "79129", "score": 0.6921953558921814, "text": "If you're creating an S-Corp for consulting services that you personally are going to provide, what would it give her to have 50% of the corporation when you're dead? Not to mention that you can just add it to your will that the corporation stock will go to her, and it will be much better (IMHO, talk to a professional) since she'll be getting stepped-up basis. Why aren't you talking to a professional before making decisions? It doesn't sound like a good way to conduct business.", "topk_rank": 8 }, { "id": "311971", "score": 0.6909132599830627, "text": "I've read over these responses like a dozen times. It's really cool hearing from a business owner who has experienced things first-hand. Nobody in my family has ever been or known anything about business/stocks/Anything. I'm learning everything from the internet, friends, and now reddit. I'll certainly seek true legal advice but you have no idea how helpful you and every other person on this thread has been. Thank you! I'm all ears to anything else", "topk_rank": 9 }, { "id": "366231", "score": 0.6905819773674011, "text": "What you are describing does not sound like an investment; it sounds like a loan. An investment involves you putting up a stake and sharing in the profits or losses of the business - there is no guarantee you will get your money back. A loan involves you putting up money for which you will receive interest and principal repayment in accordance with an agreed schedule - you get this irrespective of how the business is performing. Also, is the arrangement with your friend or his company? They are different legal entities and your risk profile is different in both cases. Whatever the arrangement you need to sign a contract which details all the terms and conditions - how much you will pay, to whom and when; how much you will get back, from whom and when; a method for resolving disputes; what happens in the event of insolvency or bankruptcy; what happens if someone breaks the terms of the contract; if your payout depends on the value of the business at some future date, how it is to be valued; etc. etc. Two points: I am not a lawyer, I am not your lawyer.", "topk_rank": 10 }, { "id": "116182", "score": 0.6904080510139465, "text": "There is no simple, legally reasonable, way for her to build equity by helping out with your mortgage, without her having a claim to your mortgage. The only 'equitable' thing she can do is rent from you. If you want her to be building equity, have her start and fund a brokerage account for herself. If you have an affinity for real estate, have her buy REITs in said investment account.", "topk_rank": 11 }, { "id": "559889", "score": 0.688917875289917, "text": "yeah but most likely, it's a 1x liquidation preference. The startup isn't going to generate cash flows enough to pay off the initial investment to the investor. Technically it isn't exactly specified as only triggered on a liquidation event because OP didn't specify the real legal language but it seems likely that's the case. Point 2 is exactly what a liquidation preference is. No way the owner of the company is participating in anything until the investor gets his initial investment back.", "topk_rank": 12 }, { "id": "434906", "score": 0.6879342198371887, "text": "I read, however, that if the company's assets are not kept separate from our assets then if we got sued, the corporate veil would be pierced. This whole venture would be to give us additional income so my wife could watch our daughter and have an income.", "topk_rank": 13 }, { "id": "98629", "score": 0.6875590682029724, "text": "This isn't complicated. You either pay her a full wage and take the cost on your end or you pay her less of a wage and give her equity. You're trying to have your cake and eat it too. It's called greed. As long as you are aware of your stance feel free to screw her over as much as you're comfortable with.", "topk_rank": 14 }, { "id": "378088", "score": 0.6857477426528931, "text": "You're can only get used (you are being used now,) if you let them. Tell him that a 25% share is the minimum you'll take and that you'll hand him all the login information in the morning if he doesn't accept your terms. Don't bother explaining who did what, he surely knows. And if he doesn't, he surely won't have dome revelation by you telling him the work you did. Quit and learn your lesson and start a competition business exactly the same, and smoothly push your network to your own shop. Your pal that took out the loan may be entitled to some more equity than you and the third guy, but $10k is really not much money in business. You guys should be making that in revenue in just a matter of weeks. Especially if you have to support three employees / shareholders. Of course, we only know your side to this story. He may have spent a lot of time on licensing and using his personal network to accomplish certain things that you fail to mention here or are just unaware of.", "topk_rank": 15 }, { "id": "533623", "score": 0.6821067333221436, "text": "I would be curious how he balanced having two female life partners at once. Not sure I would ask that at the shareholder meeting though ;)", "topk_rank": 16 }, { "id": "344641", "score": 0.6819368600845337, "text": "She said he's been in business for 3 years and I've Googled it and found it to be accurate from the paperwork I've seen that's public knowledge. I know this isn't a get-rich-quick thing bc hard work and money went into making and building not only a business but a brand as well. Brand building is a lot harder than business building. Anyone can get a loan with decent enough credit and open up a shop: it's keeping people coming in that is the hard part. I understand all areas of this business except for the growing part. I've never known how to grow weed or the technicalities it takes to maintain healthy plants and things. I'm just looking to invest in something I believe in because weed shouldn't be illegal and the medicinal reports state that it's far from a gateway drug or anything of the sort. I do wanna thank you for (so far) being the nicest reply to my post. We seem to have some haters and naysayers on here who like to just start shit and while you may find it hard to believe that I'm trying to just get rich, that simply isn't the case. I believe her and I believe in her so I know what she's trying to do is all legit", "topk_rank": 17 }, { "id": "463744", "score": 0.6794854998588562, "text": "So many possible reasons here, some good, some not. - Maybe they weren't as good at negotiating the original equity ask. - Maybe they don't let egos get in the way of advice from a business partner. - Maybe is about goals. - Maybe it's random luck with a small sample size. - Maybe it's selection bias. - Maybe they're seeling a popular feminism trend more than a product. Regardless, without more data and comparables, this is just fluff.", "topk_rank": 18 }, { "id": "510317", "score": 0.6793559789657593, "text": "No one can make this decision for you. Involve your wife and truly value and heed her thoughts on the situation. Succeeding in such an endeavor without her full support/consent will bring an unwanted undertone into your marriage. I am personally more reserved and in your situation I would stick with my job until my start-up can stand on its own. I know it would require more work but at least it wouldn't put my family in an all-or-nothing situation. It's tempting to reach for what you don't have but sometimes it worthwhile to stand back and be truly grateful for everything you do have.", "topk_rank": 19 } ]
105	How to safely earn interest on business profits (UK)	[ { "id": "41356", "score": 0.7172666788101196, "text": "Deposit it in a business savings account. The following below show you some options you can choose from. Next you can invest it in the market i.e. shares, bonds etc. If you have a more risky side, can go for peer to peer lending. If you are feeling really lucky and want to invest in the long term, then buy a property as a buy-to-let landlord. There are loads of options, you only need to explore." }, { "id": "107564", "score": 0.8104328513145447, "text": "I found some UK personal accounts offer up to 3% interest (no names here, but it is well known bank with red logo). You can take out directors loan from your company, put the cash into that personal account and earn interest. Just don't forget to return this loan before end of financial year, so this interest does not become your dividends." } ]	[ { "id": "121480", "score": 0.7236515283584595, "text": "A 15% discount is a 17.6% return. (100/85 = 1.176). For a holding period that's an average 15.5 days, a half month. It would be silly to compound this over a year as the numbers are limited. The safest way to do this is to sell the day you are permitted. In effect, you are betting, 12 times a year, that the stock won't drop 15% in 3 days. You can pull data going back decades, or as long as your company has been public, and run a spreadsheet to see how many times, if at all, the stock has seen this kind of volatility over 3 day periods. Even for volatile stocks, a 15% move is pretty large, you're likely to find your stock doing this less than once per year. It's also safest to not accumulate too many shares of your company for multiple reasons, having to do with risk spreading, diversification, etc. 2 additional points - the Brexit just caused the S&P to drop 4% over the last 3 days trading. This was a major world event, but, on average we are down 4%. One would have to be very unlucky to have their stock drop 15% over the specific 3 days we are discussing. The dollars at risk are minimal. Say you make $120K/yr. $10K/month. 15% of this is $1500 and you are buying $1765 worth of stock. The gains, on average are expected to be $265/mo. Doesn't seem like too much, but it's $3180 over a years' time. $3180 in profit for a maximum $1500 at risk at any month's cycle.", "topk_rank": 0 }, { "id": "51337", "score": 0.7227270603179932, "text": "By your logic, if a loan of £100 is new money dilutes your purchasing power, then the repayment of £110 is a reduction of the money supply that increases your purchasing power. Indeed, ultimately the increase in purchasing power upon repayment is greater than the initial reduction, so you are 'better off' every time a loan is made and successfully repaid. The effect on you is tiny, but the collective benefit you get from all the loans being repaid with interest is more or less equivalent to the purchasing power reduction of the loans that are never repaid. Therefore you do not lose out and are indeed compensated (in a tiny way) for the tiny risk you incurred. The bank incurs a substantial risk and is thus compensated in a substantial way.", "topk_rank": 1 }, { "id": "36190", "score": 0.7221991419792175, "text": "First of all I recommend reading this short e-book that is aimed at young investors. The book is written for American investors but they same rules apply with different terms (e.g. the equivalent tax-free savings wrappers are called ISAs in the UK). If you don't anticipate needing the money any time soon then your best bet is likely a stocks and share ISA in an aggressive portfolio of assets. You are probably better off with an even more aggressive asset allocation than the one in the book, e.g. 0-15% bond funds 85-100% equity funds. In the long term, this will generate the most income. For an up-to-date table of brokers I recommend Monevator. If you are planning to use the money as a deposit on a mortgage then your best bet might be a Help to Buy ISA, you'll have to shop around for the best deals. If you would rather have something more liquid that you can draw into to cover expenses while at school, you can either go for a more conservative ISA (100% bond funds or even a cash ISA) or try to find a savings account with a comparable interest rate.", "topk_rank": 2 }, { "id": "467926", "score": 0.7218484878540039, "text": "\"An important point yet to be mentioned is that, with a standard investment, the most you can lose of your £100 stake is £100 (if the company literally goes bust, say). With shorting on the other hand, your downside is not limited to your initial stake. You could \"\"invest\"\" £100, but end up owing £200, £500, or, well, the sky's the limit. Shorting is dangerous even for experienced investors. For a beginner, it is about the worst possible investment strategy I can think of!\"", "topk_rank": 3 }, { "id": "5668", "score": 0.7217528820037842, "text": "I'd put as much of it as possible into an ISA that pays a decent amount of interest so you get the benefit of the money accruing interest tax free. For the rest, I'd shop around for notice accounts, but would also keep an eye out for no-notice accounts. The latter might be beneficial if you expect interest rates to rise and are willing to shop around and move the money into accounts paying better interest every few months. Just make sure you're also factoring in the loss of interest when moving the money. You could look into fixed term savings bonds but I don't think they currently pay enough to make it worthwhile locking away your money.", "topk_rank": 4 }, { "id": "61264", "score": 0.7214754223823547, "text": "There are a number of UK banks that offer what passes for reasonable interest on an amount of cash held in their current accounts. I would suggest that you look into these. In the UK the first £1000 of bank or building society interest is paid tax-free for basic rate taxpayers (£500 for higher rate tax-payers) so if your interest income is below these levels then there is no point in investing in a cash ISA as the interest rate is often lower. At the moment Santander-123 bank account pays 1.5% on up to £20000 and Nationwide do 5% on up to £2500. A good source if information on the latest deals is Martin Lewis' Moneysaving Expert Website", "topk_rank": 5 }, { "id": "346498", "score": 0.7211024165153503, "text": "\"Is he affiliated with the company charging this fee? If so, 1% is great. For him. You are correct, this is way too high. Whatever tax benefit this account provides is negated over a sufficiently long period of time. you need a different plan, and perhaps, a different friend. I see the ISA is similar to the US Roth account. Post tax money deposited, but growth and withdrawals tax free. (Someone correct, if I mis-read this). Consider - You deposit £10,000. 7.2% growth over 10 years and you'd have £20,000. Not quite, since 1% is taken each year, you have £18,250. Here's what's crazy. When you realize you lost £1750 to fees, it's really 17.5% of the £10,000 your account would have grown absent those fees. In the US, our long term capital gain rate is 15%, so the fees after 10 years more than wipe out the benefit. We are not supposed to recommend investments here, but it's safe to say there are ETFs (baskets of stocks reflecting an index, but trading like an individual stock) that have fees less than .1%. The UK tag is appreciated, but your concern regarding fees is universal. Sorry for the long lecture, but \"\"1%, bad.\"\"\"", "topk_rank": 6 }, { "id": "564453", "score": 0.7206940054893494, "text": "It will depend on how much you expect to earn this way, and whether you expect the company to become profitable soon. Has the company just not made a profit yet, or has it actually made a significant loss that your invoices would just be offsetting? If you're earning over £10,000 per year then invoicing through the company is preferable. Above that level, you'd be taking money from the company as dividends after paying 20% corporation tax with no other tax to pay on your personal tax return. As a sole trader you'd be paying 20% income tax and 9% NI. (Note however that the company can only pay dividends from profits, which is a problem if there are significant losses to offset.) Below £10,000, there's little difference. Through the company, you can take a salary of £7956 per year without paying any income tax or NI. With the new £2000 discount on employers' NI you could then take salary up to £10,000 and just pay 12% employee's NI. As a sole trader, you pay 9% Class 4 NI over £7956 and a fixed £143 per year for Class 2 NI. Paying 9% rather than 12% saves you £60, but then you add the £143. In practice the company would work out more expensive at this level because you'll probably want to pay an accountant to deal with the payroll for you. Having the company repay your £2000 from the invoices doesn't really save any tax if the company will become profitable in the future. You don't pay any tax now since the money you receive isn't income, and the company doesn't pay any tax if the extra £2000 of revenue doesn't put it back in profit. However, if the company is profitable next year then it will have an extra £2000 of profit that would otherwise have been offset against this year's loss, and you do end up paying 20% corporation tax on the £2000. You could still have the company repay the loan in order to delay the tax liability, but it's not really tax free money. Loaning additional money to the company has no tax benefit, you just give the company £1000 and get your original £1000 back later. You pay no tax and neither does the company, but it was your money in the first place.", "topk_rank": 7 }, { "id": "484414", "score": 0.7204697728157043, "text": "Because so many businesses make some money through some form of compound interest, like a business that saves its earnings in a business account that pays interest, it heavily depends on how strict you interpret this law. Some Muslims I know interpret it to mean directly and indirectly, while for some it's just direct interest earned. What I would suggest is either a direct investment in agriculture or a share in agriculture, where you are directly paid from your share in the investment and not through money that comes from a bank account earning interest. If you do a direct investment in agriculture, like owning livestock, you will be paid money in the form of food, which compounds through reproduction and can sell the offspring to others and collect the money. Year to date, agriculture is crushing the S&P 500 and many places around the world are facing shortages in food, like sugar and corn. If you don't have enough money for a direct investment, you can try the share route where you own a share of a direct investment. Rather than go through stock exchanges, where many of these companies make money indirectly through interest also, you can negotiate directly with farmers, ranchers, livestock owners, etc. Some of these individuals are looking to diversify their money, so they may be willing to let you own a fraction of what they produce and pay you directly. All of this comes with risk, of course. Livestock and plants die for a variety of reasons, but none of it will be interest from lending whether to individuals or through a bank. In addition, if we experience very high inflation in the future, livestock and plants do very well in this environment.", "topk_rank": 8 }, { "id": "332832", "score": 0.7200796008110046, "text": "Your plan will probably work. I speak from past experience approx 5-10 years ago, when Lloyds used to offer tiered interest of up to 4% on £5000 in their Vantage accounts. It was allowed for an individual person to have up to three Vantage accounts. The criteria for obtaining the headline interest rates were simply: What I, and many others, did was to set up three Vantage accounts, call them A, B, and C, and a standing order on each to transfer minimum amount + £1 on the same day each month in this manner: This satisfied the letter of conditions, though perhaps not the spirit. Most importantly it satisfied the bank, and all three accounts received that headline interest rate. These days banks have got a little wiser to this and have started including the 'set up n direct debits' condition, which makes this a more time-consuming system to arrange - you must assign your various bills across your accounts - but I believe that the overall plan still works. They don't care where the money comes from, or whether it stays - just that it comes in. Enough people get it wrong that they don't have to worry about the few who get it perfectly right (see also: how 0% balance transfer offers can be profitable...)", "topk_rank": 9 }, { "id": "366231", "score": 0.7196232080459595, "text": "What you are describing does not sound like an investment; it sounds like a loan. An investment involves you putting up a stake and sharing in the profits or losses of the business - there is no guarantee you will get your money back. A loan involves you putting up money for which you will receive interest and principal repayment in accordance with an agreed schedule - you get this irrespective of how the business is performing. Also, is the arrangement with your friend or his company? They are different legal entities and your risk profile is different in both cases. Whatever the arrangement you need to sign a contract which details all the terms and conditions - how much you will pay, to whom and when; how much you will get back, from whom and when; a method for resolving disputes; what happens in the event of insolvency or bankruptcy; what happens if someone breaks the terms of the contract; if your payout depends on the value of the business at some future date, how it is to be valued; etc. etc. Two points: I am not a lawyer, I am not your lawyer.", "topk_rank": 10 }, { "id": "323731", "score": 0.7195935249328613, "text": "If you are planning this as a tax avoidance scheme, well it is not. The gains will be taxable in your hands and not in the Banks hands. Banks simply don't cash out the stock at the same price, there will be quite a bit of both Lawyers and others ... so in the end you will end up paying more. The link indicates that one would pay back the loan via one's own earnings. So if you have a stock worth USD 100, you can pledge this to a Bank and get a max loan of USD 50 [there are regulations that govern the max you can get against 100]. You want to buy something worth USD 50. Option1: Sell half the stock, get USD 50, pay the captial gains tax on USD 50. Option2: Pledge the USD 100 stock to bank, get a loan of USD 50. As you have not sold anything, there is no tax. Over a period pay the USD 50 loan via your own earnings. A high valued customer may be able to get away with a very low rate of intrest and very long repayment period. The tax implication to your legal hier would be from the time the stock come to his/her hands to the time she sold. So if the price increase to 150 by the time Mark dies, and its sold at 160 later, the gain is only of USD 10. So rather than paying 30% or whatever the applicable tax rate, it would be wise to pay an interest of few percentages.", "topk_rank": 11 }, { "id": "346064", "score": 0.7188687324523926, "text": "This is a very interesting question. I'm going to attempt to answer it. Use debt to leverage investment. Historically, stock markets have returned 10% p.a., so today when interest rates are very low, and depending on which country you live in, you could theoretically borrow money at a very low interest rate and earn 10% p.a., pocketing the difference. This can be done through an ETF, mutual funds and other investment instruments. Make sure you have enough cash flow to cover the interest payments! Similar to the concept of acid ratio for companies, you should have slightly more than enough liquid funds to meet the monthly payments. Naturally, this strategy only works when interest rates are low. After that, you'll have to think of other ideas. However, IMO the Fed seems to be heading towards QE3 so we might be seeing a prolonged period of low interest rates, so borrowing seems like a sensible option now. Since the movements of interest rates are political in nature, monitoring this should be quite simple. It depends on you. Since interest rates are the opportunity cost of spending money, the lower the interest rates, the lower the opportunity costs of using money now and repaying it later. Interest rates are a market mechanism so that people who prefer to spend later can lend to people who prefer to spend now for the price of interest. *Disclaimer: Historically stocks have returned 10% p.a., but that doesn't mean this trend will continue indefinitely as we have seen fixed income outperform stocks in the recent past.", "topk_rank": 12 }, { "id": "25316", "score": 0.7188316583633423, "text": "In the UK at least, we have Credit Unions. Credit Unions are not-for-profit organisations that don't pay interest on your balance, but instead give you a share of their profits at the end of the year (or at least my local branch do). This normally equates to around 1% of my balance.", "topk_rank": 13 }, { "id": "534291", "score": 0.7181264162063599, "text": "If you are an entrepreneur, and you are looking forward to strike on your own ( the very definition of entrepreneur) then I suggest that you don't invest in anything except your business and yourself. You will need all the money you have when you launch your business. There will be times when your revenue won't be able to cover your living costs, and that's when you need your cash. At that point of time, do you really want to have your cash tie up in stock market/property? Some more, instead of diverting your attention to learn how the stock market/property works, focus on your business. You will find that the reward is much, much greater. The annual stock market return is 7% to 15%. But the return from entrepreneurship can be many times higher than that. So make sure you go for the bigger prize, not the smaller gains. It's only when your business no longer requires your capital then you can try to find other means of investment.", "topk_rank": 14 }, { "id": "289582", "score": 0.7178773880004883, "text": "Use a limited company. Use the HMRC website for help on limited companies and get a good accountant for doing your taxes. Mixing your website income and personal income may make you pay a higher tax rate. You can take out expenses from the limited company, which are tax deductible. But if you group it in personal income it wouldn't be tax deductible. In a personal capacity you are 100% liable if your business goes bust and you owe debt. But for a limited company you are only liable for what you own i.e %age of shares. You can take on an investor if your business booms and it is easier if you do it through a limited company rather than through a personal endeavour.", "topk_rank": 15 }, { "id": "189678", "score": 0.717619776725769, "text": "\"Remember that risk should correlate with returns, in an investment. This means that the more risk you take on, the more return you should be receiving, in an efficient marketplace. That's why putting your money in a savings account might earn you <1% interest right now, but putting money in the stock market averages ~7% returns over time. You should be very careful not to use the word 'interest' when you mean 'returns'. In your post, you are calling capital gains (the increase in value of owned property) 'interest'. This may be understating in your head the level of risk associated with property ownership. In the case of the bank, they are not in the business of home construction. Rather than take that risk themselves, they would rather finance many projects being done by construction companies that know the business. The bank has a high degree of certainty of getting its money back, because its mortgages are protected by the value of the property. Part of the benefit of an efficient marketplace is that risk gets 'bought' by individuals who want it. This means that people with a low-risk tolerance (such as banks, people on fixed incomes, seniors, etc.) can avoid risk, and people with a high risk tolerance (stock investors, young people with high income, etc.) can take on that risk for higher average returns. The bank's reasoning should remind you of the risk associated with property ownership: increases in value are not a sure thing. If you do not understand the risk of your investment, you cannot be certain that you are being well compensated for that risk. Note also that most countries place regulations on their banks that limit the amount of their funds that can be placed in 'higher risk' asset classes. Typically, this something along the lines of \"\"If someone places a deposit with your bank, you can only invest that deposit in a low-risk debt-based asset [ie: you can take money deposited by customer A and use it to finance a mortgage for customer B]\"\". This is done in an attempt to prevent collapse of the financial sector, if risky investments start failing.\"", "topk_rank": 16 }, { "id": "76562", "score": 0.7171554565429688, "text": "Unfortunately I do not have much experience with European banks. However, I do know of ways to earn interest on bank accounts. CDs (Certificates of Deposit) are a good way to earn interest. Its basically a savings account that you cannot touch for a fixed rate of time. You can set it from an average of 6 months to 12 months. You can pull the money out early if there is an emergency as well. I would also look into different types of bank accounts. If you go with an account other than a free one, the interest rate will be higher and as long as you have the minimum amount required you should not be charged. Hope I was able to help!", "topk_rank": 17 }, { "id": "190746", "score": 0.7170501947402954, "text": "If any academic framework worked, your teachers would be the richest people on the planet. However, you must read up on macro and micro economic factors and make an educated guess where the market(or stock) would be at the date of expiry. Subtract the Strike Price from your determined price and calculate your potential profit. Then, if you are getting paid more or less the same thing as of today, sell it and switch to a safer investment till expiry (For example:- Your potential profit was $10, but you are getting $9 as of today, you can sell it and earn interest(Safer investment) for the remaining time.) Its just like buying and selling stocks. You must set a target and must have a stop loss. Sell when you reach that target, and exit if you hit the stop loss. If you have none of these, you will always be confused(Personal experience).", "topk_rank": 18 }, { "id": "217472", "score": 0.7165635824203491, "text": "As you own a company, you need to know what your role is. You can never just move money into or out of the company, you have to identify the role in which you are doing it, and do it properly. There is Company, and there is You, in three different roles. You are the sole shareholder and director of Company. You are the sole employee of Company. You are also just a private person. You need to keep these three roles separate. As the sole shareholder, you own the company. However, you don't own any assets of the company. The company is yours, but the money in its bank account isn't. As a private person, you give a loan to your company. You write on a sheet of paper that You personally, give a loan to the company, how much a loan is, what interest is paid, and when the loan will be paid back (that could be 'whenever You demands the money paid back'). Then you move the money from your private bank account to the company bank account, and the company has the money it needs to fund its operation. Assume it wasn't you who loaned the money, but I gave the loan to the company. You can imagine that I would have this loan written down and signed before I hand over the cash. And you must have exactly the same papers that I would have. How do you get money from the company? The company can pay back your loan. That should be written down again, in the same way as the loan itself was written down. Other than that, there are three ways how you can get money out of the company: The company can pay You, in your role as its employee, a salary, which it can deduct from its profits. The company can pay money into a pension of the company director (that's You in your role as company director) up to £40,000 or so a year; that money is deducted from its profits again. The company pays 20% tax on its remaining profits. Then the company can pay You, in your role as company director, a dividend, usually twice a year. Each of these payments has to be written down and given to HMRC properly. Best by far to use an accountant to do all the paper work for you and advice you what to do. You can lose a lot of money by just not getting the paperwork right, by filing late etc., which the accountant will get right. The accountant will also tell you what are the optimal amounts for salary and dividend (best is a small salary, about £10,000 a year, dividend of about £30,000 a year, pension as much as the company can afford, which is then all tax free to you). You can't pay more dividend then the company can afford (paying a dividend and then not being able to pay your suppliers is criminal), and if you want higher dividends, then you will have to pay taxes on them.", "topk_rank": 19 } ]
107	Income tax on my online drop-shipping business (India)	[ { "id": "276408", "score": 0.6822920441627502, "text": "Please consult a tax advisor. You may be voilating the FEMA [Foreign Exchange Management Act] and can land into trouble. Further what you are doing can land up into various other acts as illegal including AML. Further if there is income generated by Indian citizen in India, he is still liable to pay tax, irrespective of whether you get the funds back into India. Edit: AML is Anti Money Laundering. Your transaction is sure to raise AML triggers as it looks like converting Black Money to White in round about way. Once the triggers are raised, RBI division will investigate further to verify what you are doing. If you are able to prove that this is a valid transaction, you would be OK on AML front. How will Income Tax Know? - If they don't know does not mean you are not liable for tax. - Any suspicious transactions would get investigated and sooner or later Income Tax would know about it and can cause a serious problem. - It is irrelevant where you have kept the money, if you have earned something, its taxable. For it not to be taxable you need to conduct this business differently. Please consult a tax adviser who will advice you on the tax-ability of this type of transaction." }, { "id": "269646", "score": 0.6702315211296082, "text": "I find that there are two violation of law , prima facie , if someone earns money by depositing in the online account and then not reporting it ( including in his total income for the year ) and not bringing in India. Income Tax Act violation 1. It is simply comcealment liable for penalty & prosecution under I.T.Act. 2. You should know that anyone who is resident of India as per income Tax Act and having taxable income ( gross total income exceeding exemption limit) will have to fill up the column in his/her income tax return whether Previously these column were not in the Income Tax Return. So , now anyone who is liable to file return of Income can be tried for false return if he has hiddne assets aborad. 2. FEMA violation RBI permits remittance under Liberalized Remittance Scheme. However this scheme can not be used for certain purpose . It is important to examine whether RBI prohibits use of remittance for any entity or business you have described. You can read following FAQ on RBI site Q. 30. What are the prohibited items under the Scheme? Ans. The remittance facility under the Scheme is not available for the following: i) Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000; ii) Remittance from India for margins or margin calls to overseas exchanges / overseas counter-party; iii) Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market; iv) Remittance for trading in foreign exchange abroad; v) Remittance by a resident individual for setting up a company abroad; vi) Remittances directly or indirectly to Bhutan, Nepal, Mauritius and Pakistan; vii) Remittances directly or indirectly to countries identified by the Financial Action Task Force (FATF) as “non co-operative countries and territories”, from time to time; and viii) Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks. You will have to examine , if the remittance was NOT done for purpose not allowed by RBI under LRS . If you clear this , you can say there is no violation and your violation is restricted to I.T.Act only." } ]	[ { "id": "519321", "score": 0.642308235168457, "text": "Are you being paid through a limited company or an umbrella company ? Are you self employed If not what they are doing is illegal. If you are being paid a salary, then the employer has to contribute their part of National Insurance. I believe they are treating you as self employed, hence asking you to generate invoices. Check your contract wordings properly. Or get help from Citizens Advice. Call them or visit their local office. Or else do call up HMRC. But if you are invoicing them, I would assume you are self employed and you have to do your self assessment. Get in contact with HMRC and ask them to generate your Unique Taxpayer Reference (UTR). THey will send you the UTR and using this you can fill your tax returns. It looks like cumbersome now, but it isn't so. You can do it yourself, I do mine. Or at the end of the financial year, get an accountant to do the returns for you, probably should charge you £100-£150. Keep all your invoices, bills, bank statements safely. This is some help from HMRC website", "topk_rank": 0 }, { "id": "207788", "score": 0.6422941088676453, "text": "\"You have a sequence of questions here, so a sequence of answers: If you stopped at the point where you had multiple wins with a net profit of $72, then you would pay regular income tax on that $72. It's a short term capital gain, which does not get special tax treatment, and the fact that you made it on multiple transactions does not matter. When you enter your next transaction that takes the hypothetical loss the question gets more complicated. In either case, you are paying a percentage on net gains. If you took a two year view in the second case and you don't have anything to offset your loss in the second year, then I guess you could say that you paid more tax than you won in the total sequence of trades over the two years. Although you picked a sequence of trades where it does not appear to play, if you're going to pursue this type of strategy then you are likely at some point to run into a case where the \"\"wash sale\"\" rules apply, so you should be aware of that. You can find information on this elsewhere on this site and also, for example, here: http://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02 Basically these rules require you to defer recording a loss under some circumstances where you have rapid wins and losses on \"\"substantially identical\"\" securities. EDIT A slight correction, you can take part of your losses in the second year even if you have no off-setting gain. From the IRS: If your capital losses exceed your capital gains, the amount of the excess loss that you can claim on line 13 of Form 1040 to lower your income is the lesser of $3,000, ($1,500 if you are married filing separately)\"", "topk_rank": 1 }, { "id": "455983", "score": 0.6422687768936157, "text": "In addition to above points : Interest earned on NRE accounts are tax free. But you can deposit any foreign currency except INR. Nothing is taxable. While the NRO account gives you a flexibility to deposit INR too, the interest will be taxable and tax will be deducted at source at the rate of 30.9%. It is necessary to convert the existing Indian local accounts to NRO as per the Reserve Bank of India circular: RBI/2007-2008/242 Master Circular No. 03 /2007- 08 . So basically you need:", "topk_rank": 2 }, { "id": "557647", "score": 0.6422085165977478, "text": "Depending on what software you use. It has to be reported as a foreign income and you can claim foreign tax paid as a foreign tax credit.", "topk_rank": 3 }, { "id": "154667", "score": 0.6421908140182495, "text": "Generally bank transfers are not in themselves liable for tax. However making profit generally is taxed either as income, capital gains or some combination of the two. It seems that in the UK cryptocurrencies are being treated like other currencies for tax purposes and that trading profits/losses may count as either income or capital gains depending on the circumstances. https://www.gov.uk/government/publications/revenue-and-customs-brief-9-2014-bitcoin-and-other-cryptocurrencies/revenue-and-customs-brief-9-2014-bitcoin-and-other-cryptocurrencies However I do not know how to unravel whether particular trading activity would count as income or capital gains. I would suggest gathering as much information as possible and then discussing this with an accountant.", "topk_rank": 4 }, { "id": "568976", "score": 0.6420577168464661, "text": "The UK doesn't have a gift tax. In limited circumstances if the giver is also in the UK and dies within 7 years, then some inheritance tax might be payable, but if you're in India that won't apply. India also appears not to have any gift tax if the giver is an uncle of the recipient, so no tax will be payable by either party here. There's also no tax deduction for gifts in either the UK or India, so if this is out of your income you'll probably already have paid tax on the money in some form.", "topk_rank": 5 }, { "id": "367742", "score": 0.6420162320137024, "text": "Assuming that taxes were withheld when you received the options, you would now only owe tax on the profit from the sale of the stock. The cost basis would be whatever you bought the stock for (the strike price of the options in this case), and the profit will be the total amount received from the sale minus the total cost of those shares. Since you bought the stock more than one year ago, you will get taxed at the long-term capital gains rate of 15% (unless you are in the 39.6% tax bracket, in which case the rate is 20%). As with all tax advice on this site, you need to check with a tax specialist when you actually file, but that should give you a rough indication of what your tax liability is.", "topk_rank": 6 }, { "id": "342411", "score": 0.641895592212677, "text": "If you buy foreign currency as an investment, then the gains are ordinary income. The gains are realized when you close the position, and whether you buy something else go back to the original form of investment is of no consequence. In case #1 you have $125 income. In case #2 you have $125 income. In case #3 you have $166 loss. You report all these items on your Schedule D. Make sure to calculate the tax correctly, since the tax is not capital gains tax but rather ordinary income at marginal rates. Changes in foreign exchange between a transaction and the conversion of the proceeds to USD are generally not considered as income (i.e.: You sold a property in Mexico, but since the money took a couple of days to clear, the exchange rate changed and you got $2K more/less than you would based on the exchange rate on the day of the transaction - this is not a taxable income/loss). This is covered by the IRC Sec. 988. There are additional rules for contracts on foreign currency, TTM rules, etc. Better talk to a licensed tax adviser (EA/CPA licensed in your State) for anything other than trivial.", "topk_rank": 7 }, { "id": "303621", "score": 0.6418299674987793, "text": "Depends on the online service, of course, but for example H&R Block at Home was fine for me last year. No problems at all. If anything, it may be better to file them online with a reputable service because they can update things immediately (no downloading updates required) if tax laws change, as they can.", "topk_rank": 8 }, { "id": "454931", "score": 0.6417570114135742, "text": "Get the worker put it in writing, and deduct it in December under constructive receipt rules. The fact that you're getting the actual cash in January isn't significant as long as you've secured the payment. Verify this with a tax adviser, but that's what I would do.", "topk_rank": 9 }, { "id": "374867", "score": 0.6417348384857178, "text": "Does this make sense? I'm concerned that by buying shares with post tax income, I'll have ended up being taxed twice or have increased my taxable income. ... The company will then re-reimburse me for the difference in stock price between the vesting and the purchase share price. Sure. Assuming you received a 100-share RSU for shares worth $10, and your marginal tax rate is 30% (all made up numbers), either: or So you're in the same spot either way. You paid $300 to get $1,000 worth of stock. Taxes are the same as well. The full value of the RSU will count as income either way, and you'll either pay tax on the gains of the 100 shares in your RSU our you'll pay tax on gains on the 70 shares in your RSU and the 30 shares you bought. Since they're reimbursing you for any difference the cost basis will be the same (although you might get taxed on the reimbursement, but that should be a relatively small amount). This first year I wanted to keep all of the shares, due to tax reasons and because believe the share price will go up. I don't see how this would make a difference from a tax standpoint. You're going to pay tax on the RSU either way - either in shares or in cash. how does the value of the shares going up make a difference in tax? Additionally I'm concerned that by doing this I'm going to be hit by my bank for GBP->USD exchange fees, foreign money transfer charges, broker purchase fees etc. That might be true - if that's the case then you need to decide whether to keep fighting or decide if it's worth the transaction costs.", "topk_rank": 10 }, { "id": "541705", "score": 0.6415781378746033, "text": "I'm not a tax expert, but I think you mean Form 4562, right? If you acquire the laptop in the year for which you're filing taxes, then it is just that simple. (At least according to my reading of 4562 instructions, and my history of accepted tax returns where I've done this for my own business.) If, however, you acquired the laptop in a previous year and have already depreciated it previously (with the plan to spread over several years), there is more complexity I believe -- you may limited in how you could accelerate the remaining depreciation.", "topk_rank": 11 }, { "id": "59795", "score": 0.6415599584579468, "text": "As your is a very specific case, please get an advice of CA. It should not cost you much and make it easier. The sale of agriculture land is taxable in certain conditions and exempt from tax in other cases. Sale of agricultural land is subject to capital gains tax. But there are certain exemptions under Section 54B, subject to conditions, which are as follows: If deemed taxable, you can avail indexation, ie the price at which you grandfather got [the date when he inherited it as per indexation] and pay 10% on the difference. If the price is not known, you can take the govt prescribed rate. As there is a large deposit in your fathers account, there can be tax queries and need to be answered. Technically there is no tax liable even if your grandfather gifts the money to your father. More details at http://www.telegraphindia.com/1130401/jsp/business/story_16733007.jsp and http://www.incometaxindia.gov.in/publications/4_compute_your_capital_gains/chapter2.asp", "topk_rank": 12 }, { "id": "547941", "score": 0.6414240598678589, "text": "\"These kinds of questions can be rather tricky. I've struggled with this sort of thing in the past when I had income from a hobby, and I wanted to ensure that it was indeed \"\"hobby income\"\" and I didn't need to call it \"\"self-employment\"\". Here are a few resources from the IRS: There's a lot of overlap among these resources, of course. Here's the relevant portion of Publication 535, which I think is reasonable guidance on how the IRS looks at things: In determining whether you are carrying on an activity for profit, several factors are taken into account. No one factor alone is decisive. Among the factors to consider are whether: Most of the guidance looks to be centered around what one would need to do to convince the IRS that an activity actually is a business, because then one can deduct the \"\"business expenses\"\", even if that brings the total \"\"business income\"\" negative (and I'm guessing that's a fraud problem the IRS needs to deal with more often). There's not nearly as much about how to convince the IRS that an activity isn't a business and thus can be thrown into \"\"Other Income\"\" instead of needing to pay self-employment tax. Presumably the same principles should apply going either way, though. If after reading through the information they provide, you decide in good faith that your activity is really just \"\"Other income\"\" and not \"\"a business you're in on the side\"\", I would find it likely that the IRS would agree with you if they ever questioned you on it and you provided your reasoning, assuming your reasoning is reasonable. (Though it's always possible that reasonable people could end up disagreeing on some things even given the same set of facts.) Just keep good records about what you did and why, and don't get too panicked about it once you've done your due diligence. Just file based on all the information you know.\"", "topk_rank": 13 }, { "id": "571062", "score": 0.6411977410316467, "text": "If this is a business expense - then this is what is called reimbursement. Reimbursement is usually not considered as income since it is money paid back to you for an expense you covered for your employer with your after-tax money. However, for reimbursement to be considered properly executed, from income tax stand point, there are some requirements. I'm not familiar with the UK income tax law specifics, but I reason the requirements would not differ much from places I'm familiar with: before an expense is reimbursed to you, you should usually do this: Show that the expense is a valid business expense for the employer benefit and by the employer's request. Submit the receipt for reimbursement and follow the employer's procedure on its approval. When income tax agent looks at your data, he actually will ask about the £1500 tab. You and you'll employer will have to do some explaining about the business activity that caused it. If the revenue agent is not satisfied, the £750 that is paid to you will be declared as your income. If the required procedures for proper reimbursement were not followed - the £750 may be declared as your income regardless of the business need. Have your employer verify it with his tax accountant.", "topk_rank": 14 }, { "id": "318491", "score": 0.6411727666854858, "text": "\"In the US, you'd run the risk of being accused of fraud if this weren't set up properly. It would only be proper if your wife could show that she were involved, acting as your agent, bookkeeper, etc. Even so, to suggest that your time is billed at one rate but you are only paid a tiny fraction of that is still a high risk alert. I believe the expression \"\"if it quacks like a duck...\"\" is pretty universal. If not, I'll edit in a clarification. note -I know OP is in UK, but I imagine tax collection is pretty similar in this regard.\"", "topk_rank": 15 }, { "id": "446099", "score": 0.6411439180374146, "text": "First decide if the best route is to distribute as a middle man (eg.land an Amazon or Walmart contract), or to distribute it through yourself (your own company). Is it more profitable to form your own corporation or have the mother company establish a international entity in N.A? (fees apply but they could be minuscule to your projected margins(eg.$5000 fee to open up a market of $1,000,000+ GP)) If you decide you want to establish your own means of distribution, you will have to decide if your going to build physical locations or do online distribution. Depending on what the product or service your providing, you generally have more possibilities and opportunities with online market. You can run an online website, incorporate an online store that accept online payments, and shipping products for less than $5000 a year. (Monthly payments for the services provided, excluding any shipping/import costs) This would be done with the means of website hosts such as GoDaddy, or retail hosts like Shopify.", "topk_rank": 16 }, { "id": "427017", "score": 0.6411248445510864, "text": "\"You can report it as \"\"hobby\"\" income, and then you won't be paying self-employment taxes. You can also deduct the blog-related expenses from that income (subject to the 2% limit though). See this IRS pub on the \"\"hobby\"\" income.\"", "topk_rank": 17 }, { "id": "249687", "score": 0.6410084366798401, "text": "You wouldn't fill out a 1099, your employer would or possibly whoever manages the stock account. The 1099-B imported from E-Trade says I had a transaction with sell price ~$4,500. Yes. You sold ~$4500 of stock to pay income taxes. Both the cost basis and the sale price would probably be ~$4500, so no capital gain. This is because you received and sold the stock at the same time. If they waited a little, you could have had a small gain or loss. The remainder of the stock has a cost basis of ~$5500. There are at least two transactions here. In the future you may sell the remaining stock. It has a cost basis of ~$5500. Sale price of course unknown until then. You may break that into different pieces. So you might sell $500 of cost basis for $1000 with a ~$500 capital gain. Then later sell the remainder for $15,000 for a capital gain of ~$10,000.", "topk_rank": 18 }, { "id": "233254", "score": 0.640910267829895, "text": "If you are still Indian Citizen for Tax purposes, then all your Global Income is taxable [There are certain exemption if you are in certain professions]. So even if you transfer or not transfer the funds to India, it is taxable in India. If you are getting a per day allowance, its exempt, this has to be looked more as expense reimbursed. If you are saving from per day allowance, well whatever you have save is to be declared as additional income and pay tax accordingly. If you are NRI for tax purposes, there is no limit on the amount of funds that you can send to India. Note that it would help to transfer funds into a separate NRI/NRO account to ensure traceability and ease of taxation.", "topk_rank": 19 } ]
108	How to find a business consultant that would ensure that all your business activities are legal and compliant with all regulations?	[ { "id": "396982", "score": 0.6810122728347778, "text": "\"Getting a specific service recommendation is off-topic, but the question of what type of professional you need seems on-topic to me. You may be looking for more than one professional in this case, but you could try these to start your search: Different people do things differently, but I think it would be pretty common to have a relationship (i.e. contract, retainer agreement, at least have met the person in case you have an \"\"emergency\"\") with a business law attorney and either a CPA or tax attorney. You may try not to use them too much to keep costs down, but you don't want to be searching for one after you have an issue. You want to know who you're going to call and may establish at least a basis working relationship.\"" } ]	[ { "id": "406707", "score": 0.6420747637748718, "text": "For this reason, whilst preparing to hire an consultant to preserve and assist your application and additives it's far crucial to realize the one of a kind industry certification and in reality confirm that the computer professional has them. You can approach the essential corporation that is committed to provide tremendous Business Network Support in Oklahoma. Their professionals are properly skilled and certified professionals. If you're inclined to hire certified specialists that could provide effective it maintenance services, then you are on the right place in your answer.", "topk_rank": 0 }, { "id": "427849", "score": 0.6414254903793335, "text": "There is no strict need to do that, you can consider yourself to be consulting, a 10% of your payment will be withheld and paid as tax by the company, you can deduct up to 60% of your income as expenses and pay tax on the rest (factoring the tax deducted at source). In another approach, you could register for service tax and charge service tax on your invoice and pay to the service tax department, the tax calculations are similar to above. It will be good if you speak to a chartered accountant and get more clarity. As for business card, you could print it with your name and qualification, there are no restrictions on that.", "topk_rank": 1 }, { "id": "538005", "score": 0.6411848068237305, "text": "How do you find an ethical, honest practitioner of any business? One: Make a small transaction with them and see how they treat you. If they cheat you on something small, don't give them a chance with something big. Two: Ask family and friends for recommendations. Three: Get information from public sources, like web sites where people post reviews of businesses, consumer advocacy organizations, groups like the Better Business Bureau, etc. Personally I consider all these of questionable value as you're asking one stranger to advise you on the reliability of another stranger, but better than nothing.", "topk_rank": 2 }, { "id": "381386", "score": 0.6404872536659241, "text": "Usually your best bet for this sort of thing is to look for referrals from people you trust. If you have a lawyer or other trusted advisor, ask them.", "topk_rank": 3 }, { "id": "291931", "score": 0.6331449747085571, "text": "Congratulations! I would start with an attorney. As a 17 year old, you legally cannot sign contracts, so you're going to have to setup some sort of structure with your parents first. Get attorney references -- your parents can ask around at work, if you're friendly with any business owners, ask them, etc. Talk to a few and pick someone who you are comfortable with. Ask your attorney for advice re: sole proprietor/S-Corp/LLC. You have assets, and your parents presumably have some assets, so you need advice about isolating your business from the rest of your life. Do the same thing for accountant references, but ask your attorney for a reference as well.", "topk_rank": 4 }, { "id": "6029", "score": 0.6294962763786316, "text": "If it was me I would want to go with the state I am moving too. I'm not familiar with business law too much as I'm only a law student right now but I would guess it's a safer bet. There might be local state laws that could apply. If there are not any local regulations then they should still know all of the national regulations just the same.", "topk_rank": 5 }, { "id": "490326", "score": 0.6260442137718201, "text": "Like what licences or permits he'll need to acquire, Does he need a separate bank account specifically for his business, What kind of insurance will he need to acquire for the business..those kind of things And I know I could use Google but there are certain things I don't like looking up on Google for advice", "topk_rank": 6 }, { "id": "176196", "score": 0.62201327085495, "text": "Look for an accountant who brings not only expertise in number crunching, but consulting and business planning - a full package.", "topk_rank": 7 }, { "id": "136239", "score": 0.6214022636413574, "text": "A business consultant is more of an expert you turn to for help with your business. They teach you skills you don’t know, analyze your business and create an action plan for you to implement. Business consultants the goals you have for your business and help you create the plan of action required for you to actually accomplish those goals!", "topk_rank": 8 }, { "id": "385320", "score": 0.6198137402534485, "text": "I do NOT know the full answer but I know here are some important factors that you need to consider : Do you have a physical location in the United States? Are you working directly from Canada? With a office/business location in the United States your tax obligation to the US is much higher. Most likely you will owe some to the state in which your business is located in Payroll Tax : your employer will likely want to look into Payroll tax, because in most states the payroll tax threshold is very low, they will need to file payroll tax on their full-time, part-time employees, as well as contractor soon as the total amount in a fiscal year exceeds the threshold Related to No.1 do you have a social security number and are you legally entitled to working in the States as an individual. You will be receiving the appropriate forms and tax withholding info Related to No.3 if you don't have that already, you may want to look into how to obtain permissions to conduct business within the United States. Technically, you are a one person consulting service provider. You may need to register with a particular state to obtain the permit. The agency will also be able to provide you with ample tax documentations. Chances are you will really need to piece together multiple information from various sources to resolve this one as the situation is specific. To start, look into consulting service / contractor work permit and tax info for the state your client is located in. Work from state level up to kick start your research then research federal level, which can be more complex as it is technically international business service for Canada-US", "topk_rank": 9 }, { "id": "295822", "score": 0.6155946254730225, "text": "Stripe Atlas helps with this. They form US companies for foreign solo entrepreneurs and get them US bank accounts. Another thing to remember with banks though, it doesn't matter what the compliance documents say, money talks. So your troubles will more likely stem from the amount of money you need to put in banks, more so than what the rules are.", "topk_rank": 10 }, { "id": "229744", "score": 0.6155515909194946, "text": "Compliance issues vary from country to country and, in the US, state to state as well. There'll be a number of levels, though: Bear in mind that it is not that these taxes and responsibilities don't apply to sole traders or unregistered businesses, it's just that being registered signals your existence and introduces the bureaucracy to you all at once. Update: Your accountant should manage your company and consumer tax calculations and submissions on your behalf (and a good one will complete all the paperwork on time plus let you know well in advance what your liability is, as well as offer advice on reducing and restructuring these liabilities). You're probably on your own for local taxes unless your accountant deals with these and is local to even know what they are.", "topk_rank": 11 }, { "id": "286461", "score": 0.6139092445373535, "text": "Yes, there is a profession that does exactly what you're looking for. It's called a fee-only financial advisor. These are professionals who (in the United States) enter into a fiduciary relationship with a client, meaning they are legally required to put your financial interests above all other considerations (such as any behind-the-scenes incentives to promote certain products). Between that requirement and the fact that they are paid for their time (and not on commission), they have zero incentive to try to sell you anything that you do not need. Their only job is to help you with your financial situation. (Of course, some of them may be better than others.) See the profession's website here to find such an advisor near you. (Credit to Marketplace Money, the old name for Marketplace Weekend, for mentioning fee-only advisors at least 87 times per show.)", "topk_rank": 12 }, { "id": "523856", "score": 0.6136524081230164, "text": "Doing business apart from commercial work also involves many legal issues such as compliance with laws, entering into contracts, responding to notices and other legal documents. Failure to look into these aspects can often snow ball into a major legal problem.", "topk_rank": 13 }, { "id": "137953", "score": 0.6136203408241272, "text": "Get to know the people that supply the business and their relationship to the success of the business, as well as, the customers of your business. Maintaining previous personal relationships is critical. Where reasonable keep doing things the way dad and grandpa did it with this people. Explain to them why you need to make such changes. Give them plenty of advanced notice.", "topk_rank": 14 }, { "id": "525360", "score": 0.613409698009491, "text": "Here are a few points to consider: Taxes: As a consultant, you will be responsible for the employer portion of the Social Security and Medicare taxes, and you might have to pay for state unemployment insurance and state disability insurance, as well. Office expenses: As a consultant, you may be required to buy your own laptop, pay for your own software licenses and buy other office-related supplies. For higher-end services, you may be setting up a complete office and even hire your own secretary and other support staff. Benefits: As a consultant, you will be responsible for your own health insurance, retirement plan and other benefits that an employer would ordinarily provide. Education: Your employer will likely pay for books and magazine subscriptions and send you to seminars, in order to keep your skills current; your client won't. Liability: Consultants face certain liabilities that employees don't, and have to factor the cost of insuring against those risks into their rate. Let's say you're a software developer, and your faulty code causes a nuclear plant's reactor core to overheat and melt down. As an employee, you'll get fired. As a consultant, you will get sued. Even consultants in low-risk fields can easily shell out thousands of dollars per year for a basic general liability policy. Sales & marketing: Don't forget that when your contract ends, you will have expenses associated with finding your next client, including the opportunity cost of not getting paid for your services during that time. All these factors contribute to your overhead, which you have to roll into your consulting rate. You should also add a margin of profit -- after all, as you're in business for yourself, you should be compensated for taking this entrepreneurial risk. If you're looking for a quick over-the-thumb rule, you can figure that your equivalent consulting rate should be about twice what you would be paid hourly as an employee. Assuming you work 2,000 hours a year, if you would receive a $100,000 salary, your hourly rate should be $100. Of course, this is only a very rough guideline. Ultimately, your rate will mostly be influenced by how established you are and how much your services are in demand.", "topk_rank": 15 }, { "id": "248624", "score": 0.613232433795929, "text": "\"Depending on where you are, you may be able to get away with filing a \"\"Doing Business As\"\" document with your local government, and then having the bank call the county seat to verify this. There is generally a fee for processing/recording/filing the DBA form, of course. But it's useful for more purposes than just this one. (I still need to file a DBA for my hobby work-for-pay, for exactly this reason.)\"", "topk_rank": 16 }, { "id": "156554", "score": 0.6128846406936646, "text": "\"This is a great question! I've been an entrepreneur and small business owner for 20+ years and have started small businesses in 3 states that grew into nice income streams for me. I've lived off these businesses for 20+ years, so I know it can be done! First let me start by saying that the rules, regulations, requirements and laws for operating a business (small or large) legally, for the most part, are local laws and regulations. Depending on what your business does, you may have some federal rules to follow, but for the most part, it will be your locality (state, county, city) that determines what you'll have to do to comply and be \"\"legal\"\". Also, though it might be better in some cases to incorporate (and even required in some circumstances), you don't always have to. There are many small businesses (think landscapers, housekeepers, babysitters, etc.) that get income from their \"\"business operations\"\" and do so as \"\"individuals\"\". Of course, everyone has to pay taxes - so as long as you property record your income (and expenses) and properly file your tax returns every year, you are \"\"income tax legal\"\". I won't try to answer the income tax question here, though, as that can be a big question. Also, though you certainly can start a business on your own without hiring lawyers or other professionals (more on that below), when it comes to taxes, I definitely recommend you indeed plan to hire a tax professional (even if it's something like H&R Block or Jackson Hewitt, etc). In some cities, there might even be \"\"free\"\" tax preparation services by certain organizations that want to help the community and these are often available even to small businesses. In general, income taxes can be complicated and the rules are always changing. I've found that most small business owners that try to file their own taxes generally end up paying a lot more taxes than they're required to, in essence, they are overpaying! Running a business (and making a profit) can be hard enough, so on to of that, you don't need to be paying more than you are required to! Also, I am going to assume that since it sounds like it would be a business of one (you), that you won't have a Payroll. That is another area that can be complicated for sure. Ok, with those generics out of the way, let me tackle your questions related to starting and operating a business, since you have the \"\"idea for your business\"\" pretty figured out. Will you have to pay any substantial amount of money to attorneys or advisors or accountants or to register with the government? Not necessarily. Since the rules for operating a business legally vary by your operating location (where you will be providing the service or performing your work), you can certainly research this on your own. It might take a little time, but it's doable if you stick with it. Some resources: The state of Florida (where I live) has an excellent page at: http://www.myflorida.com/taxonomy/business/starting%20a%20business%20in%20florida/ You might not be in Florida, but almost every state will have something similar. What all do I need to do to remain on the right side of the law and the smart side of business? All of the answers above still apply to this question, but here are a few more items to consider: You will want to keep good records of all expenses directly related to the business. If you license some content (stock images) for example, you'll want to document receipts. These are easy usually as you know \"\"directly\"\". If you subscribe to the Apple Developer program (which you'll need to if you intend to sell Apps in the Apple App Stores), the subscription is an expense against your business income, etc. You will want to keep good records of indirect costs. These are not so easy to \"\"figure out\"\" (and where a good accountant will help you when this becomes significant) but these are important and a lot of business owners hurt themselves by not considering these. What do I mean? Well, you need an \"\"office\"\" in order to produce your work, right? You might need a computer, a phone, internet, electricity, heat, etc. all of which allow you to create a \"\"working environment\"\" that allows you to \"\"produce your product\"\". The IRS (and state tax authorities) all provide ways for you to quantify these and \"\"count them\"\" as legitimate business expenses. No, you can't use 100% of your electric bill (since your office might be inside your home, and the entire bill is not \"\"just\"\" for your business) but you are certainly entitled to some part of that bill to count as a business expense. Again, I don't want to get too far down the INCOME TAX rabbit hole, but you still need to keep track of what you spend! You must keep good record of ALL your income. This is especially important when you have money coming in from various sources (a payroll, gifts from friends, business income from clients and/or the App Stores, etc.) Do not just assume that copies of your bank deposits tell the whole story. Bank statements might tell you the amount and date of a deposit, but you don't really know \"\"where\"\" that money came from unless you are tracking it! The good news is that the above record keeping can be quite easy with something like Quicken or QuickBooks (or many many other such popular programs.) You will want to ensure you have the needed licenses (not necessarily required at all for a lot of small businesses, especially home based businesses.) Depending on your business activity, you might want to consider business liability insurance. Again, this will depend on your clients and/or other business entities you'll be dealing with. Some might require you to have some insurance. Will be efforts even be considered a business initially until some amount of money actually starts coming in? This might be a legal / accountant question as to the very specific answer from the POV of the law and taxing authorities. However, consider that not all businesses make any money at all, for a long time, and they definitely \"\"are a business\"\". For instance, Twitter was losing money for a long time (years) and no one would argue they were not a business. Again, deferring to the attorneys/cpas here for the legal answer, the practical answer is that you're performing \"\"some\"\" business activity when you start creating a product and working hard to make it happen! I would consider \"\"acting as\"\" a business regardless! What things do I need to do up-front and what things can I defer to later, especially in light of the fact that it might be several months to a couple years before any substantial income starts coming in? This question's answer could be quite long. There are potentially many items you can defer. However, one I can say is that you might consider deferring incorporation. An individual can perform a business activity and draw income from it legally in a lot of situations. (For tax purposes, this is sometimes referred to as \"\"Schedule-C\"\" income.) I'm not saying incorporation is a bad thing (it can shield you from a lot of issues), but I am saying that it's not necessary on day 1 for a lot of small businesses. Having said that, this too can be easy to do on your own. Many companies offer services so you can incorporate for a few hundred dollars. If you do incorporate, as a small business of one person, I would definitely consider a tax concept called an \"\"S-Corp\"\" to avoid paying double taxes.) But here too, we've gone down the tax rabbit hole again. :-)\"", "topk_rank": 17 }, { "id": "119210", "score": 0.6121891736984253, "text": "Consult your local Small Business Administration office - they may have resources that can help you find what you're looking for.", "topk_rank": 18 }, { "id": "303239", "score": 0.6113197207450867, "text": "Yeah that's what I'm looking for. The problem, I run my business at a loss, I do it out of love for the topic. Trying to get someone to work full time at 10$/hr and be competent is difficult. Like you said, I'm giving many of these duties to part time contractors.", "topk_rank": 19 } ]
110	How to determine how much to charge your business for rent (in your house)?	[ { "id": "520386", "score": 0.7932466864585876, "text": "Your best approach is to assess rent levels in your local area for offices of a similar size. You need to take into account all the usuals - amenities, parking, etc, just as if your home-office was provided by a third-party. Get your $/sq ft and work out the monthly amount. With this figure, you need to then work out what % of it you can charge. If the space is used exclusively for the business, charge 100%. If it's used about half the time, charge 50%, etc. I would strongly advise you to do two things - 1. make sure your accountant and your attorney help you get this squared away. 2. document everything about how you arrived at the cost. Nothing fancy, but dates, realtors, addresses, $/sq foot. A simple table will do. By doing these two things, if the IRS should come around to chat, you should be covered." }, { "id": "220063", "score": 0.7639744877815247, "text": "\"If you are talking about a home office, you don't \"\"charge\"\" the business anything. If the area is used exclusively as an office you pro-rate by square footage just the actual expenses. TurboTax recent published an article \"\"Can I Take the Home Office Deduction?\"\" which is a must read if you don't understand the process. (Note: I authored said article.)\"" }, { "id": "410128", "score": 0.7635515928268433, "text": "In Canada I think you'd do it as a % of square footage. For example: Then you can count 20% of the cost of the of renting the apartment as a business expense. I expect that conventions (i.e. that what's accepted rather than challenged by the tax authorities) may vary from country to country." }, { "id": "459119", "score": 0.6850141882896423, "text": "\"In the UK it all comes down to what HMRC will allow you to charge without taxing you on the \"\"rent profit\"\" and not hitting capital gain tax when you sell the house, it may not all count as your \"\"main home\"\" if some is rented out. (http://www.accountingweb.co.uk/ is a good place to ask this type of questions in the uk)\"" }, { "id": "482165", "score": 0.6611148715019226, "text": "It depends on the structure of your business. Are you a sole proprietor filing Schedule C on your 1040, or an S-corp, or part of a partnership? The treatment of a home office will differ depending on business entity." }, { "id": "397152", "score": 0.643444836139679, "text": "To be confident in your solution, and get the best solution for you, consult a local accountant, preferably one who is specialized in taxes for businesses. Or muddle through the code and figure it out for yourself. The primary advantage in consulting with an accountant is that you can ask them to point out ways you can restructure your expenses, debts and income in order to minimize your tax burden. They can help you run the numbers for the various options and choose the one that is right, numerically." } ]	[ { "id": "113566", "score": 0.6821302771568298, "text": "Narratively from the POV of the landlord, the hip retailer ABC offered me a 10 year lease at $1000/month for an empty store front on an empty block. I agreed. ABC attracted a large youth market, so other stores filled in the rest of the block in the intervening decade, which I leased for 1200, 1500, 2000, and finally 4000 per month since the foot traffic and demographic is so strong. It's now year 9. Next year, the lease will likely jump up to the comparable 4000 per square foot. Their margin in this location probably looks great today. But the purpose of the quote is to warn you to check the future.", "topk_rank": 0 }, { "id": "268640", "score": 0.6818801760673523, "text": "The New York Times has a useful rent-vs-buy calculator. Based on your numbers, it suggests buying makes sense if you stay in the house for 5 years or more. This is just based on default values for various other parameters, though, like mortgage interest rate, rent increase rate, etc. You could try playing around with the numbers. Also as other answerers said, maintenance costs, closing costs, etc., should be factored in. If renting it out is a possibility even if you move out, it could be a better deal. One thing to think about renting-wise is, if you move out, where are you likely to move to? If you move far away, it could be impractical to manage the property as a rental. You could hire someone else to do that, but that would reduce your income from the rent. On the other hand, if you stay in LA, it could be feasible to manage the property yourself. Another key factor is, what rent would you be able to charge for this house? If you can make enough in rent to cover the mortgage payment, you may be in good shape; but due to overpriced real estate markets, sometimes you won't be able to do that, which would mean renting it might not be cost-effective.", "topk_rank": 1 }, { "id": "85229", "score": 0.681843101978302, "text": "Insurance - get estimate from an insurance agent who works with policies for commercial real estate. See comments below regarding incorporation. Taxes - if this was basic income for a simple LLC, estimating 25-40% and adjusting over time might work. Rental property is a whole different prospect. Financial experts who specialize in rental properties would be a good source of advice, and worth the cost. See below regarding incorporating. Real estate appreciation - not something you can count on for developed property. Appreciation used to be almost guaranteed to at least keep up with inflation. Now property values are not even guaranteed to go up. Never have been but the general rule was improved real estate in good repair appreciated in price. Even if property values increase over time, rental properties depreciate. In fact, for rental properties, you can claim a certain rate of depreciation over time as an expense on taxes. This depreciation could mean selling for less than you paid for the property after a number of years, and owing capital gains taxes, since you would owe the difference between the depreciated value and the sale price. Related to taxes are local codes. Some areas require you to have a property management license to handle buildings with more than a certain number of units. If you are going to own rental properties, you should protect your private financial life by incorporating. Form a company. The company will own the property and hire any maintenance people or property managers or security staff or any similar employment activities. The company takes out the insurance and pays taxes. The company can pay you a salary. So, bottom line, you can have the company pay all the expenses and take all the risks. Then, assuming there's any money left after expenses, the company can pay you a manager's salary. That way if the worst happens and a tenant breaks their hip in the shower and sues you for ONE MILLION DOLLARS and wins, the company folds and you walk away. You might even consider two companies. One to own the property and lease it to a property management company. The property management company can then go bankrupt in case of some sort of liability issue, in which case you still keep the property, form a new management company, repaint and rename the property and move on. TL;DR: Get insurance advice from insurance agent before you buy. Same for taxes from an accountant. Get trained as a property manager if your local codes require it (might be a good idea anyway). Incorporate and have the company take all the risks.", "topk_rank": 2 }, { "id": "42749", "score": 0.6815306544303894, "text": "\"I recommend reading What's the catch in investing in real estate for rent? and making a list of expenses. You have a known expense, the rent, and the assumption that it will rise a bit each year. If not each year, eventually the landlord will bump it, and on average, the rent should track inflation. The buy side is the complete unknown, especially to us here. The mortgage and taxes are just the beginning. My ongoing issue in the buy/rent debate is that it's easy to buy \"\"too big\"\" or at least far bigger that what you are renting. One extreme - a couple moves from their one bedroom apartment into their purchased 3BR home with far more space than they ever use. No need to paint the full picture of numbers, the house is a money pit, and they live for the house. Other end - Couple already renting a nice sized home, and they buy a similar one. They rent out the two spare bedrooms for 5 years until they have kids and want their privacy back. They bought smart, for less than market price, and from day one, the mortgage was lower than the rent they paid. By year 5, having sent the extra income to pay down the mortgage, they've paid down half the loan. As the kids come along, they refi to a new 30 yr fixed at 3.5%, and the payment is tiny compared to the rest of their budget. Simply put, the ratio of house price to rent for that same house is not a constant. When the ratio is high, it's time to rent. When it swings very low, it's worth considering a purchase. But the decision is never clear until every detail is known. The time may be perfect, and the day after you close, you lose your job, or in a good scenario, get a raise and are relocated. Just because you bought low yesterday, doesn't mean the market will pay you a good price today, it takes time for out-of-whack pricing to come back to normal. A simple question? Maybe. But we first need a lot of details to help you understand what you are considering.\"", "topk_rank": 3 }, { "id": "453305", "score": 0.6815279722213745, "text": "\"No magic answers here. Housing is a market, and the conditions in each local market vary. I think impact on cash flow is the best way to evaluate housing prices. In general, I consider a \"\"cheap\"\" home to cost 20% or less of your income, \"\"affordable\"\" between 20-30% and \"\"not affordable\"\" over 30%. When you start comparing rent vs. buy, there are other factors that you need to think about: Renting is an easy transaction. You're comparing prices in a market that is usually pretty stable, and your risk and liability is low. The \"\"cost\"\" of the low risk is that you have virtually no prospects of recouping any value out of the cash that you are laying out for your home. Buying is more complex. You're buying a house, building equity and probably making money due to appreciation. You need to be vigilant about expenses and circumstances that affect the value of your home as an investment. If you live in a high-tax state like New York, an extra $1,200 in property taxes saps over $16,000 of buying (borrowing) power from a future purchaser of your home. If your HOA or condo association is run by a pack of idiots, you're going to end up paying through the nose for their mistakes. Another consideration is your tastes. If you tend to live above your means, you're not going to be able to afford necessary maintenance on the house that you paid too much for.\"", "topk_rank": 4 }, { "id": "149516", "score": 0.6806706190109253, "text": "\"So the main reason that you aren't getting answers is that the question is not really answerable on this site without putting a lot of details about the expenses of your company online. Even then you will need someone who specializes in Canadian taxes to go through those details to be sure. Most of those people feel like they should be paid a decent amount per hour to go through the details. That being said, I dealt with a similar question for my contract work company by just taking a couple weekends and calculating the taxes myself on estimated numbers. It was time consuming but not really that hard. I thought I might have to buy software, but all I needed was a small calculator. Along the way I learned a few details that helped me lower my overall tax exposure. I found that Neil was generally correct that you are \"\"taxed on profits\"\" but it is worth doing the taxes yourself because the details can really matter.\"", "topk_rank": 5 }, { "id": "238087", "score": 0.6806206107139587, "text": "Nofel. So basically I wanted to know how to calculate that how much should I be paying for car or rent etc? I'm not big on percentages. Instead, I prefer hard numbers based on what you owe and what you earn. Here are rules of successful budgeting which I developed when deep in debt. They apply to everyone: After going through this exercise, you definitely might realize that you need to move to a less expensive apartment, or trade your car in for something smaller, drink less, etc. Or even get a second job.", "topk_rank": 6 }, { "id": "510692", "score": 0.680600106716156, "text": "\"Depending on the nature of the expenses, you will enter them under Deductions, on lines 9 through 20. Did you rent an office? Add the rental expense to line 13. Fee for a business license? Line 14. Everything else that doesn't fall into any specific category goes on line 20 (You'll need to attach a small statement that breaks out the expense categories, e.g. office supplies, phone, legal fees, etc.) Expenses that are entered in the Income section are costs directly related to sales, such as merchant fees that you pay to a bank if you take payments by credit card. Since you said the partnership has \"\"zero money coming in,\"\" I assume that it currently has no revenues, so all the fields in the Income section would be zero.\"", "topk_rank": 7 }, { "id": "30319", "score": 0.6805943846702576, "text": "\"You are \"\"pool[ing] the sales from both houses as downpayment on the new house.\"\" But they are going to pay you rent. Your question as it stands, just opens more questions. What, exactly is the ownership of the new house? If your's (and your wife's) was the money a gift? Ignoring the gift, if that's what it is, and if the in-law suite is 25% of the house value, you have a rental. You claim 25% of the expenses, including property tax and mortgage interest, along with 25% of the utilities, unless their part has its own meters. That's a start, if you add details, I may edit my answer. (Not to be pedantic, but whose parents are they. They can't be \"\"our in-laws,\"\" can they?)\"", "topk_rank": 8 }, { "id": "79592", "score": 0.6803209185600281, "text": "There's nothing illegal in hiring your friends to manage your property or provide you services, and it is definitely deductible. There's nothing specific to reference here, this is a standard deduction for a landlord just as any. I mentioned 1099 in the comments - if the total is over $600 and your friend is not a corporation, then you should issue 1099. That would provide you the necessary substantiation of the deduction (of course you need to keep some documentation that shows the relation between the money paid and the services provided, like a contract, or invoice or receipt). You can (but don't have to) issue 1099 for lower amounts as well. If you don't - you'll need to keep more documents as substantiation - cached checks, documents about the agreement and the amounts, etc. In addition, your deduction may be disallowed if your friend doesn't declare this as taxable income (issuing 1099 helps here since your friend will be forced to declare it, otherwise it will be recorded as a mismatch by the IRS and trigger an audit). As to reimbursements - that would go into the same bucket. They'll have to deduct their expenses from that income on their own taxes. So if you give them $300 for the work, $300 for the miles, and $300 for the materials they bought - you issue the 1099 for $900, and let them deduct the $600 on their own Schedule C.", "topk_rank": 9 }, { "id": "119247", "score": 0.6801976561546326, "text": "Our two rentals have yielded 8.5% over the past two years (averaged). That is net, after taxes, maintenance, management, vacancy, insurance, interest. I am only interested in cash flow - expenses / original investment. If you aren't achieving at least 4.5-5% net on your original investment you probably could invest elsewhere and earn a better return on a similar risk profile.", "topk_rank": 10 }, { "id": "179052", "score": 0.679836630821228, "text": "\"Get everything in writing. That includes ownership %, money in, money out, who is allowed to use the place, how much they need to pay the other partners, who pays for repairs, whether to provide 'friends and family' discounts, who is allowed to sell, what happens if someone dies, how is the mortgage set up, what to do if one of you becomes delinquent, etc. etc. etc. Money and friends don't mix. And that's mostly because people have different ideas in their head about what 'fair' means. Anything you don't have in writing, if it comes up in a disagreement, could cause a friendship-ending fight. Even if you are able to agree on every term and condition under the sun, there's still a problem - what if 5 years from now, someone decides that a certain clause isn't fair? Imagine one of you needs to move into the condo because your primary residence was pulled out from under you. They crash at the condo because they have no where else to go. You try to demand payment, but they lost their job. The agreement might say \"\"you must pay the partnership if you use the condo personally, at the standard monthly rate * # of days\"\". But what is the penalty clause - is everything under penalty of eviction, and forced sale of the condo and distribution of profits? Following through on such a penalty means the friendship would be over. You would feel guilty about doing it, and also about not doing it [at the same time, your other partner loses their job, and can't make 1/3rd of the mortgage payments anymore! They need the rent or the bank will foreclose on their house!] etc etc etc Even things like maintenance - are the 3 of you going to do it yourselves? Labour distributed how? Will anyone get a management fee? What about a referral fee for a new renter? Once you've thought of all possible circumstances and rules, and drafted it in writing, go talk to a lawyer, and maybe an accountant. There will be many things you won't have considered yet, and paying a few grand today will save you money and friends in the future.\"", "topk_rank": 11 }, { "id": "488777", "score": 0.6796613335609436, "text": "\"I think we'd need to look at actual numbers to see where you're running into trouble. I'm also a little confused by your use of the term \"\"unexpected expenses\"\". You seem to be using that to describe expenses that are quite regular, that occur every X months, and so are totally expected. But assuming this is just some clumsy wording ... Here's the thing: Start out by taking the amount of each expense, divided by the number of months between occurrences. This is the monthly cost of each expense. Add all these up. This is the amount that you should be setting aside every month for these expenses, once you get a \"\"base amount\"\" set up. So to take a simple example: Say you have to pay property taxes of $1200 twice a year. So that's $1200 every 6 months = $200 per month. Also say you have to pay a water bill once every 3 months that's typically $90. So $90 divided by 3 = $30. Assuming that was it, in the long term you'd need to put aside $230 per month to stay even. I say \"\"in the long term\"\" because when you're just starting, you need to put aside an amount sufficient that your balance won't fall below zero. The easiest way to do this is to just set up a chart where you start from zero and add (in this example) $230 each month, and then subtract the amount of the bills when they will hit. Do this for some reasonable time in the future, say one year. Find the biggest negative balance. If you can add this amount to get started, you'll be safe. If not, add this amount divided by the number of months from now until it occurs and make that a temporary addition to your deposits. Check if you now are safely always positive. If not, repeat the process for the next biggest negative. For example, let's say the property tax bills are April and October and the water bills are February, May, August, and November. Then your chart would look like this: The biggest negative is -370 in April. So you have to add $370 in the first 4 months, or $92.50 per month. Let's say $93. That would give: Now you stay at least barely above water for the whole year. You could extend the chart our further, but odds are the exact numbers will change next year and you'll have to recalculate anyway. The more irregular the expenses, the more you will build up just before the big expense hits. But that's the whole point of saving for these, right? If a $1200 bill is coming next week and you don't have close to $1200 saved up in the account, where is the money coming from? If you have enough spare cash that you can just take the $1200 out of what you would have spent on lunch tomorrow, then you don't need this sort of account.\"", "topk_rank": 12 }, { "id": "571362", "score": 0.6796537637710571, "text": "Purchase capital asset (deductible expense). Sell capital asset next year, then use the proceeds of the sale to pay your employees. Unless you buy in a quickly gentrifying area you'll have a fair amount of unrecoverable expenses like closing costs, repairs, etc that you won't make up with an increase in property value. Plus property taxes, utilities, etc. And who knows how quickly you can sell the place, might end up with a bloated useless asset and no money to pay employees. And in an audit an asset purchased with no actual use to the business will get disallowed. Either retain the earnings and take the tax hit, or make a deal with your employees to pre pay them their next year's salary. Of course if you fire someone or they quit good luck getting the overpaid portion back.", "topk_rank": 13 }, { "id": "365648", "score": 0.6793490052223206, "text": "\"In addition to Alex B's excellent overview, I'd like to add a few more bits of advice. First of all, one term you should know is \"\"commercial real estate\"\" - which is precisely what this is. There is a business element, but it is strictly (and almost entirely) intertwined to the underlying real estate, which makes this a special category of business which is generally considered simply \"\"commercial real estate\"\" (just like office buildings, shopping malls, etc). All real estate and businesses value are based on alternatives - what other options are there? In appraisal, these are generally called \"\"comparables\"\". A professional appraiser is generally available for commercial real estate of this type. While a full, official commercial appraisal can run into the thousands, many/most (all?) appraisers are willing to sell you a simplified version of their service, which can be called a \"\"letter of opinion\"\" and can help you get an idea for the market price (what other similar commercial properties are running for). A loan company would strictly require this, but if you are thinking of an all cash or form of seller-financing this would technically be optional. Your best bet is to read about some of what is involved in commercial real estate appraisal and evaluation, and you may even want to speak with commercial loan officers - even if you don't know that you want to get a loan to acquire the property! It's their job to help inform you about what is required and what they look for, so they can be a potential resource beyond your own research as well. With this said, the only way to estimate value (and, conveniently, the best way) is to look at other properties! And by \"\"others\"\", I mean that you should really not consider buying absolutely anything until you've viewed at least 6-10 other options in some depth - and you probably want to double or triple that number if you are looking to make this the last big business transaction of your life. If you don't you'll be relying on little more than dumb luck to carry you through - which in this area of business, you don't want to do because the dollar amounts and liabilities involved can bankrupt you in no time flat. With that general advice out of the way, here's a tiny nutshell version of valuation of commercial real estate. There are a few key parts involved in commercial real estate: land, improvements (buildings, docks, stuff like that), income, and wages. Land: the value of the land is based upon what you could sell it for, as-is. That is to say - who else might want it? This alone has many important factors, such as zoning laws, the neighborhood (including your neighbors), water/utilities, pacts on the land (someone may have insisted the land not be paved into a parking lot, or really anything like that), alternative uses (could you put a golf course on it, or is the land suitable for a big building or farming?), etc. And is this in a growing area, where you might hope the value will increase over the next decade, or decrease, or basically stay flat (and possibly cause losses compared to inflation)? Improvements: anything on the land is both an asset and a liability. It's an asset because it could add to the value of the land, but it might also reduce the land value if it interferes with alternate land uses. It's a liability, both in the legal sense and in that it requires maintenance. If you want to rent them out, especially, that means concern about any foundations involved, termites, roofs, sewage/septic tanks, utilities that are your responsibility (pipes, poles, wires), as well as any sort of ac/heating you may have, docks, and so on. These things are rarely free and absolutely can eat you alive. Income: Ah, the best part, the constant influx of cash! But wait, is it a constant influx? Some businesses are purely seasonal (summer only, winter only), some are year-round but have peak times, and others don't really have a \"\"peak\"\" to speak of. If you are renting, are there issues collecting, or with people over-staying? How about damage, making a mess, getting rowdy and disturbing others? Regardless, there is obviously some income, and this is usually the most dangerous part of the equation. I say \"\"dangerous\"\", because people absolutely lie like dogs on this part, all the time. It's easy to cook the books, assuming they even attempt to keep proper books in the first place! Businesses of this form often have a lot of cash business that's easy to hide (from Uncle Sam, or sometimes even the owners themselves if there are employees involved) - and fake! And some people are just shoddy bookkeepers and the info is just wrong. But, there will clearly be some kind of yearly income involved. What does this matter? Well...how much is there? How much is tied to the owners (personal friends do business and they will leave if the ownership/management changes)? In commercial real estate the income will be calculated for a fiscal year, and then there is something called a \"\"multiple\"\", which is market dependent. Let's say the whole place takes in $100k in rent a year. As part of buying this business, you are buying not just assets, but expected future income. In some commercial areas the multiple is as little as .5 to 2 - which means that the going rate is about 6-24 months worth of income, as part of the purchase price. So with 100k rent a year, that means 50k-200k of the purchase price is attributable to the income of the business. And if business is half of what you thought it would be? That means the net value of the whole enterprise decreases by 25k-100k - on top of the reduced income every year you own it! Income provides cash flow, which should pay all the expenses (cleaning up from wind storms, replacing windows that are broken, hauling off trash, replacing a well that ran dry), and then the extra that remains is positive cash flow. If you take out a loan, then ideally the cash flow would also pay that completely so long as you don't have any big unexpected expenses in the year - and still have some left over for yourself. Wages: Well, that money doesn't collect itself! There's sales, keeping the books, collecting the rent, performing maintenance, customer service, cleaning, paying the bills, keeping the insurance people happy, handling emergencies, and everything else involved with running the business. Someone is going to do it, and the biggest error people make here is not to put any value on their time - and to make it so they can never afford to take a vacation again! Pay yourself, and give yourself the flexibility to pay others when you can't (or don't want) to do it all yourselves. So, what's the point of all this? How do you actually make any money? In two ways: 1) selling the whole thing later, and 2) cash flow. For 1, it's important that you not be in a situation where you are betting that in the future there will be a \"\"person richer, and dumber, than I am now\"\". If the current owner wanted 2 million, then 1 mil, then less, over multiple years...this suggests either he is delusional about the value of his place (and most property owners are), or that its actually hard to find a buyer for such a business. You are going to want to make sure you understand why that is, because most of the value of real estate is...well, in the real estate itself! For 2, you need cash coming in that's considerably more than the cost of running the place. Also, cash flow can strongly change the value of the business for resale (depending on the multiple, this can make a huge difference or prevent you from selling the thing at all). You mentioned you want to put in more cabins, more marketing/sales efforts, etc. That's great, but first, that would mean added investment beyond the purchase price. Is it legally and physically practical to add more cabins, and what is their current utilization rate? If they are only renting 10% of their current capacity, increasing capacity may be premature. This will also vary through the year, so you may find there is a problem with being sold out sometimes...but only for a small percentage of the time. Which means you'll be adding buildings only to have them used for a fraction of the year, which will be very hard to make a profit from. If cash flow is good, ideally even being enough to cover a loan payment to help cover the purchase price (and remember that commercial real estate loans are much smaller loan-to-value ratios than in residential real estate), there is one final barrier to making money: the damn non-regular maintenance! Roofs, wells, and wooden walls all have a sad tendency to cost you nothing right up until the point they cost you $30k+ on a single day. Is there enough cash flow to make these sort of certainties (and if you plan to be there for years, they are a certainty) not put you in the poor house? This was rather long, but I hope this overview helps you appreciate all that you'll need to look into and be cautious of during your future en-devour! Commercial real estate is generally costly and high-risk, but also can be high reward. You'll need to compare many opportunities before you can get a \"\"feel\"\" for what is a good deal and what is a terrible one. You'll need to consider many factors, such as resale value and cash flow/income (which they will have to tell you and you can assume is not true, due to ignorance or malice), as well as maintenance and liabilities, before you can begin to really estimate the value of an enterprise of this sort. There are people who can help you, like appraisers and commercial brokers, but ultimately you'll need to do a lot of research and comparisons yourself to help you make a good decision. Finally, there is no very simple method for evaluating commercial real estate value. You need a variety of information, and you must be skeptical of what you are told because of the very large sums of money involved. It is doable (lots of people do it), but you must take care and do your due diligence so you don't get bankrupted by a single bad purchase.\"", "topk_rank": 14 }, { "id": "365715", "score": 0.679301381111145, "text": "If it is US, you need to take tax implications into account. Profit taken from sale of your home is taxable. One approach would be to take the tax hit, pay down the student loans, rent, and focus any extra that you can on paying off the student loans quickly. The tax is on realized gains when you sell the property. I think that any equity under the original purchase price is taxed at a lower rate (or zero). Consult a tax pro in your area. Do not blindly assume buying is better than renting. Run the numbers. Rent Vs buy is not a question with a single answer. It depends greatly on the real estate market where you are, and to a lesser extent on your personal situation. Be sure to include maintenance and HOA fees, if any, on the ownership side. Breakeven time on a new roof or a new HVAC unit or an HOA assessment can be years, tipping the scales towards renting. Include the opportunity cost by including the rate of return on the 100k on the renting side (or subtracting it on the ownership side). Be sure to include the tax implications on the ownership side, especially taxes on any profits from the sale. If the numbers say ownership in your area is better, then try for as small of a mortgage as you can get in a growing area. Assuming that the numbers add up to buying: buy small and live frugally, focus on increasing discretionary spending, and using it to pay down debt and then build wealth. If they add up to renting, same thing but rent small.", "topk_rank": 15 }, { "id": "78486", "score": 0.679273247718811, "text": "Given your clarifying points, it sounds like you are running both businesses as one combined business. As such, you should be able to get just a single HST number and use that. However, let me please urge you to contact a professional accountant and possibly a lawyer, as it is very unusual to be performing these services without a business license, and you may be exposing yourself to civil penalties and placing your personal assets (e.g. your house) at risk. Additionally, it may be beneficial for you to run these as businesses as you can likely write off (more of) your expenses.", "topk_rank": 16 }, { "id": "527489", "score": 0.6792285442352295, "text": "\"I agree with Joe Taxpayer that a lot of details are missing to really evaluate it as an investment... for context, I own a few investment properties including a 'small' 10+ unit apartment complex. My answer might be more than you really want/need, (it kind of turned into Real Estate Investing 101), but to be fair you're really asking 3 different questions here: your headline asks \"\"how effective are Condo/Hotel developments as investments?\"\" An answer to that is... sometimes, very. These are a way for you-the investor-to get higher rents per sq. ft. as an owner, and for the hotel to limit its risks and access additional development funding. By your description, it sounds like this particular company is taking a substantial cut of rents. I don't know this property segment specifically, but I can give you my insight for longer-term apartment rentals... the numbers are the same at heart. The other two questions you're implying are \"\"How effective is THIS condo/hotel development?\"\" and \"\"Should you buy into it?\"\" If you have the funds and the financial wherewithal to honestly consider this, then I am sure that you don't need your hand held for the investment pros/cons warnings of the last question. But let me give you some of my insight as far as the way to evaluate an investment property, and a few other questions you might ask yourself before you make the decision to buy or perhaps to invest somewhere else. The finance side of real estate can be simple, or complicated. It sounds like you have a good start evaluating it, but here's what I would do: Start with figuring out how much revenue you will actually 'see': Gross Potential Income: 365 days x Average Rent for the Room = GPI (minus) Vacancy... you'll have to figure this out... you'll actually do the math as (Vacancy Rate %) x GPI (equals) Effective Potential Income = EPI Then find out how much you will actually pocket at the end of the day as operating income: Take EPI (minus) Operating expenses ... Utilities ... Maintenace ... HOA ... Marketing if you do this yourself (minus) Management Expenses ... 40% of EPI ... any other 'fees' they may charge if you manage it yourself. ... Extra tax help? (minus) Debt Service ... Mortgage payment ... include Insurances (property, PMI, etc) == Net Operating Income (NOI) Now NOI (minus) Taxes == Net Income Net Income (add back) Depreciation (add back) sometimes Mortgage Interest == After-tax Cash Flows There are two \"\"quickie\"\" numbers real estate investors can spout off. One is the NOI, the other is the Cap Rate. In order to answer \"\"How effective is THIS development?\"\" you'll have to run the numbers yourself and decide. The NOI will be based on any assumptions you choose to make for vacancy rates, actual revenue from hotel room bookings, etc. But it will show you how much you should bring in before taxes each year. If you divide the NOI by the asking price of your unit (and then multiply by 100), you'll get the \"\"Cap Rate\"\". This is a rough estimate of the rate of return you can expect for your unit... if you buy in. If you come back and say \"\"well I found out it has a XX% cap rate\"\", we won't really be qualified to help you out. Well established mega investment properties (think shopping centers, office buildings, etc.) can be as low as 3-5 cap rates, and as high as 10-12. The more risky the property, the higher your return should be. But if it's something you like, and the chance to make a 6% return feels right, then that's your choice. Or if you have something like a 15% cap rate... that's not necessarily outstanding given the level of risk (uncertain vacancies) involved in a hotel. Some other questions you should ask yourself include: How much competition is there in the area for short-term lodging? This could drive vacancies up or down... and rents up or down as well How 'liquid' will the property (room) be as an asset? If you can just break even on operating expense, then it might still make sense as an investment if you think that it might appreciate in value AND you would be able to sell the unit to someone else. How much experience does this property management company have... (a) in general, (b) running hotels, and (c) running these kinds of condo-hotel combination projects? I would be especially interested in what exactly you're getting in return for paying them 40% of every booking. Seasonality? This will play into Joe Taxpayer's question about Vacancy Rates. Your profile says you're from TX... which hints that you probably aren't looking at a condo on ski slopes or anything, but if you're looking at something that's a spring break-esque destination, then you might still have a great run of high o during March/April/May/June, but be nearly empty during October/November/December. I hope that helps. There is plenty of room to make a more \"\"exact\"\" model of what your cash flows might look like, but that will be based on assumptions and research you're probably not making at this time.\"", "topk_rank": 17 }, { "id": "478221", "score": 0.679104745388031, "text": "\"If it is true that for the same price, you could get a better place (or that for a lower price you could get an equivalent place), you should do some soul-searching to decide what monetary value you would place on the hassle of moving to such an alternative. You should then negotiate aggressively for a rent that is no more than the rent of the alternative place plus your hassle costs, and if the landlord does not meet your price, you should refuse to renew your lease, and instead move out to an alternative. (Of course, you might also want to double-check your research to ensure you really can get such a good alternative, and that your new landlords won't try a similar bait-and-switch and force you to move again in a year.) Barring local ordinances such as rent control laws, I don't think it's worth it to worry about whether the increase is \"\"normal\"\". If you can get a better deal somewhere else, then what your landlords are asking is too much. If you have a good relationship with them on a personal level you may be able to tell them this in a nice way and thus get them to make a more reasonable offer. Otherwise, the landlords will learn that their expectations are unreasonable when all their tenants move out to cheaper places.\"", "topk_rank": 18 }, { "id": "542213", "score": 0.6790979504585266, "text": "\"From the IRS perspective, there's no difference between \"\"your taxes\"\" and \"\"your sole proprietorship's taxes\"\", they're all just \"\"your taxes\"\". While I could see it being very useful and wise to track your business's activities separately, and use separate bank accounts and the like, this is just a convenience to help you in your personal accounting, and not something that needs to relate directly to how tax forms are completed or taxes are paid. When calculating your taxes, if you want to figure out how much \"\"you\"\" owe vs. how much \"\"your business\"\" owes, you'll have to do so yourself. One approach might be just to take the amount that your Schedule C puts as income on your return and multiply by your marginal tax rate. Another approach might be to have your tax software run the calculations as though you had no business income, and see what just \"\"your personal\"\" taxes would have been without the business. If you think of the business income as being \"\"first\"\" and should use up the lower brackets rather than your personal income, maybe do it the other way around and have your software run the calculations as though you had only the business income and no other personal/investment income, and see what the amount of taxes would be then. Once you've figured out a good allocation, the actual mechanics of paying some \"\"personal tax amount\"\" from your personal bank account and some \"\"business tax amount\"\" from your business bank account are up to you. I'd probably just transfer the money from my business account to my personal account and pay all the taxes from the personal account. Writing two separate checks, one from each account, that total to the correct amount, I'm sure would work just fine as well. You can probably make separate payments from each account electronically through Direct Pay or EFTPS as well. As long as all taxes are paid by the deadline, I don't think the IRS is too picky about the details of how many payments are made.\"", "topk_rank": 19 } ]
111	Dual Citizen British/US and online business taxes	[ { "id": "46092", "score": 0.7135306000709534, "text": "I see no reason why a US ID would be mandatory anywhere in the UK. I'm sure they have their own tax IDs in the UK. However, if the gallery requires US persons to submit US W-9 - then yes, you're covered under that requirement." } ]	[ { "id": "274359", "score": 0.677463173866272, "text": "The data provided in your question is irrelevant. The data that you provided in the comments (that you're physically present in the US while doing the work) is the only relevant information needed to answer your question. You will need to pay taxes in the US for the earnings. The company invoicing the US client will also need to pay taxes in the US for its earnings from these invoices. You can transfer between bank accounts and deposit whatever you want anywhere you want, no-one cares (with respect to the US taxes, check with Indian tax accountant about Indian requirements).", "topk_rank": 0 }, { "id": "279870", "score": 0.6772580146789551, "text": "I believe that the form you will need to fill out for the company is the IRS' W-8ECI form. My US-based Fortune 50 company pays my rent in Germany, and had my landlord fill one out so that they would not need to do any withholding for the payments. From this IRS site on withholding income for payments to Foreign Individuals: Withholding exemption. In most cases, you do not need to withhold tax on income if you receive a Form W-8ECI on which a foreign payee represents that: The foreign payee is the beneficial owner of the income, The income is effectively connected with the conduct of a trade or business in the United States, and The income is includible in the payee's gross income. Good luck!", "topk_rank": 1 }, { "id": "387010", "score": 0.677247941493988, "text": "\"New York will want to you to pay taxes on income from \"\"New York sources\"\". I'm not sure what this means to a freelance web developer. If your wife is doing freelance web development under the same business entity as she did in New York (ie. a New York sole proprietor, corporation, etc), you probably do need to file. From nonresident tax form manual: http://tax.ny.gov/pdf/2011/inc/it203i_2011.pdf If you were a nonresident of New York State, you are subject to New York State tax on income you received from New York State sources in 2011. If you were a resident of New York State for only part of 2011, you are subject to New York State tax on all income you received while you were a resident of the state and on income you received from New York State sources while you were a nonresident. To compute the amount of tax due, use Form IT-203, Nonresident and Part-Year Resident Income Tax Return. You will compute a base tax as if you were a full-year resident, then determine the percentage of your income that is subject to New York State tax and the amount of tax apportioned to New York State.\"", "topk_rank": 2 }, { "id": "21284", "score": 0.6771820187568665, "text": "For reporting to the IRS, every bank account has a primary tax ID number associated with it. When there are multiple joint owners, they (the owners) usually pick a person at random to be the primary, unless there is a large amount of interest involved, in which case I would suggest consulting a tax attorney. As for the online banking, it depends on your institution's software. My institution allows every individual to have a separate ID; if this is important to you (and it would be to me), then look for another bank that offers it.", "topk_rank": 3 }, { "id": "231254", "score": 0.6769057512283325, "text": "\"This is an answer grounded in reality, not advice. Most states have no means of enforcing their foreign business entity registration statutes. Some states never even codified consequences. (California is a notable exception.). Some states have 'business licenses' that you need in order to defend your entity in court, but will retroactively apply the corporate veil when you get the license. The \"\"do I have to register\"\" question is analogous to asking a barber if you need a haircut. But this doesn't absolve you of looking in the mirror (doing your research). Registration and INCOME taxes are different stories. If a state calls their fee a franchise tax and it is applicable and there are real consequences for not, then you will have to pay that tax. Anyway, this isn't advocating breaking the law, but since it describes ignoring toothless state-chartered agencies, then there are people that will disagree with this post, despite being in line with business climate in the United States. Hope that helps\"", "topk_rank": 4 }, { "id": "377547", "score": 0.6768099665641785, "text": "\"As a minor you certainly can pay tax, the government wants its cut from you just like everyone else :-) However you do get the personal allowance like everyone else, so you won't have to pay income tax until your net income reaches £10,800 (that's the figure for the tax year from April 2015 to April 2016, it'll probably change in future years). Once you're 16, you will also have to pay national insurance, which is basically another tax, at a lower threshold. The current rates are £2.80/week if you are making £5,965 a year or more, and also 9% on any income above £8,060 (up to £42,385). Your \"\"net income\"\" or \"\"profits\"\" are the income you receive minus the expenses you have to support that income. Note that the expenses must be entirely for the \"\"business\"\", they can't be for personal things. The most important thing to do immediately is to start keeping accurate records. Keep a list of the income you receive and also the expenses you pay for hardware etc. Make sure you keep receipts (perhaps just electronic ones) for the expenses so you can prove they existed later. Keep track of that net income as the year goes on and if it starts collecting at the rate you'd have to pay tax and national insurance, then make sure you also put aside enough money to pay for those when the bill comes. There's some good general advice on the Government's website here: https://www.gov.uk/working-for-yourself/what-you-need-to-do In short, as well as keeping records, you should register with the tax office, HMRC, as a \"\"sole trader\"\". This should be something that anyone can do whatever their age, but it's worth calling them up as soon as you can to check and find out if there are any other issues. They'll probably want you to send in tax returns containing the details of your income and expenses. If you're making enough money it may be worth paying an accountant to do this for you.\"", "topk_rank": 5 }, { "id": "114102", "score": 0.6767902970314026, "text": "You can do that, you aren't missing anything. It is supposed to be punishment, but as you are moving to a European country your non-penalized income would likely be taxed higher as is. I don't have info on whether you will be taxed a second time by the European country.", "topk_rank": 6 }, { "id": "588327", "score": 0.6765645742416382, "text": "The United States taxes nonresident aliens on two types of income: First, a nonresident alien who is engaged in a trade or business in the United States is taxed on income that is effectively connected with that trade or business. Second, certain types of U.S.-source payments are subject to income tax withholding. The determination of when a nonresident alien is engaged in a U.S. trade or business is highly fact-specific and complex. However, keeping assets in a U.S. bank account should not be treated as a U.S. trade or business. A nonresident alien's interest income is generally subject to U.S. federal income tax withholding at a rate of 30 percent under Section 1441 of the tax code. Interest on bank deposits, however, benefit from an exception under Section 1441(c)(10), so long as that interest is not effectively connected with a U.S. trade or business. Even though no tax needs to be withheld on interest on a bank deposit, the bank should still report that interest each year to the IRS on Form 1042-S. The IRS can then send that information to the tax authority in Brazil. Please keep in mind that state and local tax rules are all different, and whether interest on the bank deposits is subject to state or local tax will depend on which state the bank is in. Also, the United States does tax nonresident aliens on wages paid from a U.S. company, if those wages are treated as U.S.-source income. Generally, wages are U.S.-source income if the employee provides services while physically present in the United States. There are a few exceptions to this rule, but they depend on the amount of wages and other factors that are specific to the employee's situation. This is an area where you should really consult with a U.S. tax advisor before the employment starts. Maybe your company will pay for it?", "topk_rank": 7 }, { "id": "123047", "score": 0.6763815879821777, "text": "I would not expect any problems. Your interest will have tax deducted at 20% which I don't think you would be entitled to reclaim because you don't get a personal allowance if you aren't resident in the UK, and unless you have a huge amount of UK earnings you would not be legally liable to any higher rates of tax so there would be no issues there. If you were liable to more tax you would be obliged to inform the Inland Revenue.", "topk_rank": 8 }, { "id": "496036", "score": 0.6761684417724609, "text": "You should add it to all the other income and continue paying taxes as you would on your Irish salary. That is true for both the US and the Irish sides of the equation. In case you didn't know - your Irish earnings are taxable in the US, since the US taxes all of your income. Your Amazon.com earnings are taxable in Ireland since that's where you earned it. You can use the FEIE/FTC as appropriate on your US tax return to reduce your tax liability, but all of your income should be reported.", "topk_rank": 9 }, { "id": "272940", "score": 0.6761453151702881, "text": "\"You are pushing your luck, but not because you're not in the US, because it is likely that you're not qualified. From what you said, I doubt you can take it (I'm not a professional though, get a professional opinion). You say \"\"dedicated space\"\". It has to be an exclusive room. You cannot deduct 10 sq. ft. from your living room because your computer that is used wholly for your business is there. It has to be a room that is used exclusively for your business, and for your business only. I.e.: nothing not related to the business is there, and when you're there the only thing you do is working on your business. Your office doesn't have to be in the US necessarily, to the best of my knowledge. Your office must be in your home. If you take primary residence exclusion as part of your FEI, then I doubt you can deduct as well.\"", "topk_rank": 10 }, { "id": "542213", "score": 0.6756554245948792, "text": "\"From the IRS perspective, there's no difference between \"\"your taxes\"\" and \"\"your sole proprietorship's taxes\"\", they're all just \"\"your taxes\"\". While I could see it being very useful and wise to track your business's activities separately, and use separate bank accounts and the like, this is just a convenience to help you in your personal accounting, and not something that needs to relate directly to how tax forms are completed or taxes are paid. When calculating your taxes, if you want to figure out how much \"\"you\"\" owe vs. how much \"\"your business\"\" owes, you'll have to do so yourself. One approach might be just to take the amount that your Schedule C puts as income on your return and multiply by your marginal tax rate. Another approach might be to have your tax software run the calculations as though you had no business income, and see what just \"\"your personal\"\" taxes would have been without the business. If you think of the business income as being \"\"first\"\" and should use up the lower brackets rather than your personal income, maybe do it the other way around and have your software run the calculations as though you had only the business income and no other personal/investment income, and see what the amount of taxes would be then. Once you've figured out a good allocation, the actual mechanics of paying some \"\"personal tax amount\"\" from your personal bank account and some \"\"business tax amount\"\" from your business bank account are up to you. I'd probably just transfer the money from my business account to my personal account and pay all the taxes from the personal account. Writing two separate checks, one from each account, that total to the correct amount, I'm sure would work just fine as well. You can probably make separate payments from each account electronically through Direct Pay or EFTPS as well. As long as all taxes are paid by the deadline, I don't think the IRS is too picky about the details of how many payments are made.\"", "topk_rank": 11 }, { "id": "182168", "score": 0.6755658984184265, "text": "It's not quite clear what you are asking, so I'll answer a few possible interpretations. Businesses pay taxes on their profits. So if your business took a million pounds in revenue (e.g. sold a million pounds worth of stuff) then you would subtract (roughly speaking) everything the business spent on making and selling that stuff, and pay taxes only on the profit. VAT however is a different matter, and you would have to pay VAT on all of that income (technically the VAT portion isn't even income - it's tax you are forced to collect on behalf of the government). If your business made a million pounds pounds profit, it would pay tax on all of that million (subject to what a tax accountant can do to reduce that, which ought to be considerable). You can't subtract your personal living expenses like that. However the company can pay you a salary, which counts as an expense and the company doesn't pay tax on that. You might also take some money from the company as dividends. Both salary and dividends count as personal income to yourself, and you will need to pay personal income tax on them. As for the Ferrari, it depends on whether you can justify it as a business expense. A lot of companies provide cars for their employees so that they can use them for business - however you have to be able to show that IS for business, otherwise they are taxed like salary. The rules for company cars are quite complicated, and you would need an accountant. If this is a real rather than hypothetical situation, definitely get a tax accountant involved.", "topk_rank": 12 }, { "id": "589123", "score": 0.6755403876304626, "text": "\"As you said, in the US LLC is (usually, unless you elect otherwise) not a separate tax entity. As such, the question \"\"Does a US LLC owned by a non-resident alien have to pay US taxes\"\" has no meaning. A US LLC, regardless of who owns it, doesn't pay US income taxes. States are different. Some States do tax LLCs (for example, California), so if you intend to operate in such a State - you need to verify that the extra tax the LLC would pay on top of your personal tax is worth it for you. As I mentioned in the comment, you need to check your decision making very carefully. LLC you create in the US may or may not be recognized as a separate legal/tax entity in your home country. So while you neither gain nor lose anything in the US (since the LLC is transparent tax wise), you may get hit by extra taxes at home if they see the LLC as a non-transparent corporate entity. Also, keep in mind that the liability protection by the LLC usually doesn't cover your own misdeeds. So if you sell products of your own work, the LLC may end up being completely worthless and will only add complexity to your business. I suggest you check all these with a reputable attorney. Not one whose business is to set up LLCs, these are going to tell you anything you want to hear as long as you hire them to do their thing. Talk to one who will not benefit from your decision either way and can provide an unbiased advice.\"", "topk_rank": 13 }, { "id": "14065", "score": 0.6747085452079773, "text": "\"In 2014 the IRS announced that it published guidance in Notice 2014-21. In that notice, the answer to the first question describes the general tax treatment of virtual currency: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. As it's property like any other, capital gains if and when you sell are taxed. As with any capital gains, you're taxed on the \"\"profit\"\" you made, that is the \"\"proceeds\"\" (how much you got when you sold) minus your \"\"basis\"\" (how much you paid to get the property that you sold). Until you sell, it's just an asset (like a house, or a share of stock, or a rare collectible card) that doesn't require any reporting. If your initial cryptocurrency acquisition was through mining, then this section of that Notice applies: Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities? A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income. That is to say, when it was mined the market value of the amount generated should have been included in income (probably on either Line 21 Other Income, or on Schedule C if it's from your own business). At that point, the market value would also qualify as your basis. Though I doubt there'd be a whole lot of enforcement action for not amending your 2011 return to include $0.75. (Technically if you find a dollar bill on the street it should be included in income, but usually the government cares about bigger fish than that.) It sounds like your basis is close enough to zero that it's not worth trying to calculate a more accurate value. Since your basis couldn't be less than zero, there's no way that using zero as your basis would cause you to pay less tax than you ought, so the government won't have any objections to it. One thing to be careful of is to document that your holdings qualify for long-term capital gains treatment (held longer than a year) if applicable. Also, as you're trading in multiple cryptocurrencies, each transaction may count as a \"\"sale\"\" of one kind followed by a \"\"purchase\"\" of the other kind, much like if you traded your Apple stock for Google stock. It's possible that \"\"1031 like kind exchange\"\" rules apply, and in June 2016 the American Institute of CPAs sent a letter asking about it (among other things), but as far as I know there's been no official IRS guidance on the matter. There are also some related questions here; see \"\"Do altcoin trades count as like-kind exchanges?\"\" and \"\"Assuming 1031 Doesn't Apply To Cryptocurrency Trading\"\". But if in fact those exchange rules do not apply and it is just considered a sale followed by a purchase, then you would need to report each exchange as a sale with that asset's basis (probably $0 for the initial one), and proceeds of the fair market value at the time, and then that same value would be the basis of the new asset you're purchasing. Using a $0 basis is how I treat my bitcoin sales, though I haven't dealt with other cryptocurrencies. As long as all the USD income is being reported when you get USD, I find it unlikely you'll run into a lot of trouble, even if you technically were supposed to report the individual transactions when they happened. Though, I'm not in charge of IRS enforcement, and I'm not aware of any high-profile cases, so it's hard to know anything for sure. Obviously, if there's a lot of money involved, you may want to involve a professional rather than random strangers on the Internet. You could also try contacting the IRS directly, as believe-it-or-not, their job is in fact helping you to comply with the tax laws correctly. Also, there are phone numbers at the end of Notice 2014-21 of people which might be able to provide further guidance, including this statement: The principal author of this notice is Keith A. Aqui of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information about income tax issues addressed in this notice, please contact Mr. Aqui at (202) 317-4718\"", "topk_rank": 14 }, { "id": "77488", "score": 0.6745946407318115, "text": "If the firm treats you as an employee then they are treated as having a place of business in the UK and therefore are obliged to operate PAYE on your behalf - this rule has applied to EU States since 2010 and the non-EU EEA members, including Switzerland, since 2012. If you are not an employee then your main options are: An umbrella company would basically bill the client on your behalf and pay you net of taxes and NI. You potentially take home a bit less than you would being 100% independent but it's a lot less hassle and potentially makes sense for a small contract.", "topk_rank": 15 }, { "id": "298796", "score": 0.6745114326477051, "text": "The finance team from your company should be able to advise you. From what I understand you are Indian Citizen for Tax purposes. Any income you receive globally is taxable in India. In this specific case you are still having a Employee relationship with your employer and as such the place of work does not matter. You are still liable to pay tax in India on the salary. If you are out of India for more than 182 days, you can be considered as Non-Resident from tax point of view. However this clause would not be of any benefit to you as are having a Employee / Employer relationship and being paid in India. Edit: This is only about the India portion of taxes. There maybe a UK protion of it as well, plus legally can you work and your type of Visa in UK may have a bearing on the answer", "topk_rank": 16 }, { "id": "290452", "score": 0.6740525960922241, "text": "In principle, when you are the sole owner of a limited company, and also the sole employee, then it is much easier to assume that someone else is the employee. Let's say your twin brother John Adler. John Adler receives a salary from David Adler's company. Of course John has to pay income tax on his salary. Absolutely in the UK, and in Estonia as well if they have any sensible tax laws at all (which I assume but don't know for sure). Then there is the company. It's profit equals revenue, minus cost. You said £4000 revenue, and John Adler's salary, plus anything the company has to pay on top of the salary, is cost, which is subtracted from the revenue to calculate profit. In the UK, the company pays 20% corporation tax on those profits, and the rest stays in its bank account (or may be in goods that the company purchased). Where does David Adler come in? He owns the company, but doesn't work for it and gets no salary. He owns the company, but he does not own the company's money. He can't just help himself to the money. He can get a loan from the company, and is personally responsible for repaying that loan. If it's not repaid, HMRC will be very angry which will hurt. Or he can pay himself a dividend, and pays dividend tax on it. Or of course he can leave the money in the company. That's exactly how it works in the UK, and I would assume Estonia to be similar. And of course if it's not the twin brother who is the employee, but the OP himself, then the situation is exactly the same.", "topk_rank": 17 }, { "id": "303287", "score": 0.6740496158599854, "text": "Where you earn your money makes no difference to the IRS. Citizen/permanent resident means you pay income tax. To make matters worse given your situation it's virtually certain you have unreported foreign bank accounts--something that's also an important issue.", "topk_rank": 18 }, { "id": "576270", "score": 0.6738693118095398, "text": "\"That's a very clear explanation, thanks! So a few additional things if anyone will humor my curiosity... 1. By \"\"one-time\"\" tax, does that mean a company that has, say, $5B overseas could bring that back into the US and just be taxed $500M, then keep the remaining $4.5B? 2. Could a company choose a percentage of their overseas money to transfer into the US? Like, only bring in 8% of that $5B ($400M) and be taxed $40M, while keeping all the rest outside the US? Or would it be mandatory to bring it all over? 3. Would most companies just start that same practice of routing to tax havens again after this tax is implented?\"", "topk_rank": 19 } ]
112	Will my wife's business losses offset my income on a joint tax return?	[ { "id": "153541", "score": 0.887065589427948, "text": "\"First, filing status. If you and your wife are legally married, you should be filing your tax returns as married, either jointly or separately. In the US, \"\"head of household\"\" has a specific meaning and is for unmarried people who are supporting one or more relatives, per the IRS. If you are working full-time and your wife is not, then likely you will file a joint return, including all your income and all the expenses for your wife's business. So yes, the losses in her business will offset your income. Depending on how complex things are, you may want to hire a professional to help with your taxes. The rules for what can and cannot be deducted as a business expense can be opaque.\"" } ]	[ { "id": "208989", "score": 0.7725319862365723, "text": "\"It's not possible to determine whether you can \"\"expect a refund\"\" or whether you are claiming the right number of exemptions from the information given. If your wife were not working and you did not do independent contracting, then the answer would be much simpler. However, in this case, we must also factor in how much your contracting brings in (since you must pay income tax on that, as well as Medicare and, probably, Social Security), whether you are filing jointly or separately, and your wife's income from her business. There are also other factors such as whether you'll be claiming certain child care expenses, and certain tax credits which may phase out depending on your income. If you can accurately estimate your total household income for the year, and separate that into income from wages, contracting, and your wife's business, as well as your expenses for things like state and local income and property taxes, then you can make a very reasonable estimate about your total tax burden (including the self-employment taxes on your non-wage income) and then determine whether you are having enough tax withheld from your paycheck. Some people may find that they should have additional tax withheld to compensate for these expenses (see IRS W-4 Line #6).\"", "topk_rank": 0 }, { "id": "532888", "score": 0.7700735926628113, "text": "\"Short answer: Yes. For Federal income tax purposes, you are taxed on your total income, adding up positives and negatives. If business A made, say, $100,000 while business B lost $20,000, then your total income is $80,000, and that's what you'll be taxed on. As @littleadv says, of course any business losses you claim must qualify as business losses under IRS rules. And yes, there are special rules about losses that the IRS considers \"\"passive\"\". If you have wage income in addition to business income, business losses don't offset wage income for social security and medicare tax purposes. You can't get a refund of the social security tax deducted from your paycheck. I don't know if this is relevant to you, but: If you have businesses in different states, each is taxed by that state. For example I have two tiny side businesses, one in Michigan and one in Ohio. Last year the Michigan business made money while the Ohio business lost money. So my federal income was Michigan minus Ohio. My Ohio income was negative so I owed no Ohio income tax. But I couldn't subtract my Ohio losses from my Michigan income for Michigan income tax purposes. Thus, having, say, $10,000 income in Michigan and $10,000 in Ohio would result in lower taxes than $30,000 income in Michigan and a $10,000 loss in Ohio, even though the total income in both cases is the same. And this would be true even if the tax rates in both states were identical.\"", "topk_rank": 1 }, { "id": "512151", "score": 0.7608652710914612, "text": "Just from my own experience (I am not an accountant): In addition to counting as 'business income' (1040 line 12 [1]) your $3000 (or whatever) will be subject to ~15% self-employment tax, on Schedule SE. This carries to your 1040 line ~57, which is after all your 'adjustments to income', exemptions, and deductions - so, those don't reduce it. Half of the 15% is deductible on line ~27, if you have enough taxable income for it to matter; but, in any case, you will owe at least 1/2 of the 15%, on top of your regular income tax. Your husband could deduct this payment as a business expense on Schedule C; but, if (AIUI) he will have a loss already, he'll get no benefit from this in the current year. If you do count this as income to you, it will be FICA income; so, it will be credited to your Social Security account. Things outside my experience that might bear looking into: I suspect the IRS has criteria to determine whether spousal payments are legit, or just gaming the tax system. Even if your husband can't 'use' the loss this year, he may be able to apply it in the future, when/if he has net business income. [1] NB: Any tax form line numbers are as of the last I looked - they may be off by one or two.", "topk_rank": 2 }, { "id": "462184", "score": 0.7546753287315369, "text": "In no ways. Both will be reported to the members on their K1 in the respective categories (or if it is a single member LLC - directly to the individual tax return). The capital gains will flow to your personal Schedule D, and the business loss to your personal Schedule C. On your individual tax return you can deduct up to 3K of capital losses from any other income. Business loss is included in the income if it is active business, for passive businesses (like rental) there are limitations.", "topk_rank": 3 }, { "id": "502267", "score": 0.7503440976142883, "text": "\"I don't believe it makes a difference at the federal level -- if you file taxes jointly, gains, losses, and dividends appear on the joint tax account. If you file separately, I assume the tax implications only appear on the owner's tax return. Then the benefits might outweigh the costs, but only if you correctly predict market behavior and the behavior of your positions. For example, lets say you lose 30k in the market in one year, and your spouse makes 30k. If you're filing jointly, the loss washes out the gain, and you have no net taxes on the investment. If you're filing separately, you can claim 3k in loss (the remaining 27k in loss is banked to future tax years), but your spouse pays taxes on 30k in gain. Where things get more interesting is at the state level. I live in a \"\"community property state,\"\" where it doesn't matter whether you have separate accounts or not. If I use \"\"community money\"\" to purchase a stock and make a million bucks, that million bucks is shared by the two of us, whether the account is in my name our in our name. income during the marriage is considered community property. However property you bring into the marriage is not. And inheritances are not community property -- until co-mingled. Not sure how it works in other states. I grew up in what's called an \"\"equitable property state.\"\"\"", "topk_rank": 4 }, { "id": "55500", "score": 0.7494544386863708, "text": "If the business activities are closely related you could combine them into a single Schedule C, but in your case it sounds like it should be two separate Schedule C's. The loss from one will offset profit from the other, and your self-employment and income taxes will be based on the net of the two businesses. Any business can generate losses, make sure your expenses are reasonable and documented, there are plenty of resources out there for helping you decide which expenses are proper for each business. There is some truth to the warning that not showing profit in 2/5 of years can raise flags at the IRS, and they may deem your business a hobby, which disallows losses. That is not a hard rule, legitimate businesses can lose money for years on end without issue, if you're trying to make money at it, you'll likely be fine.", "topk_rank": 5 }, { "id": "137251", "score": 0.7492144107818604, "text": "You are correct. She cannot claim the initial loss of $1,000 on her taxes, she can only report the $500 profit. However, the IRS does allow her to add the $1,000 loss to the basis cost of her replacement shares. e.g.", "topk_rank": 6 }, { "id": "280538", "score": 0.7471337914466858, "text": "In some circumstances losses from self-employment can be offset against total income and/or capital gains. If this applies to you may be able to claim back some of the tax taken by PAYE from your day job. You can also to some extent carry the loss backwards into previous tax years or forward into the next one if you can't use it fully this year. HMRC have some information available on the current rules: When you can claim losses You can claim: But You can’t claim:", "topk_rank": 7 }, { "id": "14255", "score": 0.7465658783912659, "text": "Yes you can claim your business deductions if you are not making any income yet. But first you should decide what structure you want to have for your business. Either a Company structure or a Sole Trader or Partnership. Company Structure If you choose a Company Structure (which is more expensive to set up) you would claim your deductions but no income. So you would be making a loss, and continue making losses until your income from the business exceed your expenses. So these losses will remain inside the Company and can be carried forward to future income years when you are making profits to offset these profits. Refer to ATO - Company tax losses for more information. Sole Trader of Partnership Structure If you choose to be a Sole Trader or a Partnership and your business makes a loss you must check the non-commercial loss rules to see if you can offset the loss against your income from other sources, such as wages. In order to offset your business losses against your other income your business must pass one of these tests: If you don't pass any of these tests, which being a start-up you most likely won't, you must carry forward your business losses until an income year in which you do pass one of the tests, then you can offset it against your other income. This is what differentiates a legitimate business from someone having a hobby, because unless you start making at least $20,000 in sales income (the easiest test to pass) you cannot use your business losses against your other income. Refer to ATO - Non-commercial losses for more information.", "topk_rank": 8 }, { "id": "360925", "score": 0.7459921836853027, "text": "With your income so high, your marginal tax rate should be pretty easy to determine. You are very likely in the 33% tax bracket (married filing jointly income range of $231,450 to $413,350), so your wife's additional income will effectively be taxed at 33% plus 15% for self-employment taxes. Rounding to 50% means you need to withhold $19,000 over the year (or slightly less depending on what business expenses you can deduct). You could use a similar calculation for CA state taxes. You can either just add this gross additional amount to your withholdings, or make an estimated tax payment every quarter. Any difference will be made up when you file your 2017 taxes. So long as you withhold 100% of your total tax liability from last year, you should not have any underpayment penalties.", "topk_rank": 9 }, { "id": "192516", "score": 0.7421794533729553, "text": "\"I am going to keep things very simple and explain the common-sense reason why the accountant is right: Also, my sister in law owns a small restaurant, where they claim their accountant informed them of the same thing, where a portion of their business purchases had to be counted as taxable personal income. In this case, they said their actual income for the year (through their paychecks) was around 40-50K, but because of this detail, their taxable income came out to be around 180K, causing them to owe a huge amount of tax (30K ish). Consider them and a similarly situated couple that didn't make these purchases. Your sister in law is better off in that she has the benefit of these purchases (increasing the value of her business and her expected future income), but she's worse off because she got less pay. Presumably, she thought this was a fair trade, otherwise she wouldn't have made those purchases. So why should she pay any less in taxes? There's no reason making fair trades should reduce anyone's tax burden. Now, as the items she purchased lose value, that will be a business loss called \"\"depreciation\"\". That will be deductible. But the purchases themselves are not, and the income that generated the money to make those purchases is taxable. Generally speaking, business gains are taxable, regardless of what you do with the money (whether you pay yourself, invest it, leave it in the business, or whatever). Generally speaking, only business losses or expenses are deductible. A purchase is an even exchange of income for valuable property -- even exchanges are not deductions because the gain of the thing purchased already fairly compensates you for the cost. You don't specify the exact tax status of the business, but there are really only two types of possibilities. It can be separately taxed as a corporation or it can be treated essentially as if it didn't exist. In the former case, corporate income tax would be due on the revenue that was used to pay for the purchases. There would be no personal income tax due. But it's very unlikely this situation applies as it means all profits taken out of the business are taxed twice and so small businesses are rarely organized this way. In the latter case, which is almost certainly the one that applies, business income is treated as self-employment income. In this case, the income that paid for the purchases is taxable, self-employment income. Since a purchase is not a deductible expense, there is no deduction to offset this income. So, again, the key points are: How much she paid herself doesn't matter. Business income is taxable regardless of what you do with it. When a business pays an expense, it has a loss that is deductible against profits. But when a business makes a purchase, it has neither a gain nor a loss. If a restaurant buys a new stove, it trades some money for a stove, presumably a fair trade. It has had no profit and no loss, so this transaction has no immediate effect on the taxes. (There are some exceptions, but presumably the accountant determined that those don't apply.) When the property of a business loses value, that is usually a deductible loss. So over time, a newly-purchased stove will lose value. That is a loss that is deductible. The important thing to understand is that as far as the IRS is concerned, whether you pay yourself the money or not doesn't matter, business income is taxable and only business losses or expenses are deductible. Investments or purchases of capital assets are neither losses nor expenses. There are ways you can opt to have the business taxed separately so only what you pay yourself shows up on your personal taxes. But unless the business is losing money or needs to hold large profits against future expenses, this is generally a worse deal because money you take out of the business is taxed twice -- once as business income and again as personal income. Update: Does the business eventually, over the course of the depreciation schedule, end up getting all of the original $2,000 tax burden back? Possibly. Ultimately, the entire cost of the item is deductible. That won't necessarily translate into getting the taxes back. But that's really not the right way to think about it. The tax burden was on the income earned. Upon immediate replacement, hypothetically with the exact same model, same cost, same 'value', isn't it correct that the \"\"value\"\" of the business only went up by the amount the original item had depreciated? Yes. If you dispose of or sell a capital asset, you will have a gain or loss based on the difference between your remaining basis in the asset and whatever you got for the asset. Wouldn't the tax burden then only be $400? Approximately, yes. The disposal of the original asset would cause a loss of the difference between your remaining basis in the asset and what you got for it (which might be zero). The new asset would then begin depreciating. You are making things a bit more difficult to understand though by focusing on the amount of taxes due rather than the amount of taxable gain or loss you have. They don't always correlate directly (because tax rates can vary).\"", "topk_rank": 10 }, { "id": "176054", "score": 0.7401093244552612, "text": "Firstly if your Partnership makes less than $20,000 in revenue (before expenses are applied), then you cannot claim any net losses from the Partnership against your other income. However, you still need to include the Partnership details in your Tax Return showing your portion on the net loss, and you will also be required to submit a separate Tax Return for the Partnership showing the net losses. Any net losses from the Partnership will be carried forward to future tax years and can be used as a deduction against your Partnership Income when and if it does start to make a profit.", "topk_rank": 11 }, { "id": "446553", "score": 0.7360776662826538, "text": "When your debt is forgiven, you have to consider the amount written off as an ordinary income item (with the exclusion of the debt originated from the purchase of primary home). If you're trying to write the debt off from your taxes - then it won't work. Even if you can expense the debt forgiveness, you will incur tax liability on your personal taxes side, and in addition you'll be out of cash in your business. So basically you'll end up paying it with after tax money, exactly the thing you're trying to avoid. In addition, you're dealing with related persons here, which means that the loss deduction might not be allowed (depends on the actual details of the transaction), so you might actually end up paying more taxes with this scheme that just paying off the loan directly (if your business pays taxes separately from your person). A loss on the sale or exchange of property between related persons is not deductible. This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. For the list of related persons, see Related persons next.", "topk_rank": 12 }, { "id": "160313", "score": 0.7339860796928406, "text": "First, the SSN isn't an issue. She will need to apply for an ITIN together with tax filing, in order to file taxes as Married Filing Jointly anyway. I think you (or both of you in the joint case) probably qualify for the Foreign Earned Income Exclusion, if you've been outside the US for almost the whole year, in which cases both of you should have all of your income excluded anyway, so I'm not sure why you're getting that one is better. As for Self-Employment Tax, I suspect that she doesn't have to pay it in either case, because there is a sentence in your linked page for Nonresident Spouse Treated as a Resident that says However, you may still be treated as a nonresident alien for the purpose of withholding Social Security and Medicare tax. and since Self-Employment Tax is just Social Security and Medicare tax in another form, she shouldn't have to pay it if treated as resident, if she didn't have to pay it as nonresident. From the law, I believe Nonresident Spouse Treated as a Resident is described in IRC 6013(g), which says the person is treated as a resident for the purposes of chapters 1 and 24, but self-employment tax is from chapter 2, so I don't think self-employment tax is affected by this election.", "topk_rank": 13 }, { "id": "19183", "score": 0.73325115442276, "text": "\"If your sole proprietorship losses exceed all other sources of taxable income, then you have what's called a Net Operating Loss (NOL). You will have the option to \"\"carry back\"\" and amend a return you filed in the last 2 years where you owed tax, or you can \"\"carry forward\"\" the losses and decrease your taxes in a future year, up to 20 years in the future. For more information see the IRS links for NOL. Note: it's important to make sure you file the NOL correctly so I'd advise speaking with an accountant. (Especially if the loss is greater than the cost of the accountant...)\"", "topk_rank": 14 }, { "id": "133235", "score": 0.7322607636451721, "text": "\"Do I understand correctly, that we still can file as \"\"Married filing jointly\"\", just add Schedule C and Schedule SE for her? Yes. Business registration information letter she got once registered mentions that her due date for filing tax return is January 31, 2016. Does this prevent us from filing jointly (as far as I understand, I can't file my income before that date)? IRS sends no such letters. IRS also doesn't require any registration. Be careful, you might be a victim to a phishing attack here. In any case, sole proprietor files a regular individual tax return with the regular April 15th deadline. Do I understand correctly that we do not qualify as \"\"Family partnership\"\" (I do not participate in her business in any way other than giving her money for initial tools/materials purchase)? Yes. Do I understand correctly that she did not have to do regular estimated tax payments as business was not expected to generate income this year? You're asking or saying? How would we know what she expected? In any case, you can use your withholding (adjust the W4) to compensate.\"", "topk_rank": 15 }, { "id": "408112", "score": 0.7319630980491638, "text": "\"Thinking about the business overall, your \"\"profit\"\" would be: Since this is a sole proprietorship, the taxes are going to depend on your marginal tax rate. If you file jointly, your income will determine what your marginal tax rate is. If you file separately, there likely wouldn't be any tax on that income since it's less than the standard deduction, but you lose benefits of filing jointly (combined exemptions, etc.) So think about how much she would charge, what expenses are involved (before taxes), what the taxes would be on that profit, and what the \"\"opportunity costs\"\" are - is it worth time away from the kids/hobbies/etc. for that hobby? How much should a hobby business make to make it worth the effort of charging for such services? That would fall in the \"\"expense\"\" section. Are you talking about the actual costs (tax prep, etc.) or just the hassle of collecting, accounting, etc. Certainly those are a consideration but it's harder to quantify that. If you can come up with some sort of cost then certainly it would fit in the overall value equation. I'm not sure using additional Social Security benefits as a gauge is helpful, since you wouldn't see those benefits until you're of retirement age (according to SS) and a lot can happen between now and then.\"", "topk_rank": 16 }, { "id": "43494", "score": 0.7308629155158997, "text": "There would be no point to claim the gift exemption because a gift from a spouse that you file jointly with wouldn't be considered income. It would be the same as if you moved money from one bank account to another.", "topk_rank": 17 }, { "id": "135073", "score": 0.7300487756729126, "text": "Once the business is shut down, you'll need to show that the corporation is in bankruptcy and the amounts are unrecoverable. You can then report it as investment loss. I suggest talking to a tax adviser (EA/CPA licensed in your State), and maybe an attorney, on what the specific technical details are.", "topk_rank": 18 }, { "id": "207788", "score": 0.7299450635910034, "text": "\"You have a sequence of questions here, so a sequence of answers: If you stopped at the point where you had multiple wins with a net profit of $72, then you would pay regular income tax on that $72. It's a short term capital gain, which does not get special tax treatment, and the fact that you made it on multiple transactions does not matter. When you enter your next transaction that takes the hypothetical loss the question gets more complicated. In either case, you are paying a percentage on net gains. If you took a two year view in the second case and you don't have anything to offset your loss in the second year, then I guess you could say that you paid more tax than you won in the total sequence of trades over the two years. Although you picked a sequence of trades where it does not appear to play, if you're going to pursue this type of strategy then you are likely at some point to run into a case where the \"\"wash sale\"\" rules apply, so you should be aware of that. You can find information on this elsewhere on this site and also, for example, here: http://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02 Basically these rules require you to defer recording a loss under some circumstances where you have rapid wins and losses on \"\"substantially identical\"\" securities. EDIT A slight correction, you can take part of your losses in the second year even if you have no off-setting gain. From the IRS: If your capital losses exceed your capital gains, the amount of the excess loss that you can claim on line 13 of Form 1040 to lower your income is the lesser of $3,000, ($1,500 if you are married filing separately)\"", "topk_rank": 19 } ]
439	Do I need a Like-Kind Exchange when selling a personal vehicle for a company car	[ { "id": "202630", "score": 0.8379067182540894, "text": "You cannot do a like-kind (Sec. 1031) exchange for personal property, only for business/investment property. Since you said that you traded in your personal car - no like-kind exchange is possible. Also, since the new car doesn't belong to you - you didn't actually perform any exchange. You sold your old car, but you didn't buy a new one. If Turbo-Tax suggests you to fill the exchange form - you must have entered something wrong to make it think there was an exchange. Check your entries again, specifically - check if you entered that you purchased a new car instead of the old one, since you didn't. See an example of where to start looking here." } ]	[ { "id": "309758", "score": 0.7841037511825562, "text": "If you had an agreement with your friend such that you could bring back a substantially similar car, you could sell the car and return a different one to him. The nature of shares of stock is that, within the specified class, they are the same. It's a fungible commodity like one pound of sand or a dollar bill. The owner doesn't care which share is returned as long as a share is returned. I'm sure there's a paragraph in your brokerage account terms of service eluding to the possibility of your shares being included in short sale transactions.", "topk_rank": 0 }, { "id": "30394", "score": 0.7675025463104248, "text": "\"I don't think that there is a generic answer that will apply to this question across all goods. The answer depends on how the related businesses work, how much insight you have into the true value of the goods, and probably other things. Your car example is a good one that shows multiple options - There are dealers who will buy as a single transaction, sell as a single transaction, or do a simultaneous sell with trade-in. I had a hot tub once, on the other hand, where I could find people who would do a trade-in, but there was no dealer who would just buy my used tub. There's not much parallel between the car and the tub because the options available are very different. To the extent that there is a generic answer, I generally agree with the point in @keshlam's answer about trying to avoid entrapment, but I take a slightly different view. If you want to get your best deal, you need to have an idea going into the process of what you want in net and keep focused on meeting your goal. If for some reason, it's convenient for the dealer to \"\"move money around\"\" between the new car and the trade-in, I'm ok with that as long as I'm getting what I want out of the deal. If possible, I prefer to deal with both transactions at once because it's simpler. At the same time, I'm willing to remove the trade-in from the deal if I'm not getting what I want. (Threatening to do so can also give you some information about where the dealer really puts the value between the new car and trade-in since, if you threaten to pull the trade-in, the price on the car will probably change in response.)\"", "topk_rank": 1 }, { "id": "201122", "score": 0.7584707140922546, "text": "Yes, but then either of you will need the other's permission to sell the car. I strongly recommend you get an agreement on that point, in writing, and possibly reviewed by a lawyer, before entering into this kind of relationship. (See past discussions of car titles and loan cosigners for some examples of how and why this can go wrong.) When doung business with friends, treating it as a serious business transaction is the best way to avoid ruining the friendship.", "topk_rank": 2 }, { "id": "338439", "score": 0.7563045024871826, "text": "Bartering is a tricky discussion. Yes, it definitely applies when you are self-employed and do a job that you would charge anyone else for, but what if you are helping a friend in your spare time? If you receive something in exchange, the value of the item you received would be your income, but what if you don't receive anything in exchange? If the company bought a computer that they loan to you to do occasional work for them, there's no reason you couldn't take the computer home and have that company retain ownership of the property. They could still expense the depreciation of the computer without giving it to you. If it were a car though, you would have to count mileage for personal use as income. What if you exchange occasional tech support for the use of an empty desk and Internet connection? As long as they aren't renting desks for money to others, there's probably no additional marginal cost to them if they allow you to use the space, so the fair market value question breaks down.", "topk_rank": 3 }, { "id": "261673", "score": 0.7554787397384644, "text": "\"Unfortunately, it's not unusual enough. If you're looking for a popular car and the dealer wants to make sure they aren't holding onto inventory without a guarantee for sale, then it's a not completely unreasonable request. You'll want to make sure that the deposit is on credit card, not cash or check, so you can dispute if an issue arises. Really though, most dealers don't do this, requiring a deposit, pre sale is usually one of those hardball negotiating tactics where the dealer wrangles you into a deal, even if they don't have a good deal to make. Dealers may tell you that you can't get your deposit back, even if they don't have the car you agreed on or the deal they agreed to. You do have a right for your deposit back if you haven't completed the transaction, but it can be difficult if they don't want to give you your money back. The dealer doesn't ever \"\"not know if they have that specific vehicle in stock\"\". The dealer keeps comprehensive searchable records for every vehicle, it's good for sales and it's required for tax records. Even when they didn't use computers for all this, the entire inventory is a log book or phone call away. In my opinion, I would never exchange anything with the dealer without a car actually attached to the deal. I'd put down a deposit on a car transfer if I were handed a VIN and verified that it had all the exact options that we agreed upon, and even then I'd be very cautious about the condition.\"", "topk_rank": 4 }, { "id": "205984", "score": 0.7435048818588257, "text": "Check the employee-friends-and-family sales contract, which your friend should be able to get quite easily. There is almost always a minimum holding period before resale clause, specifically to prevent this kind of scenario. Without that clause, the dealers tend to riot... Also, remember that a car loses a huge percentage of its value the moment it leaves the lot. Odds are that you'd be doing well to find someone willing to buy it from you at the discounted price. If you don't want this car, ask your friend not to buy it and get one you do want. Seriously.", "topk_rank": 5 }, { "id": "581380", "score": 0.7434054613113403, "text": "You continue with this form. The fact that the trade in value is less than market value doesn't mean that you don't have taxable income from the sale. Since you depreciated the car before selling it, you need to compare the trade in value not to the market value, but to your cost basis, which may be lower.", "topk_rank": 6 }, { "id": "491897", "score": 0.7401869893074036, "text": "\"You can greatly reduce the risk if you can line up a buyer prior to purchasing the car. That kind of thing is common in business, one example is drop shipping. Also there are sales companies that specialize in these kinds of things bringing manufacturers of goods together with customers. The sales companies never take delivery of the product, just a commission on the sales. From this the manufacturers are served as they have gained a customer for their goods. The buying company is served as they can make a \"\"better\"\" end product. The two parties may have not been brought together had it not been for the sales company so on some level both are happy to pay for the service. Can you find market inequalities and profit from them? Sure. I missed a great opportunity recently. I purchased a name brand shirt from a discount store for $20. Those shirts typically sell on ebay for $80. I should have cleaned out that store's inventory, and I bet someone else did as by the time I went back they were gone. That kind of thing was almost risk-less because if the shirts did not sell, I could simply return them for the full purchase price. That and I can afford to buy a few hundred dollars worth of shirts. Can you afford to float 45K CDN? What if it takes a year to sell the car? What if the economy goes sour and you are left \"\"holding the bag\"\"? Why are not car dealers doing exactly what you propose? Here in the US this type of thing is called \"\"horse trading\"\" and is very common. I've both lost and made money on these kind of deals. I would never put a significant amount of my net worth at risk.\"", "topk_rank": 7 }, { "id": "78865", "score": 0.738631546497345, "text": "I have sold cars before to individuals and always just received cash. I would think as long as the amount is less than $10,000.00 and the buyer is serious they will get there with the cash. Of course there is no possible way to guarantee the cash will not be counterfeit.", "topk_rank": 8 }, { "id": "392607", "score": 0.7360280752182007, "text": "Most companies that have employee discounts have policies to prevent exactly this. Sometimes they will say that you can only use the company discount for products that you intend to use yourself, they'll specifically ban buying things for friends. Of course enforcing such a rule can be difficult, but a car is a big enough purchase that if they have such a rule, they're likely to pay attention. Other times they try to discourage letting friends use your discount by having rules that make it awkward. Like I used to work for a furniture company that said you had to pick up the furniture personally at the office where you worked. So if you wanted to buy a sofa for your brother who lived in another state, you'd have to pay to ship it, and probably wipe out most of the savings from the employee discount. My daughter's employer says you have to show your employee ID when you make the purchase and then they deduct it from your next paycheck. So you'd have to get your friend to pay you back, maybe loan them your ID if they want to pick it out, which would get awkward. Etc. Assuming the company doesn't care if you buy with an employee discount and re-sell, or their rules are lax enough that you can get away with it, I'm not aware of any law that would stop you. In general there aren't any laws against you re-selling things you've bought. People have garage sales and sell used cars and the like all the time. (There are specific exceptions. Like you can't re-sell prescription drugs.)", "topk_rank": 9 }, { "id": "287086", "score": 0.7354693412780762, "text": "On the off chance that I am not wrong, at that point you should be included money and you are proposing to get it by offering your garbage auto. This is genuinely a smart thought, as there are a large number of auto merchants who demonstrate their enthusiasm for old autos. Your auto specialist needs to have disclosed to you the money for garbage autos Tampa which couldn't be more than two or three hundred dollars.", "topk_rank": 10 }, { "id": "101557", "score": 0.7316171526908875, "text": "\"In general, insurance payouts you receive in compensation for damage to your vehicle are not taxable income (see for instance this Nolo page). However, I don't see how that is related to your three bullet points about how your sister should buy her car. You can transfer the money to her in any way that's convenient to both of you. Whether the dealership will accept cash is something you'll have to ask them about, but my impression is most dealers are eager to accept cash. As long as the car you are getting from her is not worth substantially more than the $8500 you're giving her, I don't see that you'll be in trouble income-tax-wise. As mentioned in the question you linked to, you can give each other up to $14k per year tax-free. So if you give her a $8500 and she gives you a car worth roughly the same amount, no problem. If you actually do it as a sale, even better, since then the only amount that will count as a gift to either of you is whatever one party gets above and beyond the fair value of the car. (That is, if the car is worth $10000 but she sells it to you for $8500, she effectively gave you a gift of $1500 in car value. If it's worth $7000 but she sells it to you for $8500, you gave her a gift of $1500 in cash.) As Rocky pointed out in a comment, if you do a sale it may be subject to sales tax depending on what state you're in. In practice it is very common for people to not deal with sales tax in informal transactions like this between family members, but you do owe it if your state's laws require it, and the state could theoretically come after you for it. Another edit: I see from your comment you are in Michigan. According to this page from the Michigan Secretary of State, \"\"no tax is due if you purchase a vehicle from an immediate family member\"\". So you would not owe sales tax if you do it as a sale.\"", "topk_rank": 11 }, { "id": "215225", "score": 0.7262765765190125, "text": "Trade-in values are generally below what you can get in a private sale. To directly answer your question, you should sell the crossover yourself and use the balance to purchase your new vehicle. I would encourage you to use the $9k to finance directly without a lease, especially if you are planning on financing after the lease term. The lease will not save you money over the time you drive the vehicle in this case, and worse, will likely expose you to risk of having to pay additional fees if you break certain terms in the lease (mileage, wear and tear, etc) Best option mathematically is to use the $9k to purchase a vehicle for cash. This provides the lowest total cost of ownership. Even if you are afraid of purchasing a lemon, leasing a vehicle is awfully expensive insurance against that possibility. You would have to rack up some significant repairs to justify the cost of the lease vs cash over the term of operating the vehicle.", "topk_rank": 12 }, { "id": "446001", "score": 0.726092517375946, "text": "My suggestion would be to keep it. The value of a new car is that you get to drive it around when it's still new and shiny, and that you know its history. If you maintain it in good condition, both mechanically and cosmetically, then you can have both of those benefits for the life of the car. Your question merges the old car sale and new car purchase transactions together, but that's not correct. The value of your 2010 car has no relationship to the value of any new car you might buy, except incidentally through the market forces that act on each. The car dealership is likely to be skilled at making you feel like your most important criteria are satisfied, but they will try to construct the deal to maximize the money you pay them while making you feel like you're the one maximizing your value. Also note that the dealership cannot give you maximum value for your car, because it costs them money to sell it and they take all the risk. Some of the difference between typical direct-sale and trade-in prices is the commission you are paying them to both sell it for you and absorb the risks in the transaction.", "topk_rank": 13 }, { "id": "239167", "score": 0.7244727611541748, "text": "Break the transactions into parts. Go to your bank or credit union and get a loan commitment. When applying for loan get the maximum amount they will let you borrow assuming that you will no longer own the first car. Take the car to a dealer and get a written estimate for selling the car. Pick one that gives you an estimate that is good for a week or ten days. You now know a data point for the trade-in value. Finally go to the dealer where you will buy the replacement car. Negotiate the price, tell them you don't need financing and you will not be trading in the car. Get all you can regarding rebates and other special incentives. Once you have a solid in writing commitment, then ask about financing and trade in. If they beat the numbers you have regarding interest rate and trade-in value accept those parts of the deal. But don't let them change anything else. If you keep the bank financing the dealer will usually give you a couple of days to get a check. If you decide to ell the car to the first dealer do so as soon as you pick up the replacement car. If you try to start with the dealer you are buying the car from they will keep adjusting the rate, length of loan, trade-in value, and price until you have no idea if you are getting a good deal.", "topk_rank": 14 }, { "id": "265167", "score": 0.7236391305923462, "text": "I don't believe you can do that. From the IRS: Finally, certain types of property are specifically excluded from Section 1031 treatment. Section 1031 does not apply to exchanges of: I highlighted the relevant items for emphasis.", "topk_rank": 15 }, { "id": "68631", "score": 0.7230048775672913, "text": "Yes, maybe. Sometimes the mother company (that makes the car) covers a bit of the loss that comes from the super-offer loan, so the dealer loses a bit less. But generally, you are right. you should be able to talk them into some rebate that gets you around the given number, depending on how good you are a negotiator (and how urgently they need to sell a car)", "topk_rank": 16 }, { "id": "416606", "score": 0.7210274338722229, "text": "\"I'm going to ignore your numbers to avoid spending the time to understand them. I'm just going to go over the basic moving parts of trading an upside down car against another financed car because I think you're conflating price and value. I'm also going to ignore taxes, and fees, and depreciation. The car has an acquisition cost (price) then it has a value. You pay the price to obtain this thing, then in the future it is worth what someone else will pay you. When you finance a car you agree to your $10,000 price, then you call up Mr. Bank and agree to pay 10% per year for 5 years on that $10,000. Mr. Banker wires over $10,000 and you drive home in your car. Say in a year you want a different car. This new car has a price of $20,000, and wouldn't you know it they'll even buy your current car from you. They'll give you $7,000 to trade in your current car. Your current car has a value of $7,000. You've made 12 payments of $188.71. Of those payments about $460 was interest, you now owe about $8,195 to Mr. Banker. The new dealership needs to send payment to Mr. Banker to get the title for your current car. They'll send the $7,000 they agreed to pay for your car. Then they'll loan you the additional $1,195 ($8,195 owed on the car minus $7,000 trade in value). Your loan on the new car will be for $21,195, $20,000 for the new car and $1,195 for the amount you still owed on the old car after the dealership paid you $7,000 for your old car. It doesn't matter what your down-payment was on the old car, it doesn't matter what your payment was before, it doesn't matter what you bought your old car for. All that matters is how much you owe on it today and how much the buyer (the dealership) is willing to pay you for it. How much of this is \"\"loss\"\" is an extremely vague number to derive primarily because your utility of the car has a value. But it could be argued that the $1,195 added on to your new car loan to pay for the old car is lost.\"", "topk_rank": 17 }, { "id": "560325", "score": 0.7194049954414368, "text": "Not sure if it is the same in the States as it is here in the UK (or possibly even depends on the lender) but if you have any amount outstanding on the loan then you wouldn't own the vehicle, the loan company would. This often offers extra protection if something goes wrong with the vehicle - a loan company talking to the manufacturer to get it resolved carries more weight than an individual. The laon company will have an army of lawyers (should it get that far) and a lot more resources to deal with anything, they may also throw in a courtesy car etc.", "topk_rank": 18 }, { "id": "482056", "score": 0.7191439867019653, "text": "\"Also consider how cars fare under your ownership: Does your current car... If any of the answers to these questions are \"\"Yes\"\", you're probably going to get hosed with fees when you return the car.\"", "topk_rank": 19 } ]
442	Why are earning credit card rewards often tied to groceries and gas?	[ { "id": "92144", "score": 0.7935253381729126, "text": "Every reward program has to have a funding source. If the card gives you x percent back on all purchases. That means that their business is structured to entice you to pump more transactions through the system. Either their other costs are lower, or the increased business allows them to make more money off of late fees, and interest. If the card has you earn extra points for buying a type of item or from a type of store (home stores improvement in the Spring), they are trying to make sure you use their card for what can be a significant amount of business during a small window of time. Sometimes they cap it by saying 5% cash back at home improvement stores during the spring but only on the first $1500 of purchases. That limits it to $75 maximum. Adding more business for them, makes more money for them. Groceries and gas are a good year round purchase categories. Yes there is some variation depending on the season, and the weather, but overall there is not an annual cliff once the season ends. Gas and groceries account for thousands of dollars a year these are not insignificant categories, for many families are recession proof. If they perceive a value from this type of offer they will change their buying behavior. My local grocery store has a deal with a specific gas station. This means that they made a monetary deal. Because you earn points at the grocery store and spend points at the gas station, the grocery store is paying some compensation to the gas station every time you use points. The gas station must be seeing an increase in business so theoretically they don't get 100% compensation from the grocery store. In cases where credit cards give airline miles, the credit card company buys the miles from the airline at a discount because they know that a significant number of miles will never be used." }, { "id": "355592", "score": 0.7085177302360535, "text": "\"There absolutely is a specific model that makes this so popular with so many credit card companies, and that model is \"\"per transaction fees\"\". Card companies also receive cost-sharing incentives from certain merchants. There is also a psychological reasoning as an additional incentive. When you want to accept credit cards as a source of payment as a business, you generally have three kinds of fees to pay: monthly/yearly subscription fees, percentage of transaction fee, and per transaction fee. The subscription fees can be waived and sometimes are expressed as a \"\"minimum cost\"\", so the business pays a certain amount whether you actually have people use credit cards or not. Many of these fees don't actually make it to the credit card companies, as they just pay the service providers and middle-men processing companies. The percentage of transaction fee means that the business accepting payment via credit card must pay a percentage usually ranging from 1-3% of the total transactions they accept. So if they get paid $10,000 a month by customers in the form of credit cards, the business pays out $100-300 a month to the credit card processor - a good portion of which will make it back to the credit card issuing company, and is a major source of income for them. The per transaction fee means that every time a transaction is run involving a card, a set fee is incurred by the business (which is commonly anywhere from $0.05 to $0.30 per transaction). If that $10,000 a month business mentioned previously had 10 customers paying $1,000 each at $0.10 a transaction, that's only $1 in fees to the credit card processors/companies. But if instead that business was a grocery store with an average transaction of $40, that's $25 in fees. This system means that if you are a credit card company and want to encourage people to make a specific kind of purchase, you should encourage purchases that people make many times for relatively small amounts of money. In a perfect world you'd want them to buy $1 bottles of water 5 times a day with their credit card. If the card company had 50,000 card holders doing this, at the end of 1 year the company would have $91,250,000 spread across 91,250,000 transactions. The card company might reasonably make $0.05 per transaction and %1 of the purchase total. The Get Rewarded For Drinking More campaign might earn the card company $912,500 in percentage fees and over $4.5 million in transaction fees. Yet the company would only have to pay 3% in rewards from the percentage fees, or $2.7 million, back to customers. If the card company had encouraged using your credit card for large once-yearly purchases, they would actually pay out more money in rewards than they collect in card-use fees. Yet by encouraging people to make small transactions very often the card company earns a nice net-income even if absolutely every customer pays their balance in full, on time, and pays no annual/monthly fees for their card - which obviously does not happen in the real world. No wonder companies try so hard to encourage you to use your card all the time! For card companies to make real money they need you to use your credit card. As discussed above, the more often you use the card the better (for them), and there can be a built-in preference for small repeated transactions. But no matter what the size of transaction, they can't make the big bucks if you don't use the card at all! Selling your personal information isn't as profitable if they don't have in-depth info on you to sell, either. So how do they get you to make that plastic sing? Gas and groceries are a habit. Most people buy one or the other at least once a weak, and a very large number of us make such purchases multiple times a week. Some people even make such purchases multiple times a day! So how do people pay for such transactions? The goal of the card companies is to have you use their product to pay as much as possible. If you pay for something regularly you'll keep that card in your wallet with you, rather than it getting lost in a drawer at home. So the card companies want you to use your card as a matter of habit, too. If you use a card to buy for gas and groceries, why wouldn't you use it for other things too? Lunch, dinner, buying online? If the card company pays out more and makes less for large, less-regular purchases, then the ideal for them is to have you use the card for small regular purchase and yet still have you use the card for larger infrequent purchases even if you get reduced/no rewards. What better way to achieve all these goals than to offer special rewards on gas and groceries? And because it's not a one-time purchase, you aren't so likely to game the system; no getting that special 5% cash-back card, booking your once-per-decade dream vacation, then paying it off and cancelling it soon after - which would actually make the card company lose money on the deal. In the end, credit card companies as a whole have a business model that almost universally prefers customers who use their products regularly and preferably for small amounts a maximum number of times. They want to reduce their expenses (like rewards paid out) while maximizing their revenue. They haven't figured out a better way to do all of this so well as to encourage people to use their cards for gas and groceries - everything else seems like a losing proposition in comparison. The only time this preference differs is when they can avoid paying some or all of the cost of rewards, such as when the merchants themselves honor the rewards in exchange for reduced or zero payment from the card companies. So if you use an airline card that seems to give you 10% back in airline rewards? Well, that's probably a great deal for the card company if the airline provides that reward at their own expense to try to boost business. The card company keeps the transaction-related fees and pays out almost nothing in rewards - the perfect offer (for them)! And this assumes no shenanigans like black-out periods, \"\"not valid with any other offers\"\" rewards like on cars where only a fool pays full MSRP (and sometimes the rewards are tagged in this sort of way, like not valid on sale/clearance items, etc), expiring rewards, the fact that they know not everyone uses their rewards, annual fees that are greater than the rewards you'll actually be obtaining after accounting for all the other issues, etc. And credit card industries are known for their shenanigans!\"" } ]	[ { "id": "369083", "score": 0.711859941482544, "text": "Their income is from the two sources you mentioned - they charge the merchants for each use, and they make interest money on people who carry a balance. This is one reason a lot of merchants will be willing to give you a discount if you pay cash - they don't have to give a portion to VISA or MasterCard. I wouldn't be able to speak to the relative proportions between the two income sources, but when many cards are at 30% interest for balances carried, and many people have tens of thousands of dollars owed on their cards, the interest income is not insignificant. They'll also charge interest immediately on cash advances. A few cards also make money off of annual fees, although I'd suspect this is not very much in the full scheme of things. The way to get the most out of a card, is to always pay it off fully at the end of each month.", "topk_rank": 0 }, { "id": "140500", "score": 0.7117141485214233, "text": "Credit card companies organize types of businesses into different categories. (They charge different types of businesses different fees.) When a business first sets up their credit card processing merchant account, they need to specify the category. Here is a list of categories that Visa uses. Grocery stores and supermarkets are category number 5411. Other types of businesses, such as the examples you provided in your question, have a different category number. American Express simply looks at the merchant category code for each of your transactions and only gives you rewards for the ones in the grocery store category. It's all automated. They likely don't have a list of every grocery store in the US, and even if they did, they would probably not provide it to the public, for proprietary reasons. If you are in doubt about whether or not a particular store is in the grocery category, you'll just have to charge it to your card and see what happens. Often, the category of transaction will be shown for each transaction on your credit card's website.", "topk_rank": 1 }, { "id": "25701", "score": 0.7114478945732117, "text": "It could be a sunk cost. If you buy 5 gallons of vegetable oil it costs $50. Until you use up all the vegetable oil you dollars are tied up and cannot be spent on popcorn or any other good. So weigh if the convenience is more important than having the cash on hand for other purchases is another factor to consider", "topk_rank": 2 }, { "id": "54275", "score": 0.709316074848175, "text": "\"What's going on here is that Amazon/visa thinks that the money they will earn on average from irresponsible credit card users is more value than 50$ each. This is the same logic that is behind the cash back or airplane point bonuses many credit cards offer, or the \"\"apply and get a free 2-liter of soda\"\" that some stores offer. I would need more information about the card to say whether or not you should apply (What are the fees, if any? What is the interest rate? etc).\"", "topk_rank": 3 }, { "id": "299030", "score": 0.7092715501785278, "text": "There are lots of things to consider in addition to your questions. The rules changed in the US recently. I think you mean you will save more money. Your interest rate isn't likely to go up, but your principle will, so you will earn more interest income than before. I would wager it won't be a significant amount however. You can certainly earn a reward, either cash back, points, miles or something else. BUT the sticking point with earning things with your card is harder than before. Due to rules changes, merchants can now recuperate the fees they pay for accepting your credit card. Rewards cards have a higher fee than non-rewards cards (because banks aren't in charities). So now, depending on the merchant's choice, you could see a higher cost paying with a credit card (or a debit card) and that cost could wipe out your reward. And if your card has a fee, it has always been true that you need to evaluate the annual fee to confirm the benefit is more than paying for the fee. Additional advantages to credit cards", "topk_rank": 4 }, { "id": "433993", "score": 0.7091955542564392, "text": "If you go to a grocery store and purchase retail gift cards along with other products, and you pay with a credit card, your credit card company generally does not know what you spent the money on; they don't get an itemized receipt.* If this is the case with your rewards card, then yes, you would get the cashback reward on the gift cards, because all the credit card company knows is that you spent $100 at the grocery store; they don't know (or care, really) that $50 of it was for an Olive Garden gift card. This, of course, should be fairly easy to test. Buy the gift card, wait for your statement, and see if they included the purchase when calculating your rewards. * Note: I don't have an American Express card, but from some quick googling I see that it is possible that American Express does actually receive itemized billing details on your purchases from some merchants. If your grocery store is sending this data to AmEx, it is possible that the gift cards could be excluded from rewards. But again, I suggest you just test it out and see.", "topk_rank": 5 }, { "id": "94158", "score": 0.7090138792991638, "text": "A lot of big companies offer credit cards. And it makes total sense. For example, if you have a Macy's card, you get access to special discounts that you wouldn't normally get. It saves the consumer money and builds loyalty to the brand. Same for Southwest credit cards. It's a completely normal move. EDIT: Also, Uber doesn't actually have to do much - it's the issuing bank that manages the program. Most of the branded credit cards you see are Chase, BTW. Amazon and Southwest are both run by Chase.", "topk_rank": 6 }, { "id": "339648", "score": 0.7070547342300415, "text": "I'm not sure if you are including the use of credit cards in the intent of your quesiton. However, I will give you some good reasons I use them even when I can pay cash: 1) I get an interest free loan for almost 30 days as long as I don't carry balances. 2) I get a statement detailing where I am spending my money that is helpful for budgeting. I'd never keep track to this level of detail if I were using cash. 3) Many cards offer reward programs that can be used for cash back. 4) It helps maintain my credit rating for those times I NEED to buy something and pay it off over time (car, house, etc.) 5) Not so much an issue for me personally, but for people that live paycheck to paycheck, it might help to time your cash outflows to match up with your inflows. For a business, I think it is mostly a cash flow issue. That is, in a lot of B2B type businesses customers can pay very slowly (managing their own cash flows). So your revenue can sometimes lag quite a bit behind the expenses that were associated with them (e.g payroll). A business line of credit can smooth out the cash flow, especially for companies that don't have a lot of cash reserves.", "topk_rank": 7 }, { "id": "488127", "score": 0.7059183716773987, "text": "I would like to offer a different perspective here. The standard fee for a credit card transaction is typically on the order of 30 cents + 2.5% of the amount (the actual numbers vary, but this is the ballpark). This makes small charges frequently unprofitable for small merchants. Because of this they will often have minimum purchase requirements for credit/debit card payments. The situation changes for large retailers (think Wal-mart, Target, Safeway, Home Depot). I cannot find a citation for this right now, but large retailers are able to negotiate volume discounts from credit card companies (a guy who used to work in finance at Home Depot told me this once). Their transaction fees are MUCH lower than 30 cents + 2.5%. But you get the same reward points on your credit card/debit card regardless of where you swipe it. So my personal philosophy is: large chain - swipe away without guilt for any amount. Small merchant - use cash unless it's hundreds of dollars (and then they may give you a cash discount in that case). And make sure to carry enough cash for such situations. When I was a student, that was about $20 (enough for coffee or lunch at a small place).", "topk_rank": 8 }, { "id": "542864", "score": 0.7052814960479736, "text": "\"There are a couple pretty good answers here already, but I wanted to add that, depending on your location, many grocery stores sell gasoline. Gift cards for those grocery stores can be used for gas and groceries and usually do not include any fees. Since we all need to eat and most of us need to fill the tank on a regular basis, this seems like the best way to run up the bill without purchasing frivolous items. As another poster mentioned, pre-paying bills is another great way to go. Some places such as health clubs may even offer you a discount for paying in full, essentially \"\"earning\"\" you more money down the road.\"", "topk_rank": 9 }, { "id": "261016", "score": 0.7045692205429077, "text": "\"This is second hand information as I am not a millionaire, but I work with such people everyday and have an understanding of how they handle cash: The wealthy people don't. Simple. Definitely not if they don't have to. Cash is a tool to them that they use only if they get benefit of it being a cash transaction (one of my friends is a re-seller and he gets a 10% discount from suppliers for settling lines using cash). Everything else they place on a line of credit. For people who \"\"dislike\"\" credit cards and pay using ATM or debit cards might actually have a very poor understanding of leverage. I assure you, the wealthy people have a very good understanding of it! Frankly, wealthy people pay less for everything, but they deserve it because of the extreme amount of leverage they have built for themselves. Their APRs are low, their credit limits are insanely high, they have longer billing periods and they get spoiled by credit card vendors all the time. For example, when you buy your groceries at Walmart, you pay at least a 4% markup because that's the standardized cost of processing credit cards. Even if you paid in cash! A wealthy person uses his credit card to pay for the same but earns the same percentage amount in cash back, points and what not. I am sure littleadv placed the car purchase on his credit card for similar reasons! The even more wealthy have their groceries shipped to their houses and if they pay cash I won't be surprised if they actually end up paying much less for fresh (organic) vegetables than what equivalent produce at Walmart would get them! I apologize for not being able to provide citations for these points I make as they are personal observations.\"", "topk_rank": 10 }, { "id": "501976", "score": 0.7040852904319763, "text": "\"While I think this is generally inadvisable, there are sites and communities dedicated to \"\"points churning\"\" credit card reward programs. In general, no there is no easy way to get cash from a credit card, and receive the spending rewards, and not pay fees well in excess of your rewards value. However, there are people who figure out ways to do this kind of thing. Like buying prepaid Visa cards $500 at a time from drug stores on a 5% bonus rewards month. Or buying rolls of $1 coins from the US treasury with free shipping. The issue is the source of the fees. When you spend money on your card the merchant pays a fee. When you get cash from an ATM not only is there no merchant remitting a fee there is an ATM operator and a network both charging fees.\"", "topk_rank": 11 }, { "id": "376236", "score": 0.7039331793785095, "text": "Pitfalls of paying plastic That being said, you can also find cards that have better than the 1% it looks like you are getting. I have a card that gives 2% cash back on Gas Stations, Utilities (including stuff like AT&T) and Food Stores (Walmart included). There are also limited time deals from cards - my fiance's discover has 5% cash back Oct/Nov/Dec on Online purchases. Make sure to remain diligent, keep your balances low and don't get hit with interest rates or fees (I had HORRIBLE credit and I refused to get a card with an annual fee). Why pay full price with cash, when you can get 2-5% cash back?", "topk_rank": 12 }, { "id": "429627", "score": 0.7030925750732422, "text": "Michael Pryor's answer is accurate to the actual question asked. The current accepted answer from Dheer is not entirely true but roughly provides an overview of the different entities involved in a typical transaction, with some wrong terminologies, corrected and improved below. The issuing bank, the one that issues the credit card to the customer. When it comes to the service fee split, the issuer bank takes on the majority of the cut in the service fee paid by the merchant to the different entities. For example, on a 2.5% overall fee paid by merchant, roughly 1.5% goes to the issuer, 0.3% goes to the card network (visa, master card, etc) and the remaining 0.7% goes to the acquiring bank. Reward programs have a partnership with participating merchants, where merchants are charged a higher service fee, for the likelihood of driving a higher volume of transactions to the merchant. A portion of the rewards also comes from the issuer, who shares a percentage of their fee back to the customer, in exchange for the same likelihood of making more profit through increased volume in total transactions. For example, a reward program may charge merchants 4.5% fee, with 3.5% of it going to the issuer. Upto 3% of this can be given back to the customer for their loyalty in using the card service. The banks can afford to take as little as 0.5% instead of their regular 1.5% due to the increased volume of transactions and the fixed fee they collect as membership fee. Note that costco has a similar business plan, but they make money entirely of membership fee. So with enough clients, banks can theoretically afford to run their program entirely on membership fees, costing no additional service fee to merchants. The service fee depicted above is arbitrary, and it can be lowered if the merchant is also a client of the issuing bank, that is, both the issuing bank and acquiring bank are the same. So it is kind of a win-win-win situation. And as usual, the banks can afford to make a larger income, if the customer ends up paying interest for their credit - although the rewards program is not designed accounting on this.", "topk_rank": 13 }, { "id": "164795", "score": 0.7024778723716736, "text": "I got a Capital One credit card because they don't charge a fee for transactions in foreign currencies. So I only use it when I travel abroad. At home, I use 3 different credit cards, each offering different types of rewards (cash back on gas, movies, restaurants, online shopping etc).", "topk_rank": 14 }, { "id": "261684", "score": 0.7012737989425659, "text": "Those extra treat points have to come from somewhere, and they come from American Express charging merchants a higher percentage than Visa or Mastercard. So it's less attractive for those merchants to accept it.", "topk_rank": 15 }, { "id": "568376", "score": 0.700648307800293, "text": "I especially like buying them at my grocery market when they do the deals where every $25 in gift cards you buy, you get 10 cents off of gas. Buying a new $1500 camcorder? First buy the gift cards, and then get about 60 gallons of gas for free.", "topk_rank": 16 }, { "id": "319043", "score": 0.7001399993896484, "text": "One reason why some merchants in the US don't accept Discover is that the fee the store is charged is higher than the average. Generally a portion of transaction fee for the network and the issuing bank goes to the rewards program. In some cases a portion of the interest can also be used to fund these programs. Some cards will give you more points when you carry a balance from one month to the next. Therefore encouraging consumers to have interest charges. This portion of the program will be funded from the interest charges. Profits: Rewards: Some rewards are almost always redeemed: cash once the amount of charges gets above a minimum threshold. Some are almost never redeemed: miles with high requirements and tough blackout periods. Credit cards that don't understand how their customers will use their cards can run into problems. If they offer a great rewards program that encourages use, but pays too high a percentage of points earned can lead to problems. This is especially true when a great percentage of users pay in full each month. This hurt Citibank in the 1990's. They had a card with no annual fee forever, and a very high percentage never had to pay interest. People flocked to the card, and kept it as an emergency card, because they knew it would never have a annual fee.", "topk_rank": 17 }, { "id": "545795", "score": 0.6994895339012146, "text": "If you are willing to use one main credit card for shopping, use a grocery points rewards card like PC Financial Mastercard. Pay for the groceries using the card to earn points and use those points to reduce costs. The only limitation is that you must shop at Loblaws, Superstore, No Frills, Zehrs, Fortinos. It works out to $1 = 10 points and 20,000 points = $20. So that works out to spend $1 to earn back $0.01.", "topk_rank": 18 }, { "id": "40003", "score": 0.6994309425354004, "text": "The cost to the store is small. They may have to pay a slightly greater fee because the transaction is now bigger. They do need additional cash on hand. Even though the majority of transactions are electronic (credit/debit) or check, the local grocery store still seems to have significant cash on hand. This is seen as a customer service. If there is a 2% fee the $50 advance costs them $1 for the minority of customers that take advantage of it. After more than 10 years of doing this they have figured this into the cost of groceries. Of course the credit card company could also waive the fee to store. My credit card online statement does tell me how much cash back was received. The line says date, store, amount ($40.00 cash over and $123.45 purchases) $163.45 total. Therefore the credit card company knows that cash back was used.", "topk_rank": 19 } ]
443	1099 versus corporation to corporation for payments?	[ { "id": "194955", "score": 0.7552698850631714, "text": "Do not mix personal accounts and corporate accounts. If you're paid as your self person - this money belongs to you, not the corporation. You can contribute it to the corporation, but it is another tax event and you should understand fully the consequences. Talk to a tax adviser (EA/CPA licensed in your State). If they pay to you personally (1099) - it goes on your Schedule C, and you pay SE taxes on it. If they pay to your corporation, the corporation will pay it to you as salary, and will pay payroll taxes on it. Generally, payroll through corporation will be slightly more expensive than regular schedule C. If you have employees/subcontractors, though, you may earn money which is not from your own performance, in which case S-Corp may be an advantage." } ]	[ { "id": "435798", "score": 0.7174366116523743, "text": "Well, you won't be double taxed based on what you described. Partners are taxed on income, typically distributions. Your gain in the partnership is not income. However, you were essentially given some money which you elected to invest in the partnership, so you need to pay tax on that money. The question becomes, are you being double taxed in another way? Your question doesn't explain how you invested, but pretty much the options are either a payroll deduction (some amount taken out of X paychecks or a bonus) or some other payment to you that was not treated as a payroll deduction. Given that you got a 1099, that suggests the latter. However, if the money was taken out as a payroll deduction - you've already paid taxes (via your W2)! So, I'd double check on that. Regarding why the numbers don't exactly match up - Your shares in the partnership likely transacted before the partnership valuation. Let's illustrate with an example. Say the partnership is currently worth $1000 with 100 outstanding shares. You put up $1000 and get 100 shares. Partnership is now worth $2000 with 200 outstanding shares. However, after a good year for the firm, it's valuation sets the firm's worth at $3000. Your gain is $1500 not $1000. You can also see if what happened was the firm's valuation went down, your gain would be less than your initial investment. If instead your shares transacted immediately after the valuation, then your gain and your cost to acquire the shares would be the same. So again, I'd suggest double checking on this - if your shares transacted after the valuation, there needs to be an explanation for the difference in your gain. For reference: http://smallbusiness.findlaw.com/incorporation-and-legal-structures/partnership-taxes.html And https://www.irs.gov/publications/p541/ar02.html Here you learn the purpose of the gain boxes on your K1 - tracking your capital basis should the partnership sell. Essentially, when the partnership is sold, you as a partner get some money. That money is then taxed. How much you pay will depend on what you received versus what the company was worth and whether your gain was long term or short term. This link doesn't go into that detail, but should give you a thread to pull. I'd also suggest reading more about partnerships and K1 and not just the IRS publications. Don't get me wrong, they're a good source of information, just also dense and sometimes tough to understand. Good luck and congrats.", "topk_rank": 0 }, { "id": "394871", "score": 0.7172243595123291, "text": "In general that's illegal. If you're a W2 employee, you don't miraculously become a 1099 contractor just because they pay you more. If your job doesn't change - then your status doesn't change just because they give you a raise. They can be sued (by you, and by the IRS) for that. Other issues have already been raised by other respondents, just wanted to point out this legal perspective.", "topk_rank": 1 }, { "id": "345942", "score": 0.7170319557189941, "text": "Am I required to send form 1099 to non-US citizens who are not even residing in the US? Since they're not required to file US taxes, do I still have to send the form to them? That's tricky. You need to get W8/W9 from them, and act accordingly. You may need to withhold 30% (or different percentage, depending on tax treaty they claim on W8). If you withhold taxes, you also need to file form 1042. I suggest you talk to a tax professional. Is it fine to expose my ITIN (taxpayer identification number) to individuals or companies who I send the form to them. Since the form requires me to write my TIN/EIN, what would be the risks of this and what precautions should be taken to avoid inappropriate/illegal use? No, it is not OK. But if you pay these people directly - you don't have much choice, so deal with it. Get a good insurance for identity theft, and don't transact with people you don't trust. One alternative would be to pay through a payment processor (Paypal or credit cards) - see your next question. I send payments via PayPal and wire transfer. Should I send form 1099-MISC or 1099-K? Paypal is a corporation, so you don't need to send 1099 to Paypal. Whatever Paypal sends to others - it will issue the appropriate forms. Similarly if you use a credit card for payment. When you send money through Paypal - you don't send money directly to your business counterparts. You send money to Paypal.", "topk_rank": 2 }, { "id": "129503", "score": 0.7169705629348755, "text": "\"You're conflating LLC with Corporation. They're different animals. LLC does not have \"\"S\"\" or \"\"C\"\" designations, those are just for corporations. I think what you're thinking about is electing pass through status with the IRS. This is the easiest way to go. The company can pay you at irregular intervals in irregular amounts. The IRS doesn't care about these payments. The company will show profit or loss at the end of the year (those payments to you aren't expenses and don't reduce your profit). You report this on your schedule C and pay tax on that amount. (Your state tax authority will have its own rules about how this works.) Alternatively you can elect to have the LLC taxed as a corporation. I don't know of a good reason why someone in your situation would do this, but I'm not an accountant so there may be reasons out there. My recommendation is to get an accountant to prepare your taxes. At least once -- if your situation is the same next year you can use the previous year's forms to figure out what you need to fill in. The investment of a couple hundred dollars is worthwhile. On the question of buying a home in the next couple of years... yes, it does affect things. (Pass through status? Probably doesn't affect much.) If all of your income is coming from self-employment, be prepared for hassles when you are shopping for a mortgage. You can ask around, maybe you have a friendly loan officer at your credit union who knows your history. But in general they will want to see at least two years of self-employment tax returns. You can plan for this in advance: talk to a couple of loan officers now to see what the requirements will be. That way you can plan to be ready when the time comes.\"", "topk_rank": 3 }, { "id": "11569", "score": 0.7162885069847107, "text": "You are expected to file 1099 for each person you pay $600 a year. I.e.: not a one time payment, but the total over the course of the year. Since we don't know how much and what else you paid - we cannot answer this question. The real question you're asking is that if you're treating the enterprise as a hobby, whether you're supposed to file 1099s at all. The answer to that question is yes. You should talk to your tax adviser (a EA/CPA licensed in your state) about this, and whether it is the right thing for you to do treating this as a hobby at all.", "topk_rank": 4 }, { "id": "277812", "score": 0.714833676815033, "text": "There are many different types of 1099 forms. Since you are comparing it to a W-2, I'm assuming you are talking about a 1099-MISC form. Independent contractor income If you are a worker earning a salary or wage, your employer reports your annual earnings at year-end on Form W-2. However, if you are an independent contractor or self-employed you will receive a Form 1099-MISC from each client that pays you at least $600 during the tax year. For example, if you are a freelance writer, consultant or artist, you hire yourself out to individuals or companies on a contract basis. The income you receive from each job you take should be reported to you on Form 1099-MISC. When you prepare your tax return, the IRS requires you to report all of this income and pay income tax on it. So even if you receive a 1099-MISC form, you are required to pay taxes on it.", "topk_rank": 5 }, { "id": "415179", "score": 0.7145069241523743, "text": "As was once famously said, Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes. — Benjamin Franklin, 1789 It's very likely that either the company or you personally is going to have to pay taxes on that money. Really the only way to avoid it would be if the company spent that money on next year's expenses, and paid the bill before the end of this year. Of course you can only do that if the recipient is willing to receive their money so far in advance, which isn't necessarily the case since they would pay more taxes this year as a result. As for whether it's better to have the company pay the tax or for you to do as your accountant suggests, there are a lot of factors that go into that equation, and my gut feeling is that your accountant already ran it both ways and is suggesting the better choice.", "topk_rank": 6 }, { "id": "355513", "score": 0.7139471769332886, "text": "\"I'm no lawyer and no expert, so take my remarks as entertainment only. Also see this question. If you have a U.S. SSN which is eligible for work, they may be able to pay you on 1099 basis with your SSN as a sole proprietor, unless they have some personal reason for avoiding that. So perhaps try asking about that specifically. HR policies can be weird and tricky, maybe a nudge in the right direction will help. Not What You Asked: regardless, I might recommend you register as an LLC and get an EIN (sort of SSN for companies) for a variety of reasons. It's called a \"\"limited liability\"\" company for a reason. You may also have an easier time reaping various business-related rewards, like writing off expenses. If you do so, consider a state with no income tax like Wyoming. (Or, for convenience sake, WA if you live in BC, or maybe NH if you live in Ontario.. etc.)\"", "topk_rank": 7 }, { "id": "349348", "score": 0.712944507598877, "text": "\"I'm assuming that when you say \"\"convert to S-Corp tax treatment\"\" you're not talking about actually changing your LLC to a Corporation. There are two distinct pieces of the puzzle here. First, there's your organizational form. Your state, which is where the business is legally formed and recognized, creates the LLC or Corporation. \"\"S-Corp\"\" doesn't come into play here: your company is either an LLC or a Corporation. (There are a handful of other organizational types your state might have, e.g. PLLC, Limited Partnership, etc.; none of these are immediately relevant to this discussion). Second, there's the tax treatment you receive by the IRS. If your company was created by the state as an LLC, note that the IRS doesn't recognize LLCs as a distinct organizational type: you elect to be taxed as an individual (for single member LLCs), a partnership (for multiple member LLCs), or as a corporation. The former two elections are \"\"pass through\"\" -- there's no additional level of taxation on corporate profits, everything just passes through to the owners. The latter election introduces a tax on corporate profits. When you elect pass-through treatment, a single-member LLC files on Schedule C; a multiple-member LLC will prepare a form K-1 which you will include on your 1040. If your company was created by the state as a Corporation (not an LLC), you could still elect pass-through taxation if your company qualifies under the rules in Subchapter S (i.e. \"\"an S-Corp\"\"). States do not recognize \"\"S-Corp\"\" as part of the organizational process -- that's just a tax distinction used by the IRS (and possibly your state's tax authorities). In your case, if you are a single-member LLC (and assuming there are no other reasons to organize as a corporation), talking about \"\"S-Corp tax treatment\"\" doesn't make any sense. You'll just file your schedule C; in my experience it's fairly simple. (Note that this is based on my experience of single- and multiple-member LLCs in just two states. Your state may have different rules that affect state-level taxation; and the rules may change from year to year. I've found that hiring a good CPA to prepare the forms saves a good bit of stress and time that can be better applied to the business.)\"", "topk_rank": 8 }, { "id": "434351", "score": 0.712839663028717, "text": "You can and are supposed to report self-employment income on Schedule C (or C-EZ if eligible, which a programmer likely is) even when the payer isn't required to give you 1099-MISC (or 1099-K for a payment network now). From there, after deducting permitted expenses, it flows to 1040 (for income tax) and Schedule SE (for self-employment tax). See https://www.irs.gov/individuals/self-employed for some basics and lots of useful links. If this income is large enough your tax on it will be more than $1000, you may need to make quarterly estimated payments (OR if you also have a 'day job' have that employer increase your withholding) to avoid an underpayment penalty. But if this is the first year you have significant self-employment income (or other taxable but unwithheld income like realized capital gains) and your economic/tax situation is otherwise unchanged -- i.e. you have the same (or more) payroll income with the same (or more) withholding -- then there is a 'safe harbor': if your withholding plus estimated payments this year is too low to pay this year's tax but it is enough to pay last year's tax you escape the penalty. (You still need to pay the tax due, of course, so keep the funds available for that.) At the end of the first year when you prepare your return you will see how the numbers work out and can more easily do a good estimate for the following year(s). A single-member LLC or 'S' corp is usually disregarded for tax purposes, although you can elect otherwise, while a (traditional) 'C' corp is more complicated and AIUI out-of-scope for this Stack; see https://www.irs.gov/businesses/small-businesses-self-employed/business-structures for more.", "topk_rank": 9 }, { "id": "550741", "score": 0.7123851180076599, "text": "The correct, legal way to handle this would be to file an amended return for that year (probably best to talk to a CPA). If you don't have the 1099, the IRS has a process to handle that here. It sounds like they would just try to contact the employer themselves, but it doesn't say exactly what would happen if the employer is out of business.", "topk_rank": 10 }, { "id": "282681", "score": 0.7121252417564392, "text": "\"It is legal. They're probably going to give you a 1099-MISC, which is required of businesses for many cash payments over $600 in value to all sorts of counterparties. (Probably box 3 of 1099-MISC as is typical in \"\"cash for keys\"\" situations where one is paid to vacate early) A 1099-MISC is not necessarily pure income, but in this case, you do have money coming in. This money isn't a return of your security deposit or a gift. The payment could possibly be construed by you as a payment to make you whole, but the accounting for this would be on you. This is not a typical situation for IRS reporting. However, if you are uncomfortable with potentially explaining to the IRS how you implemented advice from strangers over the internet, the safest course is to report it all as income. Look at it this way: you did enter into a mutual contract, where you were paid consideration to release your leasehold interests in the property.\"", "topk_rank": 11 }, { "id": "91325", "score": 0.7118326425552368, "text": "\"This is going to depend on the tax jurisdiction and I have no knowledge of the rules in Illinois. But I'd like to give you some direction about how to think about this. The biggest problem that you might hit is that if you collect a single check and then distribute to the tutors, you may be considered their employer. As an employer, you would be responsible for things like This is not meant as an exhaustive list. Even if not an employer, you are still paying them. You would be responsible for issuing 1099 forms to anyone who goes above $600 for the year (source). You would need to file for a taxpayer identification number for your organization, as it is acting as a business. You need to give this number to the school so that they can issue the correct form to you. You might have to register a \"\"Doing Business As\"\" name. It's conceivable that you could get away with having the school write the check to you as an individual. But if you do that, it will show up as income on your taxes and you will have to deduct payments to the other tutors. If the organization already has a separate tax identity, then you could use that. Note that the organization will be responsible for paying income tax. It should be able to deduct payments to the tutors as well as marketing expenses, etc. If the school will go for it, consider structuring things with a payment to your organization for your organization duties. Then you tell the school how much to pay each tutor. You would be responsible for giving the school the necessary information, like name, address, Social Security number, and cost (or possibly hours worked).\"", "topk_rank": 12 }, { "id": "487728", "score": 0.7114958167076111, "text": "I strongly recommend that you talk to an accountant right away because you could save some money by making a tax payment by January 15, 2014. You will receive Forms 1099-MISC from the various entities with whom you are doing business as a contractor detailing how much money they paid you. A copy will go to the IRS also. You file a Schedule C with your Form 1040 in which you detail how much you received on the 1099-MISC forms as well as any other income that your contracting business received (e.g. amounts less than $600 for which a 1099-MISc does not need to be issued, or tips, say, if you are a taxi-driver running your own cab), and you can deduct various expenses that you incurred in generating this income, including tools, books, (or gasoline!) etc that you bought for doing the job. You will need to file a Schedule SE that will compute how much you owe in Social Security and Medicare taxes on the net income on Schedule C. You will pay at twice the rate that employees pay because you get to pay not only the employee's share but also the employer's share. At least, you will not have to pay income tax on the employer's share. Your net income on Schedule C will transfer onto Form 1040 where you will compute how much income tax you owe, and then add on the Social Security tax etc to compute a final amount of tax to be paid. You will have to pay a penalty for not making tax payments every quarter during 2013, plus interest on the tax paid late. Send the IRS a check for the total. If you talk to an accountant right away, he/she will likely be able to come up with a rough estimate of what you might owe, and sending in that amount by January 15 will save some money. The accountant can also help you set up for the 2014 tax year during which you could make quarterly payments of estimated tax for 2014 and avoid the penalties and interest referred to above.", "topk_rank": 13 }, { "id": "222049", "score": 0.7111572027206421, "text": "Your recruiter is likely trying to avoid having to pay the employer's side of employment taxes, and may even be trying to avoid having to file a 1099 for you by treating your relationship as a vendor/service provider that he is purchasing services from, which would make your pay just a business expense. It's definitely in his best interest for you to do it this way. Whether it's in your best interest is up to you. You should consult a licensed legal/tax professional to help you determine whether this is a good arrangement for you. (Most of the time, when someone starts playing tax avoidance games, they eventually get stung by it.) The next big question: If you already know this guy is a snake, why are you still working with him? If you don't trust him, why would you take legal/tax advice from him? He might land you a high-paying job. But he also might cause you years of headaches if his tax advice turns out to be flawed.", "topk_rank": 14 }, { "id": "537763", "score": 0.7110600471496582, "text": "Form 1099-misc reports PAYMENTS, not earnings. This does not imply the EARNINGS are not taxable in the year they were earned.", "topk_rank": 15 }, { "id": "249687", "score": 0.710321843624115, "text": "You wouldn't fill out a 1099, your employer would or possibly whoever manages the stock account. The 1099-B imported from E-Trade says I had a transaction with sell price ~$4,500. Yes. You sold ~$4500 of stock to pay income taxes. Both the cost basis and the sale price would probably be ~$4500, so no capital gain. This is because you received and sold the stock at the same time. If they waited a little, you could have had a small gain or loss. The remainder of the stock has a cost basis of ~$5500. There are at least two transactions here. In the future you may sell the remaining stock. It has a cost basis of ~$5500. Sale price of course unknown until then. You may break that into different pieces. So you might sell $500 of cost basis for $1000 with a ~$500 capital gain. Then later sell the remainder for $15,000 for a capital gain of ~$10,000.", "topk_rank": 16 }, { "id": "308938", "score": 0.7101358771324158, "text": "\"You should have separate files for each of the two businesses. The business that transfers money out should \"\"write check\"\" in its QB file. The business that receives money should \"\"make deposit\"\" in its QB file. (In QB you \"\"write check\"\" even when you make the payment by some other means like ACH.) Neither business should have the bank accounts of the other explicitly represented. On each side, you will also need to classify the payment as having originated from / gone to some other account - To know what's correct there, we'd need to know why your transferring the money in the first place and how you otherwise have your books established. I think that's probably beyond the scope of what's on-topic / feasible here. Money into your business from your personal account is probably owner's equity, unless you have something else going on. For example, on the S Corp you should be paying yourself a salary. If you overpay by accident, then you might write a check back to the company from your personal account to correct the mistake. That's not equity - It's probably a \"\"negative expense\"\" in some other account that tracks the salary payments.\"", "topk_rank": 17 }, { "id": "382908", "score": 0.7100191712379456, "text": "Can I work on 1099 from my own company instead of on W2? The reason is on W2 I can't deduct my commute, Health Insurance and some other expenses while on 1099 I think I can able do that. Since I am going to client place to work not at my own office, I am not sure whether I should able to do that or not. If you have LLC, unless you elected to tax it as a corporation, you need neither 1099 nor W2. For tax purposes the LLC is disregarded. So it is, from tax perspective, a sole proprietorship (or partnership, if multiple members). Being a W2 employee of your own LLC is a bad idea. For all these above expenses, which can I use company's debit/credit card or I need to use only my personal debit/credit card? It would be better to always use a business account for business purposes. Doesn't matter much for tax per se, but will make your life easier in case of an audit or a legal dispute (limited liability protection may depend on it). If I work on 1099, I guess I need to file some reasonable taxes on quarterly basis instead of filing at year end. If so, how do I pay my tax on quarterly basis to IRS? I mean which forms should I file and how to pay tax? Unless you're a W2 employee, you need to do quarterly estimate payments using form 1040-ES. If you are a W2 employee (even for a different job, and even if it is not you, but your spouse with whom you're filing jointly) - you can adjust your/spouse's withholding using form W4 to cover the additional tax liability. This is, IMHO, a better way than paying estimates. There are numerous questions on this, search the site or ask another one for details.", "topk_rank": 18 }, { "id": "231590", "score": 0.7099654078483582, "text": "For every document that the IRS posts, there will be a correlating instructions page. This would be the instructions for the 1099-B, here. Furthermore, as you will be reporting this on Form 8949, as a substitute for previously used Schedule D; instructions are here.This article explains that the best course of action is to donate the shares as the cost basis would switch to FMV (fair market value) of the assets today. But as this did not happen, I would recommend contacting the purchasing company directly. Being a share holder, and by purchasing the shares from the source, the accounting department should still have recorded the date of purchase along with the price sold. It may take effort to prove who you are, but if their accounting records are well documented, this will not be an issue. If nothing else, claim a 100% capital gain on the entirety of the sale, and pay the tax. That is stated here.", "topk_rank": 19 } ]
444	Why do most banks in Canada charge monthly fee?	[ { "id": "573518", "score": 0.7618148922920227, "text": "\"Arguably, \"\"because they can\"\". Canada's banking industry is dominated by five chartered banks who by virtue of their size, pretty much determine how banking is done in Canada. Yes, they have to abide by government regulation, but they carry enough weight to influence government and to some extent shape the regulation they have to follow. While this situation makes Canada's financial system very stable and efficient, it also permits anti-competitive behavior. There was a time (when U.S. banks were not permitted to operate across state lines) when the smallest of Canada's \"\"big 5\"\" was bigger than the biggest U.S. bank, despite our economy having always been about 1/10 the size of the U.S. That scale and their small number gives the \"\"big 5\"\" the ability to invest heavily in and collaborate on whatever they decide to be in their own interest. So, if they want to charge fees, they do.\"" }, { "id": "175824", "score": 0.716925323009491, "text": "Lending isn't profitable when interest rates are this low. Consider what's involved to offer a savings or checking account. The bank must maintain branches with tellers. The bank has to pay rent (or buy and pay property taxes and utilities). The bank has to pay salaries. The bank has to maintain cash so as to make change. And pay for insurance against robbery. All of that costs money. At 6% interest, a bank can sort of make money. Not great money, but it takes in more than it has to pay out. At 4% interest, which is about where ten year mortgage rates are in Canada, the bank doesn't make enough margin. They are better off selling the loan and closing their branches than offering free checking accounts. An additional problem is that banks tend to make money from overdraft fees. But there's been a move to limit overdraft fees, as they target the most economically vulnerable. So Canadian banks tend to charge monthly fees instead. UK banks may also start charging monthly fees if interest rates stay low and other fees get curtailed." }, { "id": "483282", "score": 0.8204833269119263, "text": "The other answers in this thread do a fine job of explaining the economic situation that banks are in. In addition to that information, I would like to point out that it is not hard to avoid a monthly fee for Canadian bank accounts. Usually this involves keeping a minimum balance of a few thousand dollars at all times. Actual examples (as of Dec 2016) for the lowest tier chequing accounts. Includes information on the minimum balance to waive the monthly fee, and the monthly fee otherwise:" }, { "id": "479203", "score": 0.7440312504768372, "text": "You have to check your contract to be sure what is it you're paying for. Typically, you get some of the following features which can be unavailable to you in banks which don't charge a monthly fee: Arguably, these expenses could be paid by the interest rates your money earn to the bank. Notice how banks which don't charge a fee usually require you to have a minimum amount of cash in your account or a minimum monthly cash flow. When you pay for your bank's services in cash, there's no such restrictions. I'm not sure if typical banks in the UK would take away your credit card if you lose your job and don't qualify for that kind of card any more, but I do know banks who would. The choice is yours, and while it's indeed sad that you don't have this kind of choice in Canada, it's also not like you're paying solely for the privilege of letting them invest your money behind your back." } ]	[ { "id": "121071", "score": 0.7194654941558838, "text": "Another reason for banks to push this is sitckyness. Once you have all of your bills setup, its more trouble to change banks. This reduces the customer turnover rate, which lowers their costs.", "topk_rank": 0 }, { "id": "436168", "score": 0.7188798189163208, "text": "The reason banks charge fees for wires, is because the Federal Reserve charges banks to send the wires. The Fed charges the banks a hefty fee, so the banks have to charge you a hefty fee to make up for it. Any time any business gives you a service for free, its because they think they can make more money off of some other service or product they are selling you. So the question becomes, How can I make myself valuable enough to a bank that they will waive my wire fees? The account you linked to is a good example of this: the monthly service charge, along with the $0.50 charge every time you use your debit card, would make up for the number of wires most people send.", "topk_rank": 1 }, { "id": "390343", "score": 0.7167316675186157, "text": "From what I Understand, people put up with BofA because it's convenient in that there are branches everywhere in the country. Not sure if it's worth it, but if you're a normal banking customer, your won't face any of those fees.", "topk_rank": 2 }, { "id": "264191", "score": 0.7138255834579468, "text": "I had an RRSP account with a managed services account at a major Cdn bank that increased its fees to $125 a year per account. Because I could not trade any of my funds living in the US, it made no sense to throw away $500 a year for nothing (two accounts for me and two accounts for my wife - regular RRSP and locked in RRSP). I was able to move all my accounts to TD discount brokerage without any issue. I did this two years ago.", "topk_rank": 3 }, { "id": "30253", "score": 0.7131439447402954, "text": "Fees mostly. BOA, for example, just announced $5/month for for all debit cards. Chase has foreign transaction fees, mostly hidden. BOA once famously raised interest rates on credit card holders to 28%, legally. Also, some people do not like patronizing a bank with CEOs that bankrupt the company and then get multi-million dollar golden parachutes. Finally some people have a problem with banks or institutions that suspend accounts based on political or unproven legal proceedings (ala Wikileaks and BOA). Credit unions are less like to be involved in this sort of activity since they are not privately traded, and as such they are not ruled by shareholders who demand bottom line results at all costs.", "topk_rank": 4 }, { "id": "100498", "score": 0.710063636302948, "text": "Banks need to provide a free mechanism to deposit and withdrawal money. Banks are free to charge fees as long as it is well published. If you are not happy with services you can complain to Banking ombudsman.", "topk_rank": 5 }, { "id": "201280", "score": 0.7060840129852295, "text": "Banks do of course incur costs on currency transactions. But they're not as high as the fee charged to the customer. Most banks in most places lose a lot of money on operating bank accounts for customers, and make the money back by charging more than their costs for services like currency exchange. If you don't choose to pay those fees, use an online service instead. But bear in mind that if everyone does so then banks will be forced to charge higher fees for current accounts.", "topk_rank": 6 }, { "id": "136438", "score": 0.7051193118095398, "text": "Banks, the big ones, have shareholders and the board to answer to. Credit Unions have members and the board to answer to. You become a member by joining a CU. Banks' prime objective is profit maximization, a credit union's prime objective is members' welfare. Personal experience: I didn't mind that the banks charge fees, what was frustrating was keeping up with the policy changes. Have X amount to avoid Y fees. Once you fulfill that, do something else to avoid some other fees. You miss one notice and you'll pay dearly! This constant jumping of hoops was enough to switch. Not saying CUs don't change rules, but in my opinion, not as frequently as big banks. On fee, for instance, my overdraft with my CU is $5. With BofA it was something like $35 before regulations put a cap on such ridiculous fees.", "topk_rank": 7 }, { "id": "216098", "score": 0.7024029493331909, "text": "Mainly because they can. Yes, there is a cost for banks to execute such transactions, and yes, there is a cost to cover the implied risks, but it is far from 3 or 4%. There are banks that charge a flat rate of less than 30$ (and no percentage), so for larger amounts, it is worth shopping around. Note that for smaller amounts, which are the majority of personal transactions, that is probably about as, if not more expensive, than paying 3% - below 1000$, 3% is less than 30$. So charging a percentage is actually better for people that want to transfer smaller amounts.", "topk_rank": 8 }, { "id": "597571", "score": 0.70209139585495, "text": "First, if you live in/around a reasonably populated urban area, and you're in the United States, I can't see why you would choose to bank with Chase, B of A, or another large commercial bank. I think you would be much better served by banking at a reasonably large credit union. There are many differences between banks and credit unions, but in a nutshell, credit unions are owned by the members, and operate primarily to provide benefits to their members, whereas a bank is owned by the shareholders, and operates primarily to make profits for the shareholders (not to benefit the customers). The banking industry absolutely hates the credit unions, so if you've ever been nickeled-and-dimed with this fee and that charge by your bank, I have to ask why you're still banking with a company that irritates you and/or actively tries to screw you out of your money? I live in California, and I've banked at credit unions almost exclusively since I started working nearly 30 years ago. Every time I've strayed and started banking at a for-profit bank, I've regretted it. For example, a few years ago I opened a checking account at a now-defunct bank (WaMu) just for online use: eBay and so forth. It was a free checking account. When Chase bought WaMu, the account became a Chase account, and it seemed that every other statement brought new fees, new restrictions, and so forth. I finally closed it when they imposed some stupid fee for not carrying enough of a balance. I found out by logging in to their Web site and seeing a balance of zero dollars; they had imposed the fee a few statements back, and I had missed it, so they kept debiting my account until it was empty. At this point, I do about 90% of my banking at a fairly large credit union. I have a mortgage with a big bank, but that was out of my hands, as the lender/originator sold the mortgage and I had no say in the matter. My credit union has a highly functional Web site, permits me to download my account activity to Quicken, and even has mobile apps which allow me to deposit a check by taking a picture of it, or check my account activity, etc. They (my credit union) are part of a network of other credit unions, so as long as I am using a network ATM, I never pay a fee. In sum, I can't see any reason to go with a bank. Regarding checks, I write a small number of checks per year, but I recently needed to reorder them. My credit union refers members directly to Harland-Clarke, a major-league player in the check printing business. Four boxes of security checks was around $130 plus shipping, which is not small money. However, I was able to order the very same checks via Costco for less than half that amount. Costco refers members to a check printing service, which is a front/subsidiary of Harland-Clarke, and using a promo code, plus the discount given for my Costco membership, I got four boxes of security checks shipped to me for less than $54. My advice would be to look around. If you're a Costco member, use their check printing service. Wal*mart offers a similar service to anyone, as does Sam's Club, and you can search around to find other similar services. Bottom line, if you order your checks via your bank or credit union, chances are you will pay full retail. Shop around, and save a bit. I've not opened a new account at a credit union in some time, but I would not be surprised if a credit union offered a free box of checks when you open a new account with them.", "topk_rank": 9 }, { "id": "496272", "score": 0.7006615400314331, "text": "\"From the bank's perspective, they are offering a service and within their rights to charge appropriately for that service. Depending on the size of their operation, they may have considerable overhead costs that they need to recoup one way or another to continue operating (profitably, they hope). Traditionally, banks would encourage you to save with them by offering interest growth on your deposits. Meanwhile they would invest your (and all of their customer's) funds in securities or loans to other patrons that they anticipate will generate income for them at a faster rate than the interest they pay back to you. These days however, this overly simplified model is relatively insignificant in consumer banking. Instead, they've found they can make a lot more profit by simply charging fees for the handling of your funds, and when they want to loan money to consumers they just borrow from a central bank. What this means is that the size of your balance (unless abnormally huge) is of little interest to a branch manager - it doesn't generate revenue for them much faster than a tiny balance with the same number of transactions would. To put it simply, they can live without you, and your threatening to leave, even if you follow through, is barely going to do anything to their bottom line. They will let you. If you DO have an abnormally huge balance, and it's all in a simple checking or savings account, then it might make them pause for thought. But if that's true then frankly you're doing banking wrong and should move those funds somewhere where they can work harder for you in terms of growth. They might even suggest so themselves and direct you to one of their own \"\"personal wealth managers\"\".\"", "topk_rank": 10 }, { "id": "340329", "score": 0.6993120908737183, "text": "\"In the United States, many banks aim to receive $ 100 per year per account in fees and interest markup. There are several ways that they can do this on a checking account. These examples assume that there is a 3 % difference between low-interest-rate deposit accounts and low-interest rate loans. Or some combination of these markups that adds up to $ 100 / year. For example: A two dollar monthly fee = $ 24 / year, plus a $ 2,000 average balance at 0.05% = $ 29 / year, plus $ 250 / month in rewards debit card usage = $ 24 / year, plus $ 2 / month in ATM fees = $ 24 / year. Before it was taken over by Chase Manhattan in 2008, Washington Mutual had a business strategy of offering \"\"free\"\" checking with no monthly fees, no annual fees, and no charges (by Washington Mutual) for using ATMs. The catch was that the overdraft fees were not free. If the customers averaged 3 overdraft fees per year at $ 34 each, Washington Mutual reached its markup target for the accounts.\"", "topk_rank": 11 }, { "id": "550924", "score": 0.6986416578292847, "text": "Ya small local banks effectively do not exist in Canada. We do however have a number of credit unions. I'm actually going to be defensive of the big five as they are actually well run (or rather well regulated). Our banking context is in many ways radically different up north.", "topk_rank": 12 }, { "id": "391177", "score": 0.6986272931098938, "text": "\"Simple. If they don't allow you easily transfer money then they get to keep your money longer and earn more interest. Not to mention they can continue to charge fees for wire transfers. When I was in Colorado Springs all the banks allowed free bank to bank transfers. Why? Because their clients demanded it. Most of their clients were military members who needed to be able to send money home or to relatives in other states etc. When I moved to Texas I could not find a single bank that allowed free bank to bank tranfers. They had varying fee schedules for wire tranfers ranging from $7 to as high as $22. When I asked why they charged a fee to send money basically over the internet I was told that the Feds made them charge a fee. Big bunch of bull but I had to have a bank. Banks, in this country, will make it as hard as they legally can for you to remove your money from their greedy little mitts. I am going through this now with a bank in Idaho. Supposedly I can send funds bank to bank but I have to jump through a bunch of hoops that are difficult because I work during the bank hours. The bill pay site says I can do external tranfers but the button to \"\"set up external transfers\"\" is mysteriously missing. So I have to fill out paperwork in the presence of someone at the bank and submit it. I was even told that it had to be typed or it may be refused. The more I travel the more I mistrust banks and their schemes to keep my money.\"", "topk_rank": 13 }, { "id": "546779", "score": 0.6985301971435547, "text": "If this matters to you a lot, I agree you should leave. My primary bank account raised chequing account and transaction fees. I left. When I was closing my account the teller asked for the reason (they needed to fill out a form) and I explained it was the monthly fees. Eventually, if a bank gets enough of these, they will change. I want to get back those features for the same price it cost when I opened it They are in their rights to cancel features or raise prices. Just as you are in your rights to withdraw if they don't give you a deal. The reason why I mention this is that this approach is comical in some instances. A grocery store may raise the price of carrots. Typically you either deal with it or change stores. Prices rise occasionally. thus they will lose a lot of money from my savings From my understanding, a bank makes a large chunk of their money from fees. Very little is from the floating kitty they can have because of your savings. If you have an investment account with your bank (not recommended) or your mortgage, that would matter more. I've had friends who have left banks (and moved their mortgages) because of the bank not giving them a better rate. Does the manager have any pressure into keeping the account to the point of giving away free products to keep the costumer or they don't really care? Depends. I've probably say no. One data point is an anecdote; it is expected in a client base of thousands that a few will leave for seemingly random reasons. Only if mass amounts of clients leave or complain will the manager or company care. A note: some banks waive monthly account or service fees if you keep a minimal account balance. I have one friend who keeps X thousand in his bank account to save the account fee; he budgets a month ahead of time and savings account rates are 0% so this costs him nothing.", "topk_rank": 14 }, { "id": "542075", "score": 0.6971715092658997, "text": "\"Echoing that bank fees are mostly \"\"because they can\"\", although partly this is because simply holding onto the money doesn't really pay enough for the physical infrastructure of branches, ATMs and staff. So like a budget airline they make it up on additional fees. But that document doesn't actually say they charge 3% for currency conversion! It's \"\"0.20% of transaction amount\"\" for currency conversion, which is not bad (although watch out for the \"\"spread\"\" between buying and selling rates). I see \"\"International POS/ATM Transaction Fee 3% of transaction amount\"\", which is very different. That's a card fee. The big issue with these is fraud - your card number suddenly being used in a different country will nearly always trigger extra fraud checks. It also involves a much more complicated settlement process. I'm more unimpressed with the monthly service charges and the huge $85 fee for international wire transfers.\"", "topk_rank": 15 }, { "id": "330842", "score": 0.6967371702194214, "text": "The standard customer is actually pretty satisified with BofA because he gets access to the large number of branches for free. But that money has to come from somewhere, that service isn't free. BofA gets it from those who are less responsible with their money. Alternatively, BofA can just charge everybody evenly across the board. Due to low interest rates, deposits are not very profitable, they cannot lower the interest on your savings account any more. Banks are actually losing money on most of their depositors because the stuff involved with maintaining an account costs money. That's why some banks are actively doing things to push some depositors away (some banks even charge you money to store money in the bank). Logically, it makes sense for me to bank at a place where the profits are not squeezed from me. So as someone who doesn't get hit with fees, I'm happy with BofA. That might sound weird, but logic dictates that I go to where I get the best value.", "topk_rank": 16 }, { "id": "176172", "score": 0.6956014037132263, "text": "Most transactions that the bank performs for you are electronic ACH transactions, so the costs to them are minimal in the long run. Most banks do it now to keep up with the competition. Almost every bank does it now, so they have to do it to attract new business and keep existing customers. Also, the more you rely on the bank and use them to pay bills, the more they learn about you over time and can use that data in overall marketing plans. It's easier for them to record it into their system if it is all electronic to begin with.", "topk_rank": 17 }, { "id": "317808", "score": 0.6937888860702515, "text": "Almost every company I know of charges something like 2% per month on past due accounts. They are not financial institutions, so it's probably quite legal.", "topk_rank": 18 }, { "id": "431365", "score": 0.693480372428894, "text": "Honest question, is a $10-$15 monthly fee for a checking account normal? I've been a customer of a Big 4 bank (Chase) forever, never needed to pay them any fees for anything. I never overdraft either, but it's not like I'm high networth or anything either.", "topk_rank": 19 } ]
445	Do I need to register as self employed in Ontario, Canada?	[ { "id": "178942", "score": 0.6584798097610474, "text": "If your business name is your name, you are automatically considered a sole-proprietorship and any income you generate and expenses you incur can be calculated on your personal tax return. You can use QuickTax Home & Business tax software to lead you through the steps; you don't even need an accountant. One drawback of a sole-proprietorship in your name is liability. You are personally responsible for the business because you are the business. If you get sued, you can lose everything. To limit that liability you can look into opening a corporation. If the corporation gets sued you are insulated from that; the corporation goes bankrupt, not you. A lawyer and an accountant will be required to give you solid advice on this direction." } ]	[ { "id": "449116", "score": 0.6254478096961975, "text": "\"You would put your earnings (and expenses, don't forget) on Schedule C, and then do a Schedule SE for self-employment tax. http://www.irs.gov/businesses/small/article/0,,id=98846,00.html 1040ES isn't used to compute taxes, it's used to pay taxes. Generally you are supposed to pay taxes as you go, rather than when you file. There are exceptions where you won't be penalized for paying when you file, \"\"most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller\"\" from http://www.irs.gov/taxtopics/tc306.html i.e. there's a safe harbor as long as you pay as much as you owed the year before. If you owe a lot at the end of the year a second time in a row, then you get penalized.\"", "topk_rank": 0 }, { "id": "260848", "score": 0.6254146695137024, "text": "\"If you're really interested in the long-term success of your business, and you can get by in your personal finances without taking anything from the business for the time being, then don't. There is no \"\"legal requirement\"\" to pay yourself a prevailing wage if doing so would put the company out of business. it is common for a company's principals not to draw wages from the business until it is viable enough to sustain payroll. I was in that situation when I first began my business, so the notion that somehow I'm violating a law by being fiscally responsible for my own company is nonsense. Be wise with your new business. You didn't state why you feel the need to take some kind of payment out, but this can be a crucial mistake if it imperils your business or if that money could be better spent on marketing or some other areas which improve revenues. You can always create a salary deferral agreement between yourself and your own company which basically states that the company owes you wages but you are, for the time being, willing to defer accepting them until such time that the company has sufficient revenues to pay you. That's one solution, but the simplest answer is, if you don't need the money you're thinking of paying yourself, don't do it. Let that money work for you in the business so that it pays off better in the long run. Good luck!\"", "topk_rank": 1 }, { "id": "75920", "score": 0.6248502731323242, "text": "Yes, use a separate Form 8829 for each home used for business during the year. The top of 8829 includes that exact instruction.", "topk_rank": 2 }, { "id": "270426", "score": 0.624825119972229, "text": "Self employment is. Freelancing is the same thing as owning a shop on mainstreet. Many small businesses are operated by a single person. It occurs to me now there are probably people who differentiate between business ownership and freelancing because they want to diminish the achievements of freelancers. Those people are wrong and should be looked out for. What are your motives? /u/spitinthecola", "topk_rank": 3 }, { "id": "15729", "score": 0.6248071789741516, "text": "Those terms apply for businesses operating in the US, yes. The main takeaway should be to think of whether or not you need access to tons of capital, will have substantial risk of liability, or will operate with a partner. If the answer to all of these is no, you should use the structure which is most convenient/best for your taxes. I would look up sole proprietorships and see if that matches the definition of a sole trader.", "topk_rank": 4 }, { "id": "490489", "score": 0.6247478723526001, "text": "\"Before filing your first business tax return, you will need to choose a taxation method, either corporation or partnership. If you choose a partnership, then it's moot - your business income flows through to your personal taxes via form K-1. Also, regardless of your taxation method, you should consult a legal expert, since having your business pay off your personal debt would almost always be counted as income to you, and may cause you to lose the personal liability protections provided by the LLC (aka \"\"piercing the corporate veil\"\"). Having a single-member LLC with no employees, you have to be very careful how you manage the finances of the business. Any commingling of personal and business could jeopardize your protections.\"", "topk_rank": 5 }, { "id": "387010", "score": 0.624468982219696, "text": "\"New York will want to you to pay taxes on income from \"\"New York sources\"\". I'm not sure what this means to a freelance web developer. If your wife is doing freelance web development under the same business entity as she did in New York (ie. a New York sole proprietor, corporation, etc), you probably do need to file. From nonresident tax form manual: http://tax.ny.gov/pdf/2011/inc/it203i_2011.pdf If you were a nonresident of New York State, you are subject to New York State tax on income you received from New York State sources in 2011. If you were a resident of New York State for only part of 2011, you are subject to New York State tax on all income you received while you were a resident of the state and on income you received from New York State sources while you were a nonresident. To compute the amount of tax due, use Form IT-203, Nonresident and Part-Year Resident Income Tax Return. You will compute a base tax as if you were a full-year resident, then determine the percentage of your income that is subject to New York State tax and the amount of tax apportioned to New York State.\"", "topk_rank": 6 }, { "id": "377753", "score": 0.6238387823104858, "text": "Most of the years I filed while a non-resident of the US, I didn't owe a dime to the US government. Same was actually true for Canada, though I did have some income there that was eligible for taxation. AFAIK, even if I hadn't, I would have been required to file, but perhaps that isn't necessary for everyone.", "topk_rank": 7 }, { "id": "508078", "score": 0.6238300204277039, "text": "\"Yes, you can make the election to file your LLC as an S-Corp, and Turbo Tax Business can help you with the S-Corp business return. You need to make sure you're set up correctly and there are a lot of things to be aware of. For example, the whole \"\"reasonable salary\"\" thing is a can of worms. So while the answer to your question is \"\"yes, it's manageable, you can do it on your own,\"\" it might be worthwhile to have a professional help you the first year, make sure it's set up right, and then you can do it on your own in subsequent years.\"", "topk_rank": 8 }, { "id": "158409", "score": 0.623596727848053, "text": "You do not need to file 1099-MISC to yourself if you're running as a sole proprietor - you are yourself. However, you do not deduct this amount from your business income and report it as royalties either. Your self-published book is your business income subject to SE tax. You can only deduct the actual costs of producing/writing, and the remaining amount is your Schedule C income.", "topk_rank": 9 }, { "id": "584074", "score": 0.6234264373779297, "text": "There are no clear guidelines. If you are selling as individual, then what ever profit you make gets added to your overall income as you pay tax accordingly. This is true for sole proprietor or partnership kind of firms. If you are registered as a Company, the profits are taxed as business income. There may be VAT and other taxes. Please consult a CA who can guide you in specifics as for eCommerce, there is no defined law and one has to interpret various other tax laws.", "topk_rank": 10 }, { "id": "182374", "score": 0.6233760118484497, "text": "If you're a non resident then you owe no capital gains tax to Canada. Most banks won't let you make trades if you're a non-resident. They may not have your correct address on file so they don't realize this. This is not tax law but just OSC (or equivalent) regulations. You do have to fill out paperwork for withholding tax on OAS/CPP payments. This is something you probably already do but here's a link . It's complicated and depends on the country you live in. Of course you may owe tax in Thailand, I don't know their laws.", "topk_rank": 11 }, { "id": "430728", "score": 0.6231502890586853, "text": "\"What do you mean by \"\"Canadian income\"\"? Was it income paid to you as wages for the job you did in the US? Or rental/interest income in Canada? If the former - then it doesn't go to NEC, it goes to the main part of the return. If the latter - it doesn't appear on your NR return at all. Yes, it is to validate your residency status. It has no other effect on your taxes.\"", "topk_rank": 12 }, { "id": "106149", "score": 0.6229156851768494, "text": "\"You're essentially asking the very common \"\"Do I Need to File a Tax Return?\"\" question. It's common enough that the IRS answers it right at the beginning of the Form 1040 Instructions, and it's answered fairly thoroughly here: http://www.irs.gov/individuals/article/0,,id=96623,00.html There's about 20 questions in that checklist which are mostly pretty specialized, but assuming you didn't have taxes withheld that you'd like to get back, and didn't have any retirement income/disbursements this year, the only interesting question is this: \"\"Were you self-employed with earnings of more than $400.00?\"\" Sounds like your losses outweighed your profits, and assuming you had no other income, I'd say you're fine not filing. Can't really speak to state law since that can vary so much, but your state's laws are likely similar to federal, and you can probably find a very similar answer near the beginning of the instructions of your state's income tax form.\"", "topk_rank": 13 }, { "id": "519473", "score": 0.6228199601173401, "text": "\"The difference between the provincial/territorial low and high corporate income tax rates is clear if you read through the page you linked: Lower rate The lower rate applies to the income eligible for the federal small business deduction. One component of the small business deduction is the business limit. Some provinces or territories choose to use the federal business limit. Others establish their own business limit. Higher rate The higher rate applies to all other income. [emphasis mine] Essentially, you pay the lower rate only if your income qualifies for the federal small business deduction (SBD). If you then followed the small business deduction link in the same page, you'd find the SBD page describing \"\"active business income\"\" from a business carried on in Canada as qualifying for the small business deduction. If your corporation is an investment vehicle realizing passive investment income, generally that isn't considered \"\"active business income.\"\" Determining if your business qualifies for the SBD isn't trivial — it depends on the nature of your business and the kind and amount of income it generates. Talk to a qualified corporate tax accountant. If you're looking at doing IT contracting, also pay close attention to the definition of \"\"personal services business\"\", which wouldn't qualify for the SBD. Your accountant should be able to advise you how best to conduct your business in order to qualify for the SBD. Don't have a good accountant? Get one. I wouldn't operate as an incorporated IT contractor without one. I'll also note that the federal rate you would pay would also differ based on whether or not you qualified for the SBD. (15% if you didn't qualify, vs. 11% if you qualify.) The combined corporate income tax rate for a Canadian-controlled private corporation in Ontario that does qualify for the small business deduction would be 11% + 4.5% = 15.5% (in 2013). Additional reading:\"", "topk_rank": 14 }, { "id": "364891", "score": 0.6221672296524048, "text": "For this type of business a sole tradership would seem appropriate. You might then want to register as a limited company at a later date if you were growing significantly, taking on premises, seeking debt etc, as that would then shield you from liability.", "topk_rank": 15 }, { "id": "233997", "score": 0.6219907402992249, "text": "Make sure your handling the legal side of things. At your age, at least in the US usually, your parents are the one responsible for things like contracts and such. You can't legally get into contracts on your own and if your going to go into business, even at your age, a contract of work should be a must.", "topk_rank": 16 }, { "id": "248761", "score": 0.6219427585601807, "text": "You can claim a deduction only if all of your business is conducted from the home, i.e. your home is your principal place of business - not just if you work from home sometimes. The CRA (Canada Revenue Agency) has pretty strict guidelines listed here, but once you're sure you qualify for a deduction, the next step would be to determine what portion of your home qualifies. You cannot attempt to deduct your entire mortgage simply because you run your business out of your home. The portion of your mortgage and other related & allowable home expense deductions has to be pro-rated to be equal to or less than the portion of your home you use for business. Simply put, if your business is operated out of a 120 sq-ft self-contained space, and your home's total square-footage is 2400 sq-ft, you can deduct 5% of your expenses (120/2,400 = 0.05). Hope this helps!", "topk_rank": 17 }, { "id": "185999", "score": 0.6218940615653992, "text": "You're not physically present in the US, you're not a US citizen, you're not a green card holder, and you don't have a business that is registered in the US - US laws do not apply to you. You're not in any way under the US jurisdiction. Effectively connected income is income effectively connected to your business in the US. You're not in the US, so there's nothing to effectively connect your income to. Quote from the link: You usually are considered to be engaged in a U.S. trade or business when you perform personal services in the United States. You ask: If I form an LLC or C corp am I liable for this withholding tax? If you form a legal entity in a US jurisdiction - then that entity becomes subjected to that jurisdiction. If you're physically present in the US - then ECI may become an issue, and you also may become a resident based on the length of your stay.", "topk_rank": 18 }, { "id": "123693", "score": 0.6217221021652222, "text": "There is a moral and legal obligation to file the earnings. Not doing so is tax fraud. You should keep a ledger or some record of your earnings, helpful guidelines here. Records are required by the CRA: According to the law, your responsibilities include: (source) You could get in trouble if one of your pupils report the expense at their tax filing, and the CRA finds no matching statement on your filing report. Tutoring are eligible for tax credit in case of disability: Tutoring services that are supplementary to the primary education of a person with a learning disability or an impairment in mental functions, and paid to a person in the business of providing these services to individuals who are not related to the person. A medical practitioner must certify in writing that these services are necessary. So if one of your pupils fall under that provision, you will get tax trouble sooner or later. Bottom line: start making records now, and report your earnings. Collect your tax as any lawful citizen is required to.", "topk_rank": 19 } ]
446	Why do credit card transactions take up to 3 days to appear, yet debit transactions are instant?	[ { "id": "450371", "score": 0.7951384782791138, "text": "When you swipe your credit card, the terminal at the store makes a request of your bank, and your bank has only a few seconds to accept or reject the transaction. Once the transaction is accepted by your bank, it appears in the Pending transactions. At the end of the business day, the store submits all of the final transactions for the day to their bank in a batch, and the banks all trade transactions in a batch, and money is sent between banks. This is the process that takes a couple of days, and after this happens, you see the transaction move from your Pending transactions into the regular transactions area. Most of the time, the pending transaction and the final transaction are the same. However, there are cases where it is different. A couple of examples: With a credit account, the fact that the final amount is not known for a few days is no big deal: after all, you don't have any money in the account, and if you end up spending more than you have, the bank will happily let you take your time coming up with the money (at a steep cost, of course). With a debit card tied to your checking account, the transaction is handled the same way, as far is the store is concerned. However, your bank is not going to run the risk of you overdrawing your checking account. They also are not going to run the risk of you withdrawing money from your account that is needed to cover pending transactions. So they usually treat these pending transactions as final transactions, deducting the pending transaction from your account balance immediately. When the final transaction comes through, they adjust the transaction, and your balance goes up or down accordingly. This is one of the big drawbacks to using a debit card, in my opinion. If a bad pending transaction comes through, you are out this money until it gets straightened out." }, { "id": "89506", "score": 0.7363717555999756, "text": "Take a look at http://en.wikipedia.org/wiki/Payment_gateway There is essentially a lead time between when the transaction is made and when it is settled, 2-3 business days is the lead time for settlement. The link explains the process step-by-step" } ]	[ { "id": "481648", "score": 0.727008581161499, "text": "For me, it is mostly for the fraud protection. If I have a debit card and someone makes a fraudulent charge the money is removed from my bank account. From my understanding, I can then file a fraud complaint with the bank to recover my money. However, for some period of time, the money is missing from my bank account. I've heard conflicting stories of money being returned quickly while the complaint is undergoing investigation as well as money being tied up for several days/weeks. It may depend on the bank. With a credit card, it is the banks money that is tied up.", "topk_rank": 0 }, { "id": "3373", "score": 0.7262338995933533, "text": "\"For most banks this is not the case. Transfers within the bank are usually instantaneous. It is not uncommon for banks to draw out the length of transactions because while the money is \"\"transferring\"\" or \"\"settling\"\" it is actually sitting on the bank's balance sheet, being lent out but not earning any interest. A good deal for them when you aggregate over the millions of customers they have. Your bank may be trying to squeeze a few pennies of interest out of you. Delays in transactions also allow their fraud team the flexibility to investigate transactions if they want to. Normally they probably don't but if the bank delays all transactions, then those being investigated will not be aware of it.\"", "topk_rank": 1 }, { "id": "283889", "score": 0.7259088754653931, "text": "\"From my days in e-commerce they break down like this? The company doesn't know a debit from a credit card. Got the Visa logo, then it is a Visa through the company's payment gateway. The gateway talks to the bank and that is where the particulars for money is figured out. When I programmed gateway interfaces, I had the option to \"\"authorize\"\" or check for funds (which didn't reserve anything, just verified funds existed), run for batch (which put a hold on the funds and collected them at the end of the night) or just take the money. Most places did a verify during the early checkout stages and then did a batch at the end of the night. The nightly batch allows a merchant to cancel a transaction without getting charged a fee. The \"\"authorize\"\" doesn't mean the money is tied up, although that might be your banks policy. Furthermore, an authorize can only last for so many days. This also explains why most of your banks don't report your transactions to you the day of. There is a bunch more activity on your card than the transactions that complete.\"", "topk_rank": 2 }, { "id": "127559", "score": 0.7256929874420166, "text": "\"Why? Because they can get away with it, of course. In short - why not? You may want to read the answers to this similar question (my answer is the one accepted by the OP). Who has the money? The banks, who else. I have found that some banks are capable of sending/receiving ACH transfers faster than others. I have accounts in two banks, lets call them A and B. If I send money (push) from A to B, it may take several days. But if I decide to pull the money from A to B by originating the transaction through my account at B - the money arrives the next day! So the actual transfer only takes a night, one business day. Its just the direction that matters - if the bank has to give the money out, it will do all it can (including taking 2-3 days for \"\"processing\"\") to keep the money as long as possible. But when another bank charges them - they have no choice but to pay. By the way, bank B behaves better - when I send the money from my account at B, it arrives to A the next day as well. Try a similar experiment. Instead of originating the transaction at the sender bank - try to originate it at the receiver bank, see how long it takes then for the money to appear on your account after it disappeared from the other one.\"", "topk_rank": 3 }, { "id": "86532", "score": 0.7239735722541809, "text": "If the debit card is associated with the account, there is nowhere else it could go. The chance is nil that there is another account with that 16-digit number. So either it goes there, or the transfer fails and it is right back where it came from, though this could take some days. If you don't want to risk a wait, talk to your bank now.", "topk_rank": 4 }, { "id": "224259", "score": 0.7232082486152649, "text": "\"I was perplexed by this until a few days ago when it finally clicked in a meeting with our fraud and money laundering teams in work (I work on trading surveillance). Apparently fraud detection and prevention of money laundering are currently the biggest delayers when it comes to electronic transfer of funds, checking that the transferring party has the funds to transfer etc. takes no time at all. It takes some time for a bank user to \"\"release\"\" a funds transfer; once it has been initiated it is put into a queue to be reviewed as potentially fraudulent or money laundering activity. Almost every transaction has to be monitored for this from a legal standpoint. The compliance process can take multiple days. Once the process is complete the request also has to go through \"\"settling\"\" which is an end of day process whereby banks \"\"net off\"\" their customers' transactions with other banks and only pass the net value between them. This is an end of day process by nature so only happens once a day meaning that once all of the checks have occurred any transaction will take until the end of the day to crystallise for the bank and so get credited to their customers' accounts. Incidentally in the UK and Europe banks are moving to streamline this process through \"\"faster payment\"\" systems (that is the industry term for the technology) so that customers see the effect within a few hours (2 in the UK currently) and then the banks net off at the end of day as usual. This means reducing the time it takes to do the checks that have to be done using specialist software to flag transfers as potentially fraudulent or not and making banks' processes much clearer and faster.\"", "topk_rank": 5 }, { "id": "456361", "score": 0.7227025628089905, "text": "The holdup is from the merchant. To protect themselves, a merchant requires payment before giving you your purchased item/service. That is why you are charged immediately. When getting a refund, the same reason applies. The merchant needs to ensure that you are returning the correct item, or that it is still good, or that you are not trying to defraud the merchant in some way. Once the merchant processes that refund, it is all over for them, and they have no recourse later if they find out they were cheated. That is why they wait a while: the delay gives them time to discover any problems.", "topk_rank": 6 }, { "id": "149032", "score": 0.7221319675445557, "text": "It depends on your bank and your terms of service, but using the card one way or the other may affect things such as how long it takes to process, what buyer protections you have, etc. It also affects the store as I believe they are charged differently for debit vs credit transactions.", "topk_rank": 7 }, { "id": "519124", "score": 0.7209639549255371, "text": "There are reward points that you have already mentioned. Some banks also give reward points for netbanking transfer, although very few and less than debit card. On a fraudulent site, debit card adds a layer, if compromised, easy to change. i.e just hot list the card, get a new card issued. Netbanking quite a few banks have incorrect implementation and difficult to change the login ID / User ID. The dispute resolution mechanism is well established as there is master or visa network involved. The ease of doing transaction is with netbanking as for card one has to remember 16 digits, expiry, cvv. The entire process of card usage is multiparty, on slow connection if something goes wrong, it takes 3 days to figure out. In netbanking it is instantaneous. You just login to bank and see if the debit has gone through.", "topk_rank": 8 }, { "id": "269584", "score": 0.7208446264266968, "text": "It comes down to liability - if a fraudulent transaction takes place with a debit card, you are out $$ until it is resolved - while as with a credit card, the credit lender is out $$ - the credit lender does not like losing $$, and therefore would like to be paid extra $$ for assuming this risk, and they found the merchant as the one most willing to pay. Sometimes the merchant will pass on this cost to the consumer, but often times the credit card company has a contract with the merchant preventing such a fee, because then they would be at a price disadvantage when compared to debit.", "topk_rank": 9 }, { "id": "294077", "score": 0.71905517578125, "text": "\"This is not a normal occurrence, and you have every right to be annoyed, but the technical way it usually happens goes like this: What can happen is when the merchant incorrectly completes the transaction without referencing the pre-authorization transaction. The bank effectively doesn't \"\"know\"\" this is the same transaction, so they process it the same way they process any other purchase, and it has no effect on the pre-authorization and related held/pending transaction. As far as the bank knows, you purchased a second set of blinds in the store for $200 and are still waiting on the first order to come in, they have no idea the store screwed up. The reason this is possible is the purpose of the pre-auth in the first place is that it is a contractual agreement between the bank (credit card) and the merchant that the funds are available, will be available except under rare special circumstances, and thus they can go ahead and process the order. This lets the merchant be secure in the knowledge that they can collect their payment, but you aren't paying interest or monthly payments on something you haven't even gotten yet! This system works reasonably well for everyone - right up until someone screws up and fails to properly release a hold, makes a second transaction instead of properly referencing the first one, or the bank screws up their system and fails to correctly match referenced pre-authorization codes to purchases. The problem is that this should not be a normal occurrence, and the people you are speaking with to try to sort out the issue often do not have the authority or knowledge necessary to properly fix the issue, or its such a hassle for them that they hope you just go away and time fixes the issue on its own. The only sure-fire solution to this is: make sure you have so much extra credit line that this doesn't effect you and you can safely let it time out on its own, or stop doing business with this combination of merchant/payment that creates the problem. Back when my credit limits were being pushed, I would never pay at gas pumps because their hold polices were so weird and unpredictable, and I would only pre-pay inside or with cash to avoid the holds.\"", "topk_rank": 10 }, { "id": "175448", "score": 0.7171416878700256, "text": "\"Why would you consider it null and void? It might be that something went wrong and the business \"\"lost\"\" the transaction one way or another. It might be something else. It might never appear. It might appear. In one of the questions a while ago someone posted a link of a story where an account was overdrawn because of a forgotten debit card charge that resurfaced months later. Can't find the link right now, but it can definitely happen.\"", "topk_rank": 11 }, { "id": "506374", "score": 0.7164421081542969, "text": "Another explanation is that they keep your money three days to make money with it, because they can. The other reasons might have been valid 100 years ago, and no bank would voluntarily cut that down until forced by law. Example: In Europe, bank to bank transfers used to take three days, until a law forced them to give next day, and suddenly it was possible.", "topk_rank": 12 }, { "id": "417133", "score": 0.7158232927322388, "text": "I am using my debit card regularly: in ATM's with a pin, in stores with my signature, and online. But later you say But from what I recall from starting my own business (a LONG time ago), for debit cards there's only a per-transaction fee of like $0.25, not a percentage cut. Only pin transactions have just a per-transaction fee paid by you to the merchant (and you are reimbursed by Schwab). If you use your card with just a signature or online without a pin, then it is a credit transaction from the merchant's perspective. The merchant pays a fee and Schwab gets its cut of that. So for two of the transaction types that you describe, the merchant pays Schwab (indirectly) out of your payment. Only when you enter your pin does it process as a debit transaction where Schwab pays the merchant. Because check cards withdraw the money from your account immediately, you don't even get the twenty to fifty day grace period. So those merchant fees are pure profit for Schwab, offsetting the loss from the ATM fees. You claim $4-5k in fees at $.25 each. That's sixteen to twenty thousand transactions. Assuming that several is four to five years, that's more than ten transactions a day. That seems like a lot. I can see three for meals, one for miscellaneous, and maybe some shopping. But if I go shopping one day, I don't normally go again for a while. I have trouble seeing a consistent average of five or more transactions a day. Even if we use just the higher ATM fees (e.g. $2), that's still more than a transaction a day. That's an extreme level of usage, particularly for someone who also makes frequent purchases via card. I haven't done any other business with them. I find this confusing. How does money get into your account? At some point, you must have deposited money into the account. You can't debit from an account without a positive balance. So you must have done or be doing some kind of business with them. If nothing else, they can invest the balance that you deposit. Note that they make a profit off such investments. They share some of that profit with you in the form of interest, but not that much really. Of course, Schwab may still be losing money on your transactions. We can't really tell without more information on how much of each transaction type you do and how much of a balance you maintain. Perhaps they are hoping that you will do other, more profitable, activities in the future. I doubt there are that many Schwab customers like you describe yourself. As best I've been able to see, they advertise their banking services just to investment customers. So it's unlikely that many customers who don't use their investment services use their banking services just for ATM reimbursements.", "topk_rank": 13 }, { "id": "382347", "score": 0.7139365077018738, "text": "\"Well, it took some effort to get an explanation from my bank. Turns out that some supermarkets use direct debit as a method of transferring money for purchases payed by so-called \"\"EC\"\" cards here. I was told that for some reason, a supermarket decided to reverse one of such transactions.\"", "topk_rank": 14 }, { "id": "595633", "score": 0.7136567831039429, "text": "Typically, a direct debit is set up by the company who will be receiving the money, not by you or your bank. So you need to contact your credit card company, and ask them to set up the direct debit.", "topk_rank": 15 }, { "id": "592796", "score": 0.7129669189453125, "text": "Transfers are defined to arrive on a specific number of business days, nearly always one business day (if you submit it before the cutoff time). The exact number of days depends on the receiver bank, but when you try to create a transfer, it will tell you when it will arrive, before you send it out.", "topk_rank": 16 }, { "id": "144580", "score": 0.7122851014137268, "text": "I'm pretty sure it's merchant-dependent. If a credit card transaction doesn't go through, PayPal will automatically charge your bank account. Some merchants may want that extra insurance.", "topk_rank": 17 }, { "id": "64025", "score": 0.7119903564453125, "text": "It takes about 4-5 workdays, maybe it depends on the day also when you start the transfer. I transferred an amount last Wednesday, and the same amount on Thursday too. Both transactions hit the destination account on the next Tuesday, with a difference of 2 minutes.", "topk_rank": 18 }, { "id": "461133", "score": 0.7116901874542236, "text": "It could be a delay because of the Automated Clearinghouse (ACH) process. At least that's the explanation on this thread at the PayPal forums, and on Prosper.com.", "topk_rank": 19 } ]
447	Why do VAT-registered businesses in the EU charge VAT to each other?	[ { "id": "297588", "score": 0.7108968496322632, "text": "Not doing this would defeat the entire purpose of a VAT. The reason for a VAT rather than a simple sales tax is that it's harder to evade. Having a simple sales tax with the type of rates that VAT taxes typically are is unworkable because evasion is too easy. Imagine I'm a retailer. I buy products from a wholesaler and sell them to consumers. With a sales tax, if I don't charge the customer sales tax, the customer is happy and I don't care (assuming I don't get caught). And if I keep the sales tax but don't report the sale, I make a lot of money. Now, imagine a VAT. If I don't charge the customer the VAT, I lose money since I paid the VAT on the wholesale products. And if I don't report the sale, how do I claim my VAT refund?" }, { "id": "357079", "score": 0.72758549451828, "text": "But why can't two companies exchange goods directly without paying VAT? This would make the famous carousel fraud scam impossible and businesses won't have to deal with complicated refunds. Sales tax in the United States works as you describe. Sales tax is charged only to end customers, not to businesses that themselves charge sales tax. But this means that a criminal business can charge tax and just pocket it unless someone else reports it. They can also evade income tax the same way. Not to mention other issues like cross jurisdiction taxes (e.g. internet sales often evade sales tax). The whole point of a Value Added Tax (VAT) is that they charge at each level. This creates a system where each buyer reports the tax paid to the seller so as to be able to deduct it. So the seller has to pay the VAT that they charged. Or the tax authorities know and can revoke their VAT license. If only the end user is charged tax, then fraud is easier than under a VAT. So easy, I doubt they have a special name for it. The fraudulent business just collects tax from end users and disappears. Or simply fails to record those transactions. You could call it missing transaction record fraud, but why bother? It's just straight up tax fraud. The complexity of the carousel fraud arises from the difficulty of evading a VAT." } ]	[ { "id": "203905", "score": 0.6822735071182251, "text": "\"As far as I know any business can register for VAT regardless of the nature of the business. If all the goods you sell (or services you provide) are VAT-exempt or zero-rated then you will get refunds from HMRC on VAT your business pays. Any business whose non-VAT exempt turnover (which would include zero-rated goods and services provided) exceeds the registration threshold must register, again even if that means they are \"\"forced\"\" to claim refunds. So the only question would be whether your rather nebulous activities were enough to qualify you as a business or organisation to which the VAT regime applies at all. The one-liner answer to that is generally, if goods or services are provided in return for a charge, there’s a business activity for VAT purposes Inevitably there's a much bigger body of statute and case law and it won't always be obvious whether the one-liner answer applies or not to a particular activity so it may be necessary to seek specialist advice.\"", "topk_rank": 0 }, { "id": "475607", "score": 0.6818715929985046, "text": "The plumber will apply for and receive a refund of the amount of VAT he paid on the purchase amount. That's the cornerstone of how VAT works, as opposed to a sales tax. So for example: (Rounded approximate amounts for simplicity) Now, at each point, the amount between (original cost VAT) and (new VAT) is refunded. So by the end, a total of £3 VAT is paid on the pipe (not £6.2); and at each point the business 'adding value' at that stage pays that much. The material company adds £1 value; the producer adds £4 value; the supplier adds £5 value; the plumber adds £5 value. Each pays some amount of VAT on that amount, typically 20% unless it's zero/reduced rated. So the pipe supplier pays £1 but gets a £0.2 refund, so truly pays £0.8. The plumber pays £3 (from your payment) but gets a £2 refund. So at each level somebody paid a bit, and then that bit is then refunded to the next person up the ladder, with the final person in the chain paying the full amount. The £0.2 is refunded to the producer, the £1 is refunded to the supplier, the £2 is refunded to the plumber.", "topk_rank": 1 }, { "id": "76045", "score": 0.6814928650856018, "text": "VAT is charged to consumers and passed on to the Government. Income tax is paid by the employees. Corporate tax on income is the true tax on corporate value add, which isn't reflected in this practice. That being said, there is nothing unique or illegal to what Starbucks is doing, pretty much all global corporations have entities setup for the exclusive purpose of licensing IP/brands. The entity just needs to demonstrate an arm's length in transactions.", "topk_rank": 2 }, { "id": "148228", "score": 0.679044246673584, "text": "The reason is in your own question. The answer is simple. They use that code to tax the product otherwise it would just be out of pocket expenses.", "topk_rank": 3 }, { "id": "114546", "score": 0.6783071756362915, "text": "Within the U.K., Third Party Resellers establish warehouses in the UK, but orders are placed overseas, and Amazon is not required to collect Value Added Tax on behalf of allegedly foreign owned resellers which rely on Amazon to sell items. Amazon also evades the payment of tax by routing all sales through Luxembourg which, thanks to Jean Claude Juncker of the EU when Prime Minister of Luxembourg negotiated a generous tax sweetheart deal for multi national corporations (incl Amazon) to establish their base in Luxembourg.", "topk_rank": 4 }, { "id": "419096", "score": 0.6767614483833313, "text": "They take in a lot through Corporation Tax, so it'd be relatively unfair to non-business owners and non-shareholders to put it onto VAT and income tax. In the Starbucks case, they'd still want to get the money out of the country so would end up paying no more tax than now. One alternative along the lines you state, though, would be to crank up capital gains and dividend taxes to match what's taken in by Corporation Tax now. After all, those are the other ways (than income) for owners and shareholders to extract value from corporations and would be tricky to dodge unless you're outside of the EU.", "topk_rank": 5 }, { "id": "219940", "score": 0.6762798428535461, "text": "All this speculation and no one really has the right idea what's going on. It has almost nothing to do with VAT and nothing to do compliance. [It has everything to do with a very a chronically weak Euro.](https://www.google.com/finance?client=safari&rls=en&q=eur&oe=UTF-8&um=1&ie=UTF-8&sa=N&tab=we) Apps in the App Store are tied to tiers. My app sells at tier 10. For USD, this means I sell my app for $10 and make $7 after their cut. Tier 10 used to translate to 7,99€. Now it's 8,99€. This means before the hike I, as an American, would get 4,79€ or $6.19 after the exchange. This wasn't a problem back when the app store opened. The economy was relatively strong and the Euro stood around 1.5 to one American dollar. This means in 2008 I'd get about the same $7 after the conversion. With the Euro crisis, the tiers remained the same which meant each European sale only netted around $5.75, a $1.25 discount for each European. The Euro conversion was a long standing issue and the price hike restores the exchange back to the $7 dollars it used to be.", "topk_rank": 6 }, { "id": "11132", "score": 0.6759021878242493, "text": "The big problem I see with this article is it does not state what the profits would be minus the licensing fees. It only states revenue, which is obviously a bad indicator of taxes owed. Also, licensing fees are applicable in some markets. For example in markets like China that mandate a company do business under a subsidiary, licensing is a legitimate expense, considering the subsidiary might not be wholly owned by the parent company (per the country's laws). That said, this is the UK we're talking about, so it is clearly not in that situation. I was just pointing out in some markets it is a legitimate expense. Maybe the UK could make licensing fees a non-deductible expense after a certain percentage of subsidiary income. Its a complex problem, I would be interested to see if any other jurisdictions have tackled it.", "topk_rank": 7 }, { "id": "229293", "score": 0.6746135950088501, "text": "If the VAT is offset by not having to pay for employees health insurance, then I wonder what net effect it would have on goods? Also, if the employees are no longer paying for their share of the employer funded health insurance, then that would, effectively, be more money in the employees pockets. You're right though, it all comes down to what the numbers look like.", "topk_rank": 8 }, { "id": "64868", "score": 0.6730568408966064, "text": "Its one of the main points. Transfer pricing includes discretionary decisions and is part of BEPS. Its also completely unnecessary: Pay taxes on revenue in country earned/sold. Get tax credits/refunds in country were spending is made. The reason why already profitable companies consider BEPS/tax arbitrage for HQ locations is because they get discretionary power over accounting profit allocation. Tax policy should serve the society though, and this proposal encourages the spending that benefits society. Its the usual case that the right answer is different than that being lobbied for.", "topk_rank": 9 }, { "id": "583956", "score": 0.6711603999137878, "text": "\"You cannot \"\"claim back\"\" VAT. What happens is that if you sell goods with VAT and charge customers VAT, you would have to send that VAT straight to HMRC, but if your business itself paid VAT, then you already paid VAT, so you have to send less. As an example, if you send an invoice for £10,000 plus £2,000 VAT, and you paid yourself £500 VAT on business related expenses, then you need to send £2,000 - £500 = £1,500 to HMRC. But if you don't send invoices including VAT, then you owe HMRC £0. Any VAT you paid on business related expenses is lost; HMRC won't pay you money. BTW. Only VAT on business related expenses can be deducted. So if you want to be \"\"smart\"\", register for VAT and get the VAT on your weekly shopping bill refunded, forget it.\"", "topk_rank": 10 }, { "id": "140118", "score": 0.6698474287986755, "text": "The technical answer is defined by the laws of state you live in but most (all?) states with a sales tax have some form of use tax. Where if you buy something in another state for use in your home state you are technically liable for sales tax on it regardless of whether the merchant charged you tax on it or not. I don't think many people actually pay the use taxes, and enforcement generally seems rare.", "topk_rank": 11 }, { "id": "188296", "score": 0.6696889996528625, "text": "https://www.ato.gov.au/Business/GST/ Some of the costs are indeed related to the conversion rate, which, as we all know,changes daily. You don't say whether you're using a credit card. If so, some cards do charge foreign transaction fees; some do not. However, Australia, like many European countries, does use a VAT system. Therefore your charges will be increased. Please be aware that these taxes are built into the economic system. In many cases, you van apply for and receive a waiver to be reimbursed if the purchase is made through a duty free store.", "topk_rank": 12 }, { "id": "276934", "score": 0.6678733825683594, "text": "You can claim VAT back if you are VAT registered. You MUST be VAT registered if your turnover is more than £82,000. You MAY register if your turnover is less. However, you can only claim back as much VAT as you actually received, and you can only claim VAT back on purchases that were made for your business, not for private use. And you need to remember that if you are VAT registered, you MUST charge VAT on every income. If you mostly trade with private customers, it means that your prices all just went up by 20%, so it's not a good idea.", "topk_rank": 13 }, { "id": "387186", "score": 0.6677269339561462, "text": "Usually, your situation is a generalized form of import/export, with you as the net exporter of goods/services and the individual consuming your goods/service as net importer. Import export laws vary from country to country but following are the general tariffs/taxes applicable: Export tax/duty: From your sovereign jurisdiction (read country/region/EU region), there could be export restriction or tariffs applicable to your exported goods/services on the other hand there may not be any, check with EU export law on this and then your country specific law. If there is any tax/tariff payable, you shall have to pay the same on the transactions. Import tax/duty: This is more related to your customer who is purchasing the goods/services from you, however, you should know this. Your customer will be liable to pay any import tax/duty as applicable for importing of your goods/services in that country/region, if it is applicable. Shipping Insurance: If it is a physical goods, there would be shipping and with shipping comes insurance and indemnity (if applicable). So there is a cost to it, you need to be aware of this. Sales Tax: There is no Govt. on earth or history which does not or did not charge sales tax in some form or the other. EU/country will also have sales tax, you should be aware of this as per transaction you may have to pay sales tax to the Govt. This would add to the cost. Credit of Foreign Currency Payments: Some countries have tax/tariffs attached to foreign currency credits/transfers or bank charges attached to the same, you may have to open specific type of bank A/C to receive the credits. These laws are specific to country/region, you should be aware of the same. The above are generic considerations and not specific to EU and to a greater/lesser extent applicable to all countries/regions. Best would be to search the net on the above points for EU region and get answers or approach a chartered accountant who will give you all the information.", "topk_rank": 14 }, { "id": "433801", "score": 0.6671071648597717, "text": "Note: I am not a lawyer. This is my personal opinion and interpretation. First, your source is European Law, which obviously doesn't apply outside of the EU. The EU cannot make laws that bind entities in other countries; so you cannot claim that the VAT was needed to be mentioned. Second, if you owe something, you owe it; it doesn't matter if it was forgotten to be mentioned. At best, you can say that under those circumstances you don't want the software anymore, and i would assume you can send it back and get your money back (minus a fee for having it used for a while...) - this gets quite difficult to calculate clearly, so it's probably not a good avenue to follow for you. As the company has to send the VAT to your country (they will not be allowed to keep a dime of it, and have to bear the complete cost for the handling), it is a debt you have to your government; they are just the entity responsible for collecting it. Still, if you just ignore them, they will probably suck it up, and your government will also not do a thing to you. If they only have your email address, they have no way of knowing if you even still have/use this address; for all they know, it could be you never got it. They also cannot simply charge your card, as they probably don't have the card data any more (they are not supposed to keep it after the transaction is complete, and they thought it was complete at the time). All in all, you should be safe to ignore it. It's between you and your god/consciousness, if you feel obliged to pay it, as technically you owe it.", "topk_rank": 15 }, { "id": "422335", "score": 0.666424572467804, "text": "In almost any jurisdiction, the restaurant will pay tax on the amount after the discount. Discounting is just a selective way to reduce prices for particular clients and thus achieve some degree of price discrimination. It's no different in principle to cutting prices for everyone or having a sale or similar. It would be very strange for a tax jurisdiction to work any other way, because businesses would end up being taxed on money they never actually got. While tax systems often have that kind of anomaly in rare cases at the edge of the system, discounting via vouchers is extremely common. For example, here are the rules in the UK.", "topk_rank": 16 }, { "id": "138120", "score": 0.665952205657959, "text": "How hard would it be to say that a company cannot pay licensing fees to a company that it owns an X% stake in (and/or owns an X% stake of it, to cover subsidiary to parent movement? . Alternatively, such transactions could be taxed as if they were a purchase between the two companies, and taxed as such. The percentage could be set high enough so as to not discourage joint ventures, but low enough to force a company to sacrifice a major chunk of the money to another unowned company if they try to abuse it.", "topk_rank": 17 }, { "id": "90230", "score": 0.6645996570587158, "text": "The vendor needs to do this using apportionment, according to the VAT rules for mixed supplies: If you make mixed supplies and the individual supplies are not liable to VAT at the same rate then you need to work out the tax value of each supply in order to calculate how much tax is due. If the tax value is based on the total price you charge (see paragraph 7.3) you do this by splitting that price between the supplies. This is called an apportionment ... There is no special method of apportionment ... However, your calculations must be fair and you must be able to justify them. It is usually best to use one of the methods shown in section 32. The section 32 referred to really relates to apportioning use between business and non-business purposes, but it implies that splitting up the total price in proportion to the original prices would probably be fair. So in your example the vendor might split the £5 discount equally between the spoon and the carrycot as they had the same gross cost, and pay VAT as if each had cost £7.50 gross. The vendor could also do it in proportion to their net (pre-VAT) prices and thus apportion a bit more of the discount to the carrycot than the spoon, but as this would lead to them paying slightly more tax overall they probably wouldn't choose to. However, none of this is likely to be too relevant to a consumer, since in the UK prices must be presented as the gross (VAT-inclusive) amounts and so the discounts will also apply to those amounts. It will of course affect how much of the purchase price the vendor ends up paying on to the government and thus might indirectly affect what discounts the vendor is willing to offer.", "topk_rank": 18 }, { "id": "454208", "score": 0.6642265915870667, "text": "You can't currently avoid it. The reason the legislation was introduced was to prevent the big-name developers from setting up shop in a low-VAT country and selling apps to citizens of EU countries that would normally be paying a much higher VAT. You need to register for VAT and file quarterly nil-returns so that you get that money back. It's a hassle, but probably worth it just to recoup those funds. From an article in Kotaku from late 2014: You see, in the UK we have a rather sensible exemption on VAT for businesses that earn under £81,000 a year. This allows people to run small businesses - like making and selling games in your spare time, for instance - without the administrative nightmare of registering as a business and paying VAT on sales. Unfortunately, none of the other EU member states had an exemption like this, so when the new legislation was being put together, there was no exemption factored in. That means that if someone makes even £1 from selling something digital to another person in another EU country, they now have to be VAT registered in the UK AND they have to pay tax on that sale at whatever rate the buyer’s country of residence has set. That could be 25% in Sweden, 21% in the Netherlands, and so on. [...] There’s one piece of good news: even though anyone who sells digital stuff now has to be VAT-registered in the UK, they don’t actually have to pay VAT on sales to people in the UK if they earn less than £81,000 from it. (This concession was achieved earlier this month after extensive lobbying.) But they’ll still have to submit what’s called a “nil-return”, which is essentially a tax return with nothing on it, every quarter in order to use the VAT MOSS service. That’s a lot of paperwork. Obviously Brexit may have a significant impact on all this, so the rules might change. This is the official Google Link to how they've implemented this and for which countries it affects: https://support.google.com/googleplay/android-developer/answer/138000?hl=en Due to VAT laws in the European Union (EU), Google is responsible for determining, charging, and remitting VAT for all Google Play Store digital content purchases by EU customers. Google will send VAT for EU customers' digital content purchases to the appropriate authority. You don't need to calculate and send VAT separately for EU customers. Even if you're not located in the EU, this change in VAT laws will still apply.", "topk_rank": 19 } ]
448	How To Report Cryptocurrency Earnings?	[ { "id": "378437", "score": 0.6079151630401611, "text": "\"While this does fall under the \"\"All-inclusive income\"\" segment of GI (gross income), there are two questions that come up. I invested in a decentralized bitcoin business and earned about $230 this year in interest from it Your wording is confusing here only due to how bitcoin works.\"" }, { "id": "269987", "score": 0.6798747777938843, "text": "\"As cryptocurrencies are rather new compared to most assets, there hasn't been a lot of specific guidance for a lot of situation, but in 2014 the IRS announced that it published guidance in Notice 2014-21. I'm not aware of further guidance that has been published beyond that, though it wouldn't surprise me if treatments changed over time. In that notice, the answer to the first question describes the general treatment: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. Your specific questions (about what constitutes a \"\"business\"\", and when you're considered to be \"\"selling\"\" the cryptoproperty) are likely to be considered on a case by case basis by the IRS. As the amounts involved here are so small (relatively speaking), my recommendation would be to read through what the IRS has published carefully, make reasonable assumptions about what scenarios that are described are closest to what you're doing, and document doing so clearly as part of your tax preparations. And when in doubt, erring on the side of whichever option incurs more tax is unlikely to be objected to by them. Of course, I'm not a lawyer or tax advisor, I'm a stranger on the Internet, so for \"\"real\"\" advice you should contact somebody qualified. I doubt you'd be faulted too much for not doing so given the amounts involved. You could also attempt contacting a local IRS office or calling them with your specific questions, and they may be able to provide more specific guidance tailored to you, though doing so may not save you from an auditor deciding something differently if they were to examine your return later. There are also phone numbers to contact specific people listed at the end of Notice 2014-21; you could try calling them as well.\"" } ]	[ { "id": "495418", "score": 0.6115177273750305, "text": "Use TWIRR (aka TWRR). Time Weighted rate of return. It's sort of the opposite of XIRR. XIRR results change dramatically depending on the timing of the cashflows. It might be useful to also model returns that are unaffected by the timing. This is how funds report returns, and this number allows you to compare to funds and indices. During periods of steady deposits, XIRR will continually understate performance. And in retirement, when you have steady withdrawals, XIRR will overstate. TWRR is talked about here: http://www.dailyvest.com/PRR/prr_calcmethods.aspx#twrr I've made a simple spreadsheet that you can use as a starting point, if you like: http://moosiefinance.com/static/models/spreadsheets.html (top entry in the list)", "topk_rank": 0 }, { "id": "161156", "score": 0.6114946603775024, "text": "Answering my own question, I figured it out: yes, there is a way, with a tool called gnucash2ledger.py. Versions used: GnuCash 2.6.1, Ledger 2.6.2, hledger 0.22", "topk_rank": 1 }, { "id": "5284", "score": 0.6114197373390198, "text": "Are there specific questions that you have? You can explore subs on reddit, there are solid news sources like coindesk.com and specific people on twitter / medium you can follow to get deeper insight. There are also entire avenues of theory such as cryptoeconomics - meaning how do you pay, incentivize, and secure miners. The architecture layer is complicated - currency is the tip of the iceberg, there is inherent value in protocols built on top of a blockchain and blockchains themselves.", "topk_rank": 2 }, { "id": "518393", "score": 0.6113861203193665, "text": "Your dividend should show up in one of a few methods: (1) Cash in your trading account (2) A check mailed to you (3) A deposit to a linked bank account (4) As additional new shares in the stock, as the result of a DRIP setup.", "topk_rank": 3 }, { "id": "38906", "score": 0.6111616492271423, "text": "Some banks would allow you to export your transactions as CSV (they call it Excel export, but in many cases it's actually just CSV). However, I would not expect any bank to bother with creating anything like command-line access - return on such investment would be too low. There are other ways to get information out of the banks, I'm sure - providers like Yodelee must be using something to fetch financial data - but those usually not for general public access. Also, you can use something like mint.com to aggregate you banking data if you bank doesn't do good export and then export it from there. They have CSV export too. If you need to do any actions though, I don't think there's anything like you are looking for.", "topk_rank": 4 }, { "id": "220887", "score": 0.6111477613449097, "text": "Actually banks aren't required to (and don't) report on 8300 because they already report $10k+ cash transactions to FinCEN as a Currency Transaction Report (CTR), which is substantively similar; see the first item under Exceptions in the second column of page 3 of the actual form. Yes, 8300 is for businesses, that's why the form title is '... Received In A Trade Or Business'. You did not receive the money as part of a trade or business, and it's not taxable income to you, so you aren't required to report receiving it. Your tenses are unclear, but assuming you haven't deposited yet, when you do the bank will confirm your identity and file their CTR. It is extremely unlikely the government will investigate you for a single transaction close to $10k -- they're after whales and killer sharks, not minnows (metaphorically) -- but if they do, when they do, you simply explain where the money came from. The IRS abuses were with respect to people (mostly small businesses) that made numerous cash deposits slightly under $10k, which can be (but in the abuse cases actually was not) an attempt to avoid reporting, which is called 'structuring'. As long as you cooperate with the bank's required reporting and don't avoid it, you are fine.", "topk_rank": 5 }, { "id": "428127", "score": 0.6111131310462952, "text": "https://www.google.com/search?q=quarterly+and+annual+financial+report+calendar&oq=quarterly+and+annual+financial+report+calendar&aqs=chrome..69i57.9351j0j7&sourceid=chrome&ie=UTF-8 The third result on Google is: https://www.bloomberg.com/markets/earnings-calendar/us The fourth result on Google is: https://finance.yahoo.com/calendar/earnings", "topk_rank": 6 }, { "id": "404840", "score": 0.6108638644218445, "text": "Profit after tax can have multiple interpretations, but a common one is the EPS (Earnings Per Share). This is frequently reported as a TTM number (Trailing Twelve Months), or in the UK as a fiscal year number. Coincidentally, it is relatively easy to find the total amount of dividends paid out in that same time frame. That means calculating div cover is as simple as: EPS divided by total dividend. (EPS / Div). It's relatively easy to build a Google Docs spreadsheet that pulls both values from the cloud using the GOOGLEFINANCE() function. I suspect the same is true of most spreadsheet apps. With a proper setup, you can just fill down along a column of tickers to get the div cover for a number of companies at once.", "topk_rank": 7 }, { "id": "172840", "score": 0.6107996106147766, "text": "In general you cannot. Once the security is no longer listed on the exchange - it doesn't have to provide information to the exchange and regulators (unless it wants to be re-listed). That's one of the reasons companies go private - to keep their (financial and other) information private. If it was listed in 1999, and is no longer listed now - you can dig through SEC archives for the information. You can try and reach out to the company's investors' relations contact and see if they can help you with the specific information you're looking for.", "topk_rank": 8 }, { "id": "406481", "score": 0.6107940673828125, "text": "Exec Insiders have to file with the SEC and some sites like secform4.com track it. But many insiders have selling programs where the sell the same amount every month or quarter so you would have to do your homework to determine if there are real signals in the activity.", "topk_rank": 9 }, { "id": "162159", "score": 0.6104406714439392, "text": "\"I use the (gratis, libre) command-line program ledger for my personal accounts. It handles funds across accounts gracefully, through a feature called \"\"Virtual Accounts\"\". A transaction can add or subtract money from a virtual account, which need not balance with all the other entries in the transaction. Then it's just a matter of setting up reports to include or exclude these accounts.\"", "topk_rank": 10 }, { "id": "341192", "score": 0.610431969165802, "text": "\"In the case of a specific fund, I'd be tempted to get get an annual report that would disclose distribution data going back up to 5 years. The \"\"View prospectus and reports\"\" would be the link on the site to note and use that to get to the PDF of the report to get the data that was filed with the SEC as that is likely what matters more here. Don't forget that mutual fund distributions can be a mix of dividends, bond interest, short-term and long-term capital gains and thus aren't quite as simple as stock dividends to consider here.\"", "topk_rank": 11 }, { "id": "285177", "score": 0.6103097200393677, "text": "\"You can report it as illegal income and you don't have to elaborate any further. For instance, spirit the cash off to a state where pot is legal and set up a dispensary. That is not legal at the Federal level, so it is in fact \"\"illegal income\"\" vis-a-vis your Form 1040 and that's all you say. Make sure you look, walk, and quack like a fairly successful pot distributor. That will most likely be the end of their inquiry, since they're not terribly driven to investigate the income you do report. Having to give 33% of it to the IRS is generally strong motivation for folks to not report fake income. You're not claiming the money is from pot, you're allowing them to infer it.\"", "topk_rank": 12 }, { "id": "94816", "score": 0.6103044152259827, "text": "\"I found your post while searching for this same exact problem. Found the answer on a different forum about a different topic, but what you want is a Cash Flow report. Go to Reports>Income & Expenses>Cash Flow - then in Options, select the asset accounts you'd like to run the report for (\"\"Calle's Checking\"\" or whatever) and the time period. It will show you a list of all the accounts (expense and others) with transactions effecting that asset. You can probably refine this further to show only expenses, but I found it useful to have all of it listed. Not the prettiest report, but it'll get your there.\"", "topk_rank": 13 }, { "id": "215265", "score": 0.6101055145263672, "text": "\"As far as I can tell there are no \"\"out-of-the-box\"\" solutions for this. Nor will Moneydance or GnuCash give you the full solution you are looking for. I imaging people don't write a well-known, open-source, tool that will do this for fear of the negative uses it could have, and the resulting liability. You can roll-you-own using the following obscure tools that approximate a solution: First download the bank's CSV information: http://baruch.ev-en.org/proj/gnucash.html That guy did it with a perl script that you can modify. Then convert the result to OFX for use elsewhere: http://allmybrain.com/2009/02/04/converting-financial-csv-data-to-ofx-or-qif-import-files/\"", "topk_rank": 14 }, { "id": "218468", "score": 0.6100632548332214, "text": "This site has the best information I could find, other than a Bloomberg terminal: Quantumonline.com QUANTUMONLINE.COM SECURITY DESCRIPTION: SCANA Corp., 2009 Series A, 7.70% Enhanced Junior Subordinated Notes, issued in $25 denominations, redeemable at the issuer's option on or after 1/30/2015 at $25 per share plus accrued and unpaid interest, and maturing 1/30/2065 which may be extended to 1/30/2080. Interest distributions of 7.70% ($1.925) per annum are paid quarterly on 1/30, 4/30, 7/30 & 10/30 to holders of record on the record date which is the business day prior to the payment date (NOTE: the ex-dividend date is at least 2 business days prior to the record date). Distributions paid by these debt securities are interest and as such are NOT eligible for the preferential 15% to 20% tax rate on dividends and are also NOT eligible for the dividend received deduction for corporate holders. Units are expected to trade flat, which means accrued interest will be reflected in the trading price and the purchasers will not pay and the sellers will not receive any accrued and unpaid interest. The Notes are unsecured and subordinated obligations of the company and will rank equally with all existing and future unsecured and subordinated indebtedness of the company. See the IPO prospectus for further information on the debt securities by clicking on the ‘Link to IPO Prospectus’ provided below.", "topk_rank": 15 }, { "id": "526377", "score": 0.6100489497184753, "text": "You can buy the data and process it on your own. http://www.nyxdata.com/Data-Products/Daily-TAQ", "topk_rank": 16 }, { "id": "400183", "score": 0.6100031733512878, "text": "First of all, I didn't say anything about Bitcoin - nothing I said was even related to Bitcoin but rather the inherent value of the market beyond a cryptocurrency. This market is at the beginning stages right now, so of course you are going to have schemes and scammers, why wouldn't you? The established financial market as it stands today has been around for a while and still has schemes and scammers. Wherever there is money, specifically copious amounts of money, you will have people trying to game the system or pull the wool over other people's eyes. Sometimes in life, the sheep get slaughtered, so I am not really sure why certain people losing their ass in crypto could be considered different from people losing their ass in other financial instruments. You ever been to /r/wallstreetbets? Your basic view is more than likely developed from what you are reading in main stream outlets, which is why I encouraged you to go beyond what you are reading in the easily accessible, and often way behind and misinformed, news sources and go straight to the updated and credible sources, usually from the developers themselves. ICOs alone have proven themselves to be a new and revolutionary capital raising instrument. It makes sense that traditional and conservative finance communities would be opposed to it because it disrupts their ecosystem and gives not only very new companies, but non-accredited investors an opportunity to participate. When major VCs are able to look at ICOs, which are in direct competition to their industry and purpose, and say to themselves wow, what an innovative way to raise capital - that's a big deal. Regarding anonymity, the purpose of most cryptocurrencies and protocols isn't focused on that, it is usually a side effect of the decentralization of the ecosystem in general. Bitcoin isn't even a top coin for anonymity, which is again why I suggested you research the industry. Several projects are being launched and have been launched that will help revolutionize certain areas of the web, ranging from predictive markets with projects like Augur and Gnosis, to the Golem Network which taps into idle computer time for users that need additional computing power. Even something like Steem which is essentially a social platform similar to reddit which utilizes its own token system so content creators within the ecosystem can receive monetary payment for their time and contribution to the site and the community from other users. Imagine instead of an upvote, you received money. To reiterate, we are at the beginning stages of seeing what is to come in the space. Many of these projects will fail, and many new ones will launch. As blockchain technology continues to grow not only individually, but in tandem with the IoT industry, there are scenarios where machines are interacting, bartering, and negotiating with each other, without human interaction or intervention, to agree on payments for products and services and then conducting said payments.", "topk_rank": 17 }, { "id": "272174", "score": 0.6094045042991638, "text": "For a time period as short as a matter of months, commercial paper or bonds about to mature are the highest returning investments, as defined by Benjamin Graham: An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative. There are no well-known methods that can be applied to cryptocurrencies or forex for such short time periods to promise safety of principal. The problem is that with $1,500, it will be impossible to buy any worthy credit directly and hold to maturity; besides, the need for liquidity eats up the return, risk-adjusted. The only alternative is a bond ETF which has a high probability of getting crushed as interest rates continue to rise, so that fails the above criteria. The only alternative for investment now is a short term deposit with a bank. For speculation, anything goes... The best strategy is to take the money and continue to build up a financial structure: saving for risk-adjusted and time-discounted future annual cash flows. After the average unemployment cycle is funded, approximately six or so years, then long-term investments should be accumulated, internationally diversified equities.", "topk_rank": 18 }, { "id": "215437", "score": 0.6087159514427185, "text": "This is taxable in India. You need to declare the income and pay taxes accordingly", "topk_rank": 19 } ]
449	Allocation between 401K/retirement accounts and taxable investments, as a young adult?	[ { "id": "130118", "score": 0.7389822006225586, "text": "I'm afraid you're mistaking 401k as an investment vehicle. It's not. It is a vehicle for retirement. Roth 401k/IRA has the benefit of tax free distributions at retirement, and as long as you're in the low tax bracket - it is for your benefit to take advantage of that. However, that is not the money you would be using to start a business or buy a home (except for maybe up to $10K you can withdraw without penalty for first time home buyers, but I wouldn't bother with $10k, if that's what will help you buying a house - maybe you shouldn't be buying at all). In addition, you should make sure you take advantage of the employer 401k match in full. That is free money added to your Traditional 401k retirement savings (taxed at distribution). Once you took the full advantage of the employer's match, and contributed as much as you consider necessary for your retirement above that (there are various retirement calculators on line that can help you in making that determination), everything else will probably go to taxable (regular) savings/investments." }, { "id": "366146", "score": 0.7403609156608582, "text": "I would say yes, it makes sense to keep some money in taxable accounts. Retirement accounts are for retirement, and the various early withdrawal penalties are designed to enforce that. If you're anticipating using the money before retirement (e.g., for home purchase), it makes sense to keep it out of retirement accounts. On the other hand, be aware that, regardless of what kind of account it is in, you face the usual risk/return tradeoff. If you put your money in the S&P 500 and the S&P 500 tanks just before you were going to buy a house, your down payment evaporates and you will have to wait and buy a house later. You can manage this by shifting the allocation of this money and perhaps cashing it out if a certain amount is gained (i.e., it grows to the level of your target down payment) and you are close enough to the house purchase time that you don't want to risk it anymore. Basically, if you invest money for a pre-retirement use, you may want to keep it in a taxable account, but you also need to take account of when you'll need it and manage the risk accordingly." }, { "id": "526383", "score": null, "text": "First off, great job on your finances so far. You are off on the right foot and have some sense of planning for the future. Also, it is a great question. First, I agree with @littleadv. Take advantage of your employer match. Do not drop your 401(k) contributions below that. Also, good job on putting your contributions into the Roth account. Second, I would ask: Are you out of debt? If not, put all your extra income towards paying off debt, and then you can work your plan. Third, time to do some math. What will your business look like? How much capital would you need to get started? Are there things you can do now on a part-time basis to start this business or prepare you to start the business? Come up with a figure, find some mutual funds that have a low beta, and back out how much money you need to save per month, so you have around that total. Then you have a figure. e.g. Assume you need $20,000, and you find a fund that has done 8% over the past 20 years. Then, you would need to save about $110/month to be ready to go in 10 years, or $273/month to go in about 5 years. (It's a time value of money calculation.) The house is really a long way off, but you could do the same kind of calculation. I feel that you think your income, and possibly locale, will change dramatically over the next few years. It might not be bad to double what you are saving for the business, and designate one half for the house." } ]	[ { "id": "439249", "score": 0.7026603817939758, "text": "\"With no match, the traditional 401(k) for someone otherwise in the 15% bracket makes little sense. I'd suggest contributing just enough if you were in the 25% bracket to be in the taxable 15% but no more. Use a Roth IRA if you are saving more than that. I'm adding this based on OP's statement that the fees on the 401(k) range .8-1.4%. I wrote an article Are you 401(k)o’ed? in which I discuss how fees of this range negate the benefit of the mantra \"\"save at 25% to withdraw at 15%\"\" and if one were in the 15% bracket to start, this level off fee will cost you money in no time at all. The people advising you to max out the 401(k) first, given the rest of your situation and that of the account, are misguided. I'd given them the benefit of the doubt and assume they don't have all the details. And with all due respect to the other posters here, everyone of them a bright, valued colleague, your answers should be addressed to the OP's exact situation. 15% bracket, no match, high fees. I suspect some of answers will change on reviewing this.\"", "topk_rank": 0 }, { "id": "219563", "score": 0.7026322484016418, "text": "I'm normally not a fan of partitioning investment money into buckets but your case may be the clearest case for it I've seen in awhile. Your income and saving is good and you have two clearly defined goals of retirement saving and saving for a house each with very different time frames ~30 years and 3-5 years respectively. For medium term money, like saving for a house, just building up cash is not actually a bad idea. This minimizes the chance that a market crash will happen at the same time you need to withdraw the money. However, given you have the means to take more risk a generally smarter scheme would be to invest much of the money in a broad liquid bond funds with a somewhat lower percentage in stocks and then reduce the amount of stock each year as you get closer even moving some into cash. This gives reasonable positive expected return while lowering the risk of having to sell during a crisis as the time to purchase gets shorter and shorter. The retirement money should be invested for the long term as usual. A majority in low-fee index stock funds/etfs is the standard advice for good reason.", "topk_rank": 1 }, { "id": "79888", "score": 0.7024537920951843, "text": "This is called an in-plan Roth conversion and is discussed by the IRS here. If your 401(k) has a Roth option then it likely also has a provision to convert pre-tax dollars, but you'll have to check with the administrator to be sure. They could also potentially limit the type of money that can be converted. But most likely you should be able to convert any amount you want, and since it's all pre-tax (your contributions, employer matching, and earnings), it doesn't really matter which money is converted because it's all equivalent. One caveat is you won't able to convert any employer matching that hasn't fully vested.", "topk_rank": 2 }, { "id": "369251", "score": 0.7024399042129517, "text": "When investing small amounts, you should consider the substantial toll that commissions will take on your investment. In your case, $800 placed in just one ETF will incur commissions of about $8 each way, or a total of 2% of your investment. I suggest you wait until you have at least $5000 to invest in stocks or ETFs. Since this is in a IRA, your options are limited, but perhaps you may qualify for a Vanguard mutual fund, which will not charge commissions and will have annual expenses only a trivial amount higher than the corresponding ETF. it should probably go in a mixed allocation fund, and since you are young, it should be a relatively aggressive one. Mutual funds will also allow you to contribute small amounts over time without incurring any extra fees.", "topk_rank": 3 }, { "id": "475748", "score": 0.702431857585907, "text": "Adapted from an answer to a somewhat different question. Generally, 401k plans have larger annual expenses and provide for poorer investment choices than are available to you if you roll over your 401k investments into an IRA. So, unless you have specific reasons for wanting to continue to leave your money in the 401k plan (e.g. you have access to investments that are not available to nonparticipants and you think those investments are where you want your money to be), roll over your 401k assets into an IRA. But I don't think that is the case here. If you had a Traditional 401k, the assets will roll over into a Traditional IRA; if it was a Roth 401k, into a Roth IRA. If you had started a little earlier, you could have considered considered converting part or all of your Traditional IRA into a Roth IRA (assuming that your 2012 taxable income will be smaller this year because you have quit your job). Of course, this may still hold true in 2013 as well. As to which custodian to choose for your Rollover IRA, I recommend investing in a low-cost index mutual fund such as VFINX which tracks the S&P 500 Index. Then, do not look at how that fund is doing for the next thirty years. This will save you from the common error made by many investors when they pull out at the first downturn and thus end up buying high and selling low. Also, do not chase after exchange-traded mutual funds or ETFs (as many will likely recommend) until you have acquired more savvy or interest in investing than you are currently exhibiting. Not knowing which company stock you have, it is hard to make a recommendation about selling or holding on. But since you are glad to have quit your job, you might want to consider making a clean break and selling the shares that you own in your ex-employer's company. Keep the $35K (less the $12K that you will use to pay off the student loan) as your emergency fund. Pay off your student loan right away since you have the cash to do it.", "topk_rank": 4 }, { "id": "129784", "score": 0.7024194598197937, "text": "Okay thanks, let's hope it's a relatively painless process to correct my mistake! Really odd that my 401(k)s are traditional, I was so sure they weren't. Maybe it's better then to open up a traditional IRA alongside the Roth, use that for rollovers, and just kick a few bucks into the Roth on occasion?", "topk_rank": 5 }, { "id": "555794", "score": 0.702402651309967, "text": "\"Two things to consider: When it comes to advice, don't be \"\"Penny wise and Pound foolish\"\". It is an ongoing debate whether active management vs passive indexes are a better choice, and I am sure others can give good arguments for both sides. I look at it as you are paying for advice. If your adviser will teach you about investing and serve your interests, having his advise will probably prevent you from making some dumb mistakes. A few mistakes (such as jumping in/out of markets based on fear/speculation) can eliminate any savings in fees. However, if you feel confident that you have the resources and can make good decisions, why pay for advise you don't need? EDIT In this case, my opinion is that you don't need a complex plan at this time. The money you would spend on financial advise would not be the best use of the funds. That said, to your main question, I would delay making any long-term decisions with these funds until you know you are done with your education and on an established career path. This period of your life can be very volatile, and you may find yourself halfway through college and wanting to change majors or start a different path. Give yourself the option to do that by deferring long-term investment decisions until you have more stability. For that reason, I would avoid focusing on retirement savings. As others point out, you are limited in how much you can contribute per year. If you want to start, ROTH is your best bet, but if you put it in don't pull it out. That is a bad habit to get into. Personal finance is as much about developing habits as it is doing math... A low-turnover index fund may be appropriate, but you don't want to end up where you want to buy a house or start a business and your investment has just lost 10%... I would keep at least half in a liquid, safe account until after graduation. Any debt you incur because you tied up this money will eliminate any investment gains (if any). Good Luck! EDITED to clarify retirement savings\"", "topk_rank": 6 }, { "id": "419856", "score": 0.7022833824157715, "text": "Assuming you are in the US, and are an average joe, the answer to your question is no. Investment costs do not reduce your taxable income for the year you make the investment. They do factor in to the cost basis of your investment and so will affect your taxes in the year you sell the investment. If you want to reduce your taxable income, you could contribute the $5000 to a traditional ira, or 401k, assuming you qualify. Depending on where the account is held, you may then be able to use that $5k to purchase stock in the company you are interested in. The stock would be held in your IRA or 401k account, and would be subject to more restrictions than a normal brokerage account.", "topk_rank": 7 }, { "id": "84642", "score": 0.702263355255127, "text": "\"Having worked for a financial company for years, my advice is to stay away from all the \"\"Freedom Funds\"\" offered. They're a new way for Fidelity to justify charging a higher management fee on those particular funds. That extra 1% or so a year is great for making the company money; it will kill your rate of return over the next 25+ years you're putting money into your retirement account. All these funds do is change the percentage of your funds in stocks vs. more fixed investments (bonds, etc.) so you have a higher percentage in stocks while you're young and slowly move the percentage more towards fixed as you get older. If you take a few hours every 5 years to re-balance your portfolio and just slowly shift more money towards fixed investments, you'll achieve the same thing WITHOUT the extra annual fee. So how much difference are we talking here? Let's do a quick example. Based on your salary of $70k and a 4% match by your company, you'll have $5,600 a year to put in your 401(k) (your 4% plus matched 4%). I'll also assume an 8% annual return for both funds. Here is what that 1% extra service charge will cost you: Fund with a 1% service charge: Annual Fee Paid Year 1 - $60.00 Annual Fee Paid Year 25 (assuming 8% growth in assets) - $301.00 Total Fees Year 1 through 25: $3,782 Fund with a 2% service charge: Annual Fee Paid Year 1 - $121.00 Annual Fee Paid Year 25 (assuming 8% growth in assets) - $472.00 Total Fees Year 1 through 25: $6,489 That's a total of $2,707 in extra fees over 25 years on just the investment you make this year! Next year if you invest the same amount in your 401k that will be another $2,707 paid over 25 years to the management company. This pattern repeats EACH year you pay the higher management fee. Trust me, if you invest that money in stock instead of paying it as fees, you'll have a whole lot more money saved when it's time to retire. My advice, pick a percentage you're comfortable with in stocks at your age, maybe 85 - 90%, and pick the stock funds with the lowest management fees (the remaining 10 - 15% should go into a fixed fund). Make sure you pick at least some of your stock money, I do 20 - 25%, and select a diverse (lots of different countries) international fund. For any retirement money you plan to save above the 4% getting matched by your company, set up a Roth IRA. That will give you the freedom to invest in any stocks or funds you want. Find some low-cost index funds (such as VTI for stocks, and BND for bonds) and put your money in those. Invest the same amount every month, automatically, and your cost average will work itself out through up markets and down. Good luck!\"", "topk_rank": 8 }, { "id": "478242", "score": 0.7022517919540405, "text": "At twenty-two, you can have anywhere between 100%-70% of your securities portfolio in equities. It is reasonable to start at 100% and reduce over time. The one thing that I would mention with that is that your target at retirement should be 70% stocks/30% bonds. You should NEVER have more than 30% bonds. Why? Because a 70/30 mix is both safer than 100% bonds and will give a higher return. Absent some market timing strategy (which as an amateur investor, you should absolutely avoid) or some complicated balancing scheme, there is never a reason to be at more than 30% bonds. A 50/50 mix of stocks and bonds or a 100% bonds ratio not only returns less than the 70/30 mix, it is actually riskier. Why? Because sometimes bonds fall. And when they do, stocks generally gain. And vice versa. Because of this behavior, the 70/30 mix is less likely to fall than 50% or 100% bonds. Does that mean that your stock percentage should never drop below 70%? No. If your portfolio contains things other than stocks and bonds, it is reasonable for stocks to fall below 70%. The problem is that when you drop stocks below 70%, you should drop bonds below 30% as well. So you keep the stock to bond ratio at 7:3. If you want to get a lower risk than a 70/30 mix, then you should move into cash equivalents. Cash equivalents are actually safer than stocks and bonds either individually or in combination. But at twenty-two, you don't really need more safety. At twenty-two, the first thing to do is to build your emergency fund. This should be able to handle six months of expenses without income. I recommend making it equal to six months of your income. The reason being that it is easy to calculate your income and difficult to be sure of expenses. Also, you can save six months of income at twenty-two. Are you going to stay where you are for the next five years? At twenty-two, the answer is almost certainly no. But the standard is the five year time frame. If you want a bigger place or one that is closer to work, then no. If you stay somewhere at least five years, then it is likely that the advantages to owning rather than renting will outweigh the costs of switching houses. Less than five years, the reverse is true. So you should probably rent now. You can max out your 401k and IRA now. Doing so even with a conservative strategy will produce big returns by sixty-seven. And perhaps more importantly, it helps keep your spending down. The less you do spend, the less you will feel that you need to spend. Once you fill your emergency fund, start building savings for a house. I would consider putting them in a Real Estate Investment Trust (REIT). A REIT will tend to track real estate. Since you want to buy real estate with the results, this is its own kind of safety. It fell in value? Houses are probably cheap. Houses increasing in price rapidly? A REIT is probably growing by leaps and bounds. You do this outside your retirement accounts, as you want to be able to access it without penalty.", "topk_rank": 9 }, { "id": "454102", "score": 0.7021492123603821, "text": "I have a similar plan and a similar number of accounts. I think seeking a target asset allocation mix across all investment accounts is an excellent idea. I use excel to track where I am and then use it to adjust to get closer (but not exactly) to my target percentages. Until you have some larger balances, it may be prudent to use less categories or realize that you can't come exactly to your percentages, but can get close. I also simplify by primarily investing in various index funds. That means that in my portfolio, each category has 1 or 2 funds, not 10 or 20.", "topk_rank": 10 }, { "id": "134332", "score": 0.702113687992096, "text": "I would not prepay a loan with a 3.79 rate, with just a tiny bit of inflation that's nearly free money. I would always seek to first max out a tax deferred savings program before making investments that are not receiving preferential tax treatment. (outside of emergency money, which you say is already dealt with) Especially since you effectively get an immediate return on the investment = to your marginal tax rate. (or to look at it another way, it takes a much smaller amount of money 'out of pocket' in order to make the investment) Every thousand you could put into a tax deferred account now, is generally equivalent to putting in several times that amount 20 years from now. OTOH Once you've maxed out the tax deferred savings, or if you need to set aside money for large purchase with a big time horizon that is short of retirement age, then making regular monthly investments in a no-load index fund with a quality company is a great way to go as you will be taking advantage of Dollar Cost Averaging, and a good deal of diversity, which is a great way to put money into the market. Just make sure you are investing in a fairly broad index, such as the S&P500 and not a little dinky 30 stock index like the Dow.", "topk_rank": 11 }, { "id": "182305", "score": 0.7020477056503296, "text": "You asked specifically about the ROTH IRA option and stated you want to get the most bang for your buck in retirement. While others have pointed out the benefits of a tax deduction due to using a Traditional IRA instead, I haven't seen anyone point out some of the other differences between ROTH and Traditional, such as: I agree with your thoughts on using an IRA once you maximize the company match into a 401k plan. My reasoning is: I personally prefer ETFs over mutual funds for the ability to get in and out with limit, stop, or OCO orders, at open or anytime mid-day if needed. However, the price for that flexibility is that you risk discounts to NAV for ETFs that you wouldn't have with the equivalent mutual fund. Said another way, you may find yourself selling your ETF for less than the holdings are actually worth. Personally, I value the ability to exit positions at the time of my choosing more highly than the impact of tracking error on NAV. Also, as a final comment to your plan, if it were me I'd personally pay off the student loans with any money I had after contributing enough to my employer 401k to maximize matching. The net effect of paying down the loans is a guaranteed avg 5.3% annually (given what you've said) whereas any investments in 401k or IRA are at risk and have no such guarantee. In fact, with there being reasonable arguments that this has been an excessively long bull market, you might figure your chances of a 5.3% or better return are pretty low for new money put into an IRA or 401k today. That said, I'm long on stocks still, but then I don't have debt besides my mortgage at the moment. If I weren't so conservative, I'd be looking to maximize my leverage in the continued low rate environment.", "topk_rank": 12 }, { "id": "204579", "score": 0.702022910118103, "text": "With an appropriate selection within a 401K and if operating expenses are low, you get tax deferred savings and possibly a lower tax bracket for now. The returns vary of course with market fluctuations but for almost 3 years it has been double digit growth on average. Some health care sector funds were up over 40% last year. YMMV. With stocks and mutual funds that hold them, you also are in a sense betting that people want their corporations to grow and succeed. Others do most of the work. Real estate should be part of your savings strategy but understand that they are not kidding when they talk about location. It can lose value. Tenants tend to have some problem part of the year such that some owners find it necessary to have a paid property manager to buffer from their complaints. Other owners get hauled into court and sued as slum lords for allegedly not doing basics. Tenants can ruin your property as well. There is maintenance, repair, replacement, insurance against injury not just property damage, and property taxes. While some of it might be deductible, not all is. You may want to consider that there are considerable ongoing costs and significant risks in time and money with real estate as an investment at a level that you do not incur with a 401K. If you buy mainly to flip, then be aware that if there are unforeseen issues with the house or the market sours as it can, you could be stuck with an immovable drain on your income. If you lose your job could you make payments? Many, many people sadly lost their homes or investment properties that way in 2008-2010.", "topk_rank": 13 }, { "id": "477511", "score": 0.7020203471183777, "text": "Please direct personal finance questions to /r/personalfinance However, my opinion is that you are unlikely to earn more than 7% annualized returns from any combination of asset offerings in your 401k over the next several years; therefore, you should pay off your student loans first. I am ignoring tax consequences, but /r/personalfinance may be able to provide a more quantitative answer.", "topk_rank": 14 }, { "id": "355373", "score": 0.7019922733306885, "text": "The simplest thing is to transfer to your current account. You'll have the ability to borrow (assuming employer allows) 50% of the balance if you need to, and one less account to worry about. Transferring to an IRA is the other common choice. This offers the ability to convert to a Roth IRA and to invest any way you choose. The 401(k) options may be limited. Without more details, it's tough to decide. For example, if you are in the 15% bracket, the Roth conversion can be a great idea. And the 401(k) might be not so great, just deposit to the match, and then use the IRA. For example.", "topk_rank": 15 }, { "id": "59600", "score": 0.7019656300544739, "text": "It is really hard to tell where you should withdraw money from. So instead, I'll give you some pointers to make it easier for you to make the decision for yourself, while keeping the answer useful to others as well. I have 3 401ks, ... and some has post tax, non Roth money Why keeping 3 401ks? You can roll them over into an IRA or the one 401k which is still active (I assume here you're not currently employed with 3 different employers). This will also help you avoiding fees for too low balances on your IRAs. However, for the 401k with after tax (not Roth) balance - read the next part carefully. Post tax amounts are your basis. Generally, it is not a good idea to keep post-tax amounts in 401k/IRA, you usually do post-tax contributions to convert them to Roth ASAP. Withdrawing from 401k with basis may become a mess since you'll have to account for the basis portion of each withdrawal. Especially if you pool it with IRAs, so that one - don't rollover, keep it separately to make that accounting easier. I also have several smaller IRAs and Roth IRAs, Keep in mind the RMD requirements. Roth IRAs don't have those, and are non-taxable income, so you would probably want to keep them as long as possible. This is relevant for 401k as well. Again, consolidating will help you with the fees. I'm concerned about having easily accessible cash for emergencies. I suggest keeping Roth amounts for this purpose as they're easily accessible and bear no taxable consequence. Other than emergencies don't touch them for as long as you can. I do have some other money in taxable investments For those, consider re-balancing to a more conservative style, but beware of the capital gains taxes if you have a lot of gains accumulated. You may want consider loss-harvesting (selling the positions in the red) to liquidate investments without adverse tax consequences while getting some of your cash back into the checking account. In any case, depending on your tax bracket, capital gains taxes are generally lower (down to 0%) than ordinary income taxes (which is what you pay for IRA/401k withdrawals), so you would probably want to start with these, after careful planning and taking the RMD and the Social Security (if you're getting any) into account.", "topk_rank": 16 }, { "id": "260272", "score": 0.701708197593689, "text": "\"If the difference in performance is worth it, consider \"\"borrowing\"\" from your 401k to put into the Roth. You pay it back, but you can stretch it out over time, and the interest charged is actually yours, because you borrowed from yourself. But you can only borrow half of the account and you have to pay it back before you can do another loan.\"", "topk_rank": 17 }, { "id": "169232", "score": 0.7017056941986084, "text": "A good general rule is to save 15% of your income for retirement. As for where you put it: Put as much as it takes to maximize your employer match into your 401(k), but no more. The employer match is free money, and you can't beat free money If you still haven't put in 15%, put the rest into a Roth IRA. By historical standards, taxes are pretty low today. They are almost certainly going to be higher in retirement, especially since you likely won't have the deductions in retirement that you may have now (kids, mortgage, etc). If you've maxed our the allowed contribution for your Roth and still haven't saved 15%, put the rest in a traditional IRA.", "topk_rank": 18 }, { "id": "12119", "score": 0.7015878558158875, "text": "\"I think the math is wrong. Note that in Scenario #1, you are only out of pocket $1000, while in Scenario #2, you are out of pocket $1250; the contribution and the tax you paid with respect to it. A better concept than tax rate is \"\"Retention Rate\"\". This is the fraction of your money that the Feds let you keep. And Growth Factor is the how much the investment grows. So In Scenario #1, you multiply $1000 by the investment Growth Factor and then by the retirement Retention Rate. And in Scenario #2, you multiply the same $1000 by the current Retention Rate and then by the Growth Factor. Since in your approximation, the two GFs are the same, there is no saving...\"", "topk_rank": 19 } ]
450	Income Tax form in India for freelancing	[ { "id": "159709", "score": 0.7545437812805176, "text": "\"ITR1 or ITR2 needs to be filed. Declare the income through freelancing in the section \"\"income from other sources\"\"\"" }, { "id": "347590", "score": 0.7354605197906494, "text": "Since you are living in India and earning income not from salary, you must file your tax return under ITR4(Profits or Gains of Business or Profession). You can do it online on IncomeTax India eFiling website, step by step guide available here." } ]	[ { "id": "197870", "score": 0.697253406047821, "text": "The best way is for X to work as Independent consultant fro c.com from India by raising monthly invoices for the work done. This will avoid the complications and paperwork associated by registering a LLC in US by XF and then employing X as independent consultant in India. X may need to fill out W8-BEN forms so that there is no withholding in US Edit: Independent consultant means without having to register any legal entity either in India or in US. There are no legal regulations in US or in India to hire an independent contractor / consultant. There maybe internal policy of C.com not to have independent consultants. Payments can be made via transfer to Bank account.", "topk_rank": 0 }, { "id": "319836", "score": 0.6969243288040161, "text": "Three points for you to keep in mind. 1. In the very first year, you should have 182 days outside India. So that in the year when you start your consultancy, you will not have any liability to pay tax on earning abroad. 2. Although you may be starting a consultancy abroad, if you do any services in India, there will be withholding tax depending on the country in which you have started the consultancy business. 3. Whatever money you repatriate is not taxable in India. However, if you you repatriate the money as gift to anyone who is not a relative, will be taxed in his/her hand.", "topk_rank": 1 }, { "id": "144190", "score": 0.6965696811676025, "text": "You can receive funds from US Client as an individual. There is no legal requirement for you to have a company. If the transactions are large say more than 20 lacs in a year, its advisable to open a Private Ltd. Although its simple opening & Registering a company [A CA or a Laywer would get one at a nominal price of Rs 5000] you can do yourself. Whatever be the case, its advisable to have seperate accounts for this business / professional service transactions. Maintain proper records of the funds received. There are certain benefits you can claim, a CA can help you. Paying taxes in Advance is your responsibility and hence make sure you keep paying every quarter as advance tax. Related questions Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? Freelancer in India working for Swiss Company Freelancing to UK company from India How do I account for money paid to colleagues out of my professional income?", "topk_rank": 2 }, { "id": "130934", "score": 0.6956523060798645, "text": "Do I pay tax to the US and then also pay it in India for my income, or does my American partner, who holds 15% of the monthly income, pay tax in the US for his income? Of course you do, what kind of question is this? You have income earned in the US by a US entity, and the entity is taxed. Since LLC is a disregarded entity - the tax shifts to you personally. You should file form 1040NR. You should also talk to a tax professional who's proficient in the Indo-US tax treaty, since it may affect your situation.", "topk_rank": 3 }, { "id": "276411", "score": 0.6954544186592102, "text": "This is a complicated question that relies on the US-India Tax Treaty to determine whether the income is taxable to the US or to India. The relevant provision is likely Article 15 on Personal Services. http://www.irs.gov/pub/irs-trty/india.pdf It seems plausible that your business is personal services, but that's a fact-driven question based on your business model. If the online training is 'personal services' provided by you from India, then it is likely foreign source income under the treaty. The 'fixed base' and '90 days' provisions in Article 15 would not apply to an India resident working solely outside the US. The question is whether your US LLC was a US taxpayer. If the LLC was a taxpayer, then it has an obligation to pay US tax on any worldwide income and it also arguably disqualifies you from Article 15 (which applies to individuals and firms of individuals, but not companies). If you were the sole owner of the US LLC, and you did not make a Form 8832 election to be treated as subject to entity taxation, then the LLC was a disregarded entity. If you had other owners, and did not make an election, then you are a partnership and I suspect but cannot conclude that the treaty analysis is still valid. So this is fact-dependent, but you may be exempt from US tax under the tax treaty. However, you may have still had an obligation to file Forms 1099 for your worker. You can also late-file Forms 1099 reporting the nonemployee compensation paid to your worker. Note that this may have tax consequences on the worker if the worker failed to report the income in those years.", "topk_rank": 4 }, { "id": "387010", "score": 0.6939201951026917, "text": "\"New York will want to you to pay taxes on income from \"\"New York sources\"\". I'm not sure what this means to a freelance web developer. If your wife is doing freelance web development under the same business entity as she did in New York (ie. a New York sole proprietor, corporation, etc), you probably do need to file. From nonresident tax form manual: http://tax.ny.gov/pdf/2011/inc/it203i_2011.pdf If you were a nonresident of New York State, you are subject to New York State tax on income you received from New York State sources in 2011. If you were a resident of New York State for only part of 2011, you are subject to New York State tax on all income you received while you were a resident of the state and on income you received from New York State sources while you were a nonresident. To compute the amount of tax due, use Form IT-203, Nonresident and Part-Year Resident Income Tax Return. You will compute a base tax as if you were a full-year resident, then determine the percentage of your income that is subject to New York State tax and the amount of tax apportioned to New York State.\"", "topk_rank": 5 }, { "id": "360629", "score": 0.6929588317871094, "text": "\"Do I need to pay taxes in India in this scenario? For India tax purposes, you would still qualify as \"\"Resident Indian\"\". As a resident Indian you have to pay taxes on Global income. It is not relevant whether you transfer the money back to India to keep in US. The income is generated and taxable. Depending on your contract, presumably you are working as a free lance; certain expenses are allowed to be deducted from your income, for example if you purchase equipment to help carry out the work, stay / entertainment costs, etc. Consult a professional CA who should be able to guide you on what is eligible and what is not. The balance along with your other income will be taxed as per tax brackets. There is exemption for certain category of workers, mostly in entertainment industry where such income is not taxable. This does not apply to your case.\"", "topk_rank": 6 }, { "id": "281803", "score": 0.6925615668296814, "text": "The amount earned is taxable. It needs to shown as income from other sources. Although the last date for paying Advance tax is over [15 March], there is still time to pay Self-Assessment tax till 15 June. If the tax amount due is less than 10,000/- there is no penalty. If the tax is more than Rs 10,000/- there is penalty at the rate of 1% per month from March, and if the amount of tax exceeds 40% of the total tax, there will be additional 1% interest from December. The tax can be paid online via your Banks website or using the Income Tax website at https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp The form to be used is 280. You can use the Income tax website to calculate and file your tax returns at https://incometaxindiaefiling.gov.in/ or use the services of a CA. Edit: If the income is less than expenses, you need not pay tax. Maintain proper records [receipts] of income and expenses, if possible use a different Bank account so that they remain different from your main account. The tax to be paid depending on your income slab. The additional income needs to added to you salary. The tax and slabs will be as per this. There is no distinction on this amount. Its treated as normal income. All Tax for the given year has to be paid in advance. i.e. for Tax year 2013-14, 30% of total tax by 15-Sept, Additional 30% [total 60%] by 15-Dec and Balance by 15-Mar. Read Page 3 and page 10 of http://incometaxindia.gov.in/Archive/Taxation_Of_Salaried_Employees_18062012.pdf", "topk_rank": 7 }, { "id": "47957", "score": 0.692147970199585, "text": "Yes, but make sure you issue a 1099 to these freelancers by 1/31/2016 or you may forfeit your ability to claim the expenses. You will probably need to collect a W-9 from each freelancer but also check with oDesk as they may have the necessary paperwork already in place for this exact reason. Most importantly, consult with a trusted CPA to ensure you are completing all necessary forms correctly and following current IRS rules and regulations. PS - I do this myself for my own business and it's quite simple and straight forward.", "topk_rank": 8 }, { "id": "527318", "score": 0.691981852054596, "text": "Assuming you have registered your activities as partnership and receiving this money as Individual, you need to show this under Schedule OS, 1d [other income]. this will be under the ITR-2 [tab CG-OS] XLS tax preparation utility given by Tax Department. The XLS can be found at https://incometaxindiaefiling.gov.in/portal/individual_huf.do If the funds you are receiving are large [more than say Rs 500,000] then suggest you incorporate a partnership firm or company, there are quite a few exceptions you can claim lowering you tax outgo. The fact that you are transferring funds to your partners can be an issue incase you get audited. You would need to have sufficient evidence to show that the money paid was for services rendered directly and not your income. It would be easier if you create a partnership or have the client directly pay to them. Again if the sum is small its fine, as the sum becomes large, it would get noticed by the tax authorities.", "topk_rank": 9 }, { "id": "223624", "score": 0.6906358003616333, "text": "Yes, you need to include income from your freelance work on your tax return. In the eyes of the IRS, this is self-employment income from your sole-proprietorship business. The reason you don't see it mentioned in the 1040EZ instructions is that you can't use the 1040EZ form if you have self-employment income. You'll need to use the full 1040 form. Your business income and expenses will be reported on a Schedule C or Schedule C-EZ, and the result will end up on Line 12 of the 1040. Take a look at the requirements at the top of the C-EZ form; you probably meet them and can use it instead of the more complicated C form. If you have any deductible business expenses related to your freelance business, this would be done on Schedule C or C-EZ. If your freelance income was more than $400, you'll also need to pay self-employment tax. To do this, you file Schedule SE, and the tax from that schedule lands on form 1040 Line 57.", "topk_rank": 10 }, { "id": "277812", "score": 0.6895426511764526, "text": "There are many different types of 1099 forms. Since you are comparing it to a W-2, I'm assuming you are talking about a 1099-MISC form. Independent contractor income If you are a worker earning a salary or wage, your employer reports your annual earnings at year-end on Form W-2. However, if you are an independent contractor or self-employed you will receive a Form 1099-MISC from each client that pays you at least $600 during the tax year. For example, if you are a freelance writer, consultant or artist, you hire yourself out to individuals or companies on a contract basis. The income you receive from each job you take should be reported to you on Form 1099-MISC. When you prepare your tax return, the IRS requires you to report all of this income and pay income tax on it. So even if you receive a 1099-MISC form, you are required to pay taxes on it.", "topk_rank": 11 }, { "id": "396792", "score": 0.6890127062797546, "text": "\"Paypal linked with my bank account. 1.Can I use my Saving bank account to receive payments from my clients? Or is it necessary to open a current account? Yes you can get funds into your savings account. However it is advisable to keep a seperate account as it would help with your IT Returns. 2.I will be paying a certain % as commission on every sales to a couple of sales guys (who are not my employees but only working on commission). Can I show this as an expense in my IT returns? As you are earning as freelancer, you are eligible for certain deductions like Phone calls, Laptop, other hardware, payments to partners. It is important that you maintain a book of records. An accountant for a small fee of Rs 5 K should be able to help you. In the Returns you have to show Net income after all these deductions, there is no place to enter expenses. 3.Since I will be receiving all the payments in Euros so am I falling under a category of \"\"Exporter of services\"\"? The work you are doing can be Free Lancing. 4.Do I need an Import Export Code (IEC) for smoothly running this small business? You can run this without one as Free lancing. IEC would be when you grow big and are looking for various benefits under tax and pay different taxes and are incorporated as a company.\"", "topk_rank": 12 }, { "id": "512267", "score": 0.6883571147918701, "text": "It is best to take advise from / appoint a professional CA. Will I have to pay GST? No GST is applicable. Exports outside of India do not have GST. Do I have to collect TDS when I send money to the PUBLISHERS ? No But another guy said, I have to pay 18% tax when receiving and sending payments, apart from that I have to collect 30.9% TDS when sending payment to the PUBLISHERS(outside India). There is only income tax applicable on profits. So whatever you get from Advertisers less of payments to publishers less of your expenses is your profit. Since you are doing this as individual, you will have to declare this as income from other sources and pay income tax as appropriate. Note there are restrictions on sending payments outside of India plus there are exchange rate fluctuations. It is best you open an Foreign Currency Resident [or Domestic] Account. This will enable you payout someone without much issues. Else you will have to follow FEMA and LRS schemes of RBI.", "topk_rank": 13 }, { "id": "483453", "score": 0.6878690123558044, "text": "\"Yea. Almost every form I fill out wants to know \"\"Employer Name\"\". They don't even bother checking \"\"Are you Self Employed\"\". Of course, I end up writing \"\"Self Employed\"\" in employer name field anyway. In the United States, it is even harder because EVERY state has their own labor and employment laws. You are a freelancer but what if you need to travel to a client site in a different state. Bam, you gotta file taxes for that state as well even if you made like a few hundred bucks. Too much red tape and it is really hard to change.\"", "topk_rank": 14 }, { "id": "540671", "score": 0.6870790719985962, "text": "If the work is done in India, then the income arising out of it, is taxable when received by you, and not when it come into India ...", "topk_rank": 15 }, { "id": "489679", "score": 0.6864544153213501, "text": "Yes you need to pay taxes in India. Show this as other income and pay tax according to your tax bracket. Note you need to pay the taxes quarterly if the net tax payable is more than 10,000.", "topk_rank": 16 }, { "id": "65095", "score": 0.6854439973831177, "text": "As an individual freelancer, you would need to maintain a book of accounts. This should show all the income you are getting, and should also list all the payments incurred. This can not only include the payments to other professionals, but also any hardware purchased, phone bills, any travel and entertainment bills directly related to the service you are offering. Once you arrive at a net profit figure, you would need to file this as your income. Consult a tax professional and he can help with how to keep the records of income and expenses. i.e. You would need to create invoices for payments, use checks or online transfers for most payments, segregate the accounts, one account used for this professional stuff, and another for your personal stuff, etc. In a normal course the Income Tax Department does not ask for these records, however whenever your tax returns get scrutinized on a random basis, they would ask for all the relevant documentations.", "topk_rank": 17 }, { "id": "586026", "score": 0.6854218244552612, "text": "Forms 1099 and W2 are mutually exclusive. Employers file both, not the employees. 1099 is filed for contractors, W2 is filed for employees. These terms are defined in the tax code, and you may very well be employee, even though your employer pays you as a contractor and issues 1099. You may complain to the IRS if this is the case, and have them explain the difference to the employer (at the employer's expense, through fines and penalties). Employers usually do this to avoid providing benefits (and by the way also avoid paying payroll taxes). If you're working as a contractor, lets check your follow-up questions: where do i pay my taxes on my hourly that means does the IRS have a payment center for the tax i pay. If you're an independent contractor (1099), you're supposed to pay your own taxes on a quarterly basis using the form 1040-ES. Check this page for more information on your quarterly payments and follow the links. If you're a salaried employee elsewhere (i.e.: receive W2, from a different employer), then instead of doing the quarterly estimates you can adjust your salary withholding at that other place of work to cover for your additional income. To do that you submit an updated form W4 there, check with the payroll department on details. Is this a hobby tax No such thing, hobby income is taxed as ordinary income. The difference is that hobby cannot be at loss, while regular business activity can. If you're a contractor, it is likely that you're not working at loss, so it is irrelevant. what tax do i pay the city? does this require a sole proprietor license? This really depends on your local laws and the type of work you're doing and where you're doing it. Most likely, if you're working from your employer's office, you don't need any business license from the city (unless you have to be licensed to do the job). If you're working from home, you might need a license, check with the local government. These are very general answers to very general questions. You should seek a proper advice from a licensed tax adviser (EA/CPA licensed in your state) for your specific case.", "topk_rank": 18 }, { "id": "427849", "score": 0.6853983402252197, "text": "There is no strict need to do that, you can consider yourself to be consulting, a 10% of your payment will be withheld and paid as tax by the company, you can deduct up to 60% of your income as expenses and pay tax on the rest (factoring the tax deducted at source). In another approach, you could register for service tax and charge service tax on your invoice and pay to the service tax department, the tax calculations are similar to above. It will be good if you speak to a chartered accountant and get more clarity. As for business card, you could print it with your name and qualification, there are no restrictions on that.", "topk_rank": 19 } ]
452	Should I be filling out form W-9 for somebody I sold used equipment to?	[ { "id": "467704", "score": 0.7197949886322021, "text": "They are a business. You're not a corporation. They paid you more than $600 during the year, so they're supposed to send 1099 to you and the IRS about it. They need your taxpayer certification (W9) for that. They were supposed to ask for it before they paid you, but yes - they're supposed to ask for it." } ]	[ { "id": "454931", "score": 0.6835259795188904, "text": "Get the worker put it in writing, and deduct it in December under constructive receipt rules. The fact that you're getting the actual cash in January isn't significant as long as you've secured the payment. Verify this with a tax adviser, but that's what I would do.", "topk_rank": 0 }, { "id": "57229", "score": 0.6831867694854736, "text": "Your clients should not send you 1099-MISC if they paid with a credit card. You can refer them to this text in the instructions for the form 1099-MISC: Payments made with a credit card or payment card and certain other types of payments, including third party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. See the separate Instructions for Form 1099-K. By sending out the 1099-MISC, your clients are essentially saying that they paid you directly (check or cash) in addition to the payment they made with a credit card (which will be reported on 1099-K). In case of an audit, you'll have trouble convincing the IRS that it didn't happen. I suggest asking the clients not to do this to you, since it may cost you significant amounts to fight the IRS later on. In any case, you report on your tax return what you really got, not what the 1099 says. If you have two 1099's covering the same income - there's no legal obligation to report the income twice. You do not have to pay twice the tax just because you have stupid clients. But you may have troubles explaining it to the IRS, especially if you're dealing with cash in your business. If you want to avoid matching issues, consider reporting all the 1099s, and then subtracting the duplicates and attaching a statement (the software will do it automatically when you add the description in the miscellaneous item) about what it is.", "topk_rank": 1 }, { "id": "11569", "score": 0.6829180121421814, "text": "You are expected to file 1099 for each person you pay $600 a year. I.e.: not a one time payment, but the total over the course of the year. Since we don't know how much and what else you paid - we cannot answer this question. The real question you're asking is that if you're treating the enterprise as a hobby, whether you're supposed to file 1099s at all. The answer to that question is yes. You should talk to your tax adviser (a EA/CPA licensed in your state) about this, and whether it is the right thing for you to do treating this as a hobby at all.", "topk_rank": 2 }, { "id": "158673", "score": 0.6826403737068176, "text": "\"Your employer can require a W8-BEN or W-9 if you are a contractor, and in some special cases. I believe this bank managing your stock options can as well; it's to prove you don't have \"\"foreign status\"\". See the IRS's W-9 instructions for details.\"", "topk_rank": 3 }, { "id": "402686", "score": 0.6817471385002136, "text": "You should include the checks you received from the company, invoices you sent, bank statements showing the deposits, and your receipts, if any, you issued to the company. You'd be surprised to know that this is a fairly common tax fraud. You can also try and sue the company or its successor for the missing amounts, but if it has been dissolved it may be difficult. As with any non-trivial tax issue - I suggest you get a professional advice from a EA/CPA licensed in your State. You may need representation before the IRS - only EA, CPA or an Attorney may represent you in IRS proceedings (including audit and correspondence).", "topk_rank": 4 }, { "id": "357520", "score": 0.6811630129814148, "text": "Yes, you are the proprietor of the business and your SSN is listed on Schedule C. The information on Schedule C is for your unincorporated business as a contractor; it is a sole proprietorship. You might choose to do this business under your own name e.g. Tim Taylor (getting paid with checks made out to Tim Taylor) or a modified name such as Tim the Tool Man Taylor (this is often referred to as DBA - Doing Business as), under a business name such as Tool Time etc. with business address being your home address or separate premises, and checking accounts to match etc. and all that is what the IRS wants to know about on Schedule C. Information about the company that paid you is not listed on Schedule C.", "topk_rank": 5 }, { "id": "578196", "score": 0.6811129450798035, "text": "\"The contract he wants me to sign states I'll receive my monthly stipend (if that is the right word) as a 1099 contractor. The right word is guaranteed payment, which is what \"\"salary\"\" is called when a partner is working for a partnership she's a partner in. Which is exactly the case in your situation. 1099 is not the right form to report this, the partnership (LLC in your case) should be using the Schedule K-1 for that. I suggest you talk to a lawyer and a tax adviser (EA/CPA) who are licensed in your State, before you sign anything.\"", "topk_rank": 6 }, { "id": "237331", "score": 0.6807767152786255, "text": "If you're under audit - you should get a proper representation. I.e.: EA or CPA licensed in California and experienced with the FTB audit representation. There's a penalty on failure to file form 1099, but it is with the IRS, not the FTB. If I remember correctly, it's something like $50 or $100 per instance. Technically they can disqualify deductions claiming you paid under the table and no taxes were paid on the other side, however I doubt they'd do it in a case of simple omission of filing 1099 forms. Check with your licensed tax adviser. Keep in mind that for the IRS 2011 is now closed, since the 3-year statute of limitations has passed. For California the statute is 4 years, and you're almost at the end of it. However since you're already under audit they may ask you to agree to extend it.", "topk_rank": 7 }, { "id": "495022", "score": 0.6805539131164551, "text": "There is usually contact information for the owner of the machine printed somewhere on it. Call that number. If it is in a business you could always try the clerk. Whether you get your money back is up to that person, I suppose.", "topk_rank": 8 }, { "id": "203155", "score": 0.6798906326293945, "text": "While IANAL (tax or otherwise), I have always found that keeping original receipts is the only way to go. While anything can, at some level, be forged or faked, a photo is one more step removed from the original. A mere listing on a web site isn't much proof of anything. Keep your originals for a suggested seven years; while the IRS is trying to audit much faster than that, and any inkling of fraud can be investigated at any time, you should be well and clear with originals kept that long.", "topk_rank": 9 }, { "id": "505761", "score": 0.679705023765564, "text": "Just type in the forms as they are, separately. That would be the easiest way both to enter the data without any mistakes, and ensure that everything matches properly with the IRS reports.", "topk_rank": 10 }, { "id": "128861", "score": 0.6796116232872009, "text": "Such activity is normally referred to as bartering income. From the IRS site - You must include in gross income in the year of receipt the fair market value of goods or services received from bartering. Generally, you report this income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship). If you failed to report this income, correct your return by filing a Form 1040X (PDF), Amended U.S. Individual Income Tax Return. Refer to Topic 308 and Amended Returns for information on filing an amended return.", "topk_rank": 11 }, { "id": "268257", "score": 0.6791404485702515, "text": "For purposes of the EIN the address is largely inconsequential. The IRS cannot (read: won't) recover the EIN if you fail to write it down after the website generates it for you. On your actual tax form the address is more consequential, and this is more so a question of consistency than anything. But an entity can purchase property anywhere and have a different address subsequent years. Paying the actual taxes means more than the semantical inconsistencies. The whole purpose of separate accounts is to make an audit easier, so even if someone imagines that some action (such as address ambiguity) automatically triggers an audit, all your earnings/purchases are not intermingled with personal stuff, which just streamlines the audit process. Consequences (or lack thereof) aside, physical means where physical property is. So if you have an actual mailing address in your state, you should go with that. Obviously, this depends on what arrangement you have with your registered agent, if all addresses are in Wyoming then use the Wyoming address and let the Registered Agent forward all your mail to you. Don't forget your $50 annual report in Wyoming ;) How did you open a business paypal without an EIN? Business bank accounts? Hm... this is for liability purposes...", "topk_rank": 12 }, { "id": "569455", "score": 0.678875744342804, "text": "Work on your own site is certainly not relevant here, that's just a part of your trade, not a service you provided to yourself. The business received the benefit of that work, not you. Suppose your business sold televisions. If you took a TV from stock for your own lounge, that would be included in this box because you have effectively paid yourself with a TV rather than cash. If you take a TV from stock to use as a demo model, that's part of your trade and not goods you have taken out of the business for your own use. For services provided to your dad it's less clear. As Skaty said, it depends whether it's your business providing the service, or you personally. If you gave your dad a free TV then it would be clear that you have effectively paid yourself with another TV and then given it to your dad as a gift. With services it's less clear whether you're receiving services from the business for free. You might consider how it would be treated by your employer if you weren't self-employed. If you were just applying your skills to help your dad in your free time, your employer wouldn't care. If you used your employer's equipment or facilities, or hosted his site on a server that your employer pays for, your employer would be more likely to discipline you for effectively stealing services from them, as they would if you took a TV from their warehouse for him.", "topk_rank": 13 }, { "id": "313361", "score": 0.6788473129272461, "text": "\"If this is truly hobby income (you do not intend to operate as a business and don't have a profit motive) then report the income on Line 21 (\"\"other income\"\") of form 1040. If this is a business, then the income and expenses belong on a Schedule C to form 1040. The distinction is in the treatment of profits and losses - your net profits on a business are subject to self-employment tax, while hobby income is not. Net losses on a business are deductible against other income; net losses on a hobby are miscellaneous itemized deductions in the \"\"2%\"\" box on Schedule A. From a tax point of view, selling apps and accepting donations are different. Arguably, donations are gifts; gifts are not taxable income. The hobby/business and income/gift distinctions are tricky. If the dollar amounts are small, nobody (including the IRS) really cares. If you start making or losing a lot of money, you'll want to get a good tax person lined up who can help you decide how to characterize these items of income and expens, how to put them on your return, and how to defend the return on audit if necessary.\"", "topk_rank": 14 }, { "id": "257443", "score": 0.6787035465240479, "text": "I assume the OP is the US and that he is, like most people, a cash-basis tax payer and not an accrual basis tax payer. Suppose the value of the rental of the unit the OP is occupying was reported as income on the OP's 2010 and 2011 W-2 forms but the corresponding income tax was not withheld. If the OP correctly transcribed these income numbers onto his tax returns, correctly computed the tax on the income reported on his 2010 and 2011 1040 forms, and paid the amount due in timely fashion, then there is no tax or penalty due for 2010 and 2011. Nor is the company entitled to withhold tax on this income for 2010 and 2011 at this time; the tax on that income has already been paid by the OP directly to the IRS and the company has nothing to do with the matter anymore. Suppose the value of the rental of the unit the OP is occupying was NOT reported as income on the OP's 2010 and 2011 W-2 forms. If the OP correctly transcribed these income numbers onto his tax returns, correctly computed the tax on the income reported on his 2010 and 2011 1040 forms, and paid the amount due in timely fashion, then there is no tax or penalty due for 2010 and 2011. Should the OP have declared the value of the rental of the unit as additional income from his employer that was not reported on the W-2 form, and paid taxes on that money? Possibly, but it would be reasonable to argue that the OP did nothing wrong other than not checking his W-2 form carefully: he simply assumed the income numbers included the value of the rental and copied whatever the company-issued W-2 form said onto his 1040 form. At least as of now, there is no reason for the IRS to question his 2010 and 2011 returns because the numbers reported to the IRS on Copy A of the W-2 forms match the numbers reported by the OP on his tax returns. My guess is that the company discovered that it had not actually declared the value of the rental payments on the OP's W-2 forms for 2010 and 2011 and now wants to include this amount as income on subsequent W-2 forms. Now, reporting a lump-sum benefit of $38K (but no actual cash) would have caused a huge amount of income tax to need to be withheld, and the OP's next couple of paychecks might well have had zero take-home pay as all the money was going towards this tax withholding. Instead, the company is saying that it will report the $38K as income in 78 equal installments (weekly paychecks over 18 months?) and withhold $150 as the tax due on each installment. If it does not already do so, it will likely also include the value of the current rent as a benefit and withhold tax on that too. So the OP's take-home pay will reduce by $150 (at least) and maybe more if the current rental payments also start appearing on the paychecks and tax is withheld from them too. I will not express an opinion on the legality of the company withholding an additional $150 as tax from the OP's paycheck, but will suggest that the solution proposed by the company (have the money appear as taxable benefits over a 78-week period, have tax withheld, and declare the income on your 2012, 2013 and 2014 returns) is far more beneficial to the OP than the company declaring to the IRS that it made a mistake on the 2010 and 2011 W-2's issued to the OP, and that the actual income paid was higher. Not only will the OP have to file amended returns for 2010 and 2011 but the company will need to amend its tax returns too. In summary, the OP needs to know that He will have to pay taxes on the value of the waived rental payments for 2010 and 2011. The company's mistake in not declaring this as income to the OP for 2010 and 2011 does not absolve him of the responsibility for paying the taxes What the company is proposing is a very reasonable solution to the problem of recovering from the mistake. The alternative, as @mhoran_psprep points out, is to amend your 2010 and 2011 federal and state tax returns to declare the value of the rental during those years as additional income, and pay taxes (and possibly penalties) on the additional amount due. This takes the company completely out of the picture, but does require a lot more work and a lot more cash now rather than in the future.", "topk_rank": 15 }, { "id": "248624", "score": 0.6780735850334167, "text": "\"Depending on where you are, you may be able to get away with filing a \"\"Doing Business As\"\" document with your local government, and then having the bank call the county seat to verify this. There is generally a fee for processing/recording/filing the DBA form, of course. But it's useful for more purposes than just this one. (I still need to file a DBA for my hobby work-for-pay, for exactly this reason.)\"", "topk_rank": 16 }, { "id": "399409", "score": 0.6780105829238892, "text": "We run into this all the time with our EU clients. As far as I can tell, the only requirements when it comes to invoicing have to do with sales tax, which is determined at the state level, and only in the case that items are taxable. It seems that the service provided to you is not taxable and so there is no obligation under Californian law to provide you with the invoice you need. That said, it would be nice to provide this information to you as a courtesy. We don't provide the information typically required by EU tax authorities on our receipts either, but whenever one of our EU clients requests a more formal invoice we gladly send them one.", "topk_rank": 17 }, { "id": "417866", "score": 0.6779459118843079, "text": "\"Payment gateways such as Square do not normally withhold tax. It is up to you to pay the appropriate tax at tax time. That having been said, Square does report your payments to the IRS on a form 1099-K if your payments are large enough. According to Square, you'll get a 1099-K from them if your total payments for the year add up to $20,000 AND more than 200 transactions. Whether or not they report on a 1099-K, you are required to pay the appropriate taxes on your income. So now the question becomes, \"\"Do I have to pay income tax on the proceeds from my garage sale?\"\" And the answer to that question is usually not. When you sell something that you previously purchased, if you sell it for more than you paid for it, you have a capital gain and need to pay tax on that. However, generally you sell things in a garage sale at a loss, meaning that there is no tax due. If you make more than $20,000 at your garage sale and the IRS gets a 1099-K, the IRS might be curious as to how you did that with no capital gain. So if you sell any big ticket items (a bulldozer, for example), you should keep a record of what you paid for it, so you can show the loss to the IRS in the event of an audit.\"", "topk_rank": 18 }, { "id": "562776", "score": 0.6779409050941467, "text": "I would at least encrypt the part of the drive you keep forms like that, but not to protect myself from the odd villain who works for the IRS. Your broker does report your capital gains to the IRS, whether in sales or dividends. I received a bill last month from the IRS for dividends I forgot to report on my 2013 return. The bill contained a partial duplicate of my 1099-DIV form from the brokerage, and included account numbers and SSN. Therefore it's safe to say IRS employees don't need to hack your laptop in order to get that info. :) As for minimum information, it depends on your broker. Call them and ask; they'll tell you everything you need to know. Vanguard, for example, has some security questions, among other things.", "topk_rank": 19 } ]
453	Where I am I liable for taxes?	[ { "id": "592926", "score": 0.632672131061554, "text": "You will have to pay your taxes in the UK not USA. For tax purposes it is the company's tax residency not where the server is located. You are just hiring a server in USA. Take for example a CDN being used for your same service then would you pay taxes in 300 different countries if you use Akamai? Does not work that way." } ]	[ { "id": "4992", "score": 0.6009328365325928, "text": "Yes, this extra income would be taxed at your marginal rate because it is increasing your total income. This does not necessarily apply to all income, however. Capital gains are taxed at a different rate. Depending on the amount of extra work, you may wish to consider setting up a corporation. Corporations are taxed entirely differently. This would also give you the opportunity to write off far more of your expenses, but be aware of double taxation. Investopedia has a good article on double taxation. The issue is that the corporation must pay taxes on the revenue and then, when you take out the money either as salary or dividends, you personally will pay tax. It may leave you better off, even with the double taxation. Dividends are taxed at a lower rate than your marginal tax rate, generally. And you can write off much more inside a corporation. If considering this, talk to an accountant and discuss your expected revenue from consulting. The accountant should be able to quantify the costs and benefits.", "topk_rank": 0 }, { "id": "59819", "score": 0.6009259819984436, "text": "The CPA's mention of $2,500 is probably referring to the recently increased de minimis safe harbor under the final tangible property regulations (used to be $500) without an applicable financial statement. The IRS will not challenge your choice of expense or capitalization on amounts on or below $2500 if you elect the de minimis safe harbor election on your return. However, you must follow whatever you're doing for your books. (So if you are capitalizing your laptops for book purposes, you would also need to capitalize for tax purposes). Section 179 allows you to expense property that you would have otherwise have had to capitalize and depreciate. Section 179 can be annoying, especially if your LLC is treated as a passthrough, because there are recapture provisions when you dispose of the asset too early. For the tax return preparer, it makes the return preparation much more simple if there are no fixed assets to account for in the first place, which is quite possible if you are expensive all items/invoices less than $2,500.", "topk_rank": 1 }, { "id": "325113", "score": 0.6008749008178711, "text": "In the UK you have an allowance of £40,000 per annum for tax relief into a pension. This amount includes both your and your employer's contributions. If you earn more than £150,000 per annum this allowance starts to reduce and if you earn less than the allowance, your allowance is limited to what you earn. You can also carry over unused allowance from up to 3 years previously. If you stick within this allowance you won't pay tax on your pension contributions, if you go over the excess will be subject to tax. Salary exchange normally lets you avoid the National Insurance value of your contribution being taxed. If you paid your own money into your pension (without going through salary exchange), your contributions would have the 20% basic rate of tax credited to them and if you're a higher rate taxpayer you could reclaim the difference between the basic rate of tax and the higher rate of tax you pay but the National Insurance you've paid on your own money would not be reclaimable. You can't get the money back you've paid into your pension till you are are 58 (given that you are 27 now), the minimum age has risen from its historic 55 for your age group. That's the pension trade off, you forgo tax now in the expectation that, once retired, you will be paying tax at a lower rate (because your income will be lower and you are much less likely to be subject to higher rate taxation) in return for locking in your money till you're older. Your pension income will be subject to tax when you eventually take it. There are other options such as ISAs which have lower annual limits (£20,000 currently) and on which your contributions do not attract tax relief, but which are not taxed as income when you eventually spend them. ISAs and pensions are not mutually exclusive so if you have the money, you can do both. It's up to you to determine what mix of savings will be appropriate to generate income for your eventual retirement. If you are living in some other country when you retire your pension will be paid net of UK tax. You might then be able to claim (or pay) any difference between that and your local tax rate depending on what agreement exists between the UK government and the other country's government.", "topk_rank": 2 }, { "id": "142645", "score": 0.6008487343788147, "text": "\"It is definitely legal, however none of such expenses will be allowed as a tax deduction for the corporation. Basically, you'll end up paying more to maintain the entity and pay taxes on its income (the rent you're paying to yourself as a corporation) at corporate rates, for no apparent benefit. Being the director/executive in the corporation will make you liable for whatever the corporation is liable, so liability isn't going away. The reason corporation is considered \"\"limited liability\"\" for owners is because shareholders are shielded from the corporate liability. Not directors or executives (which are explicitly not shielded).\"", "topk_rank": 3 }, { "id": "191447", "score": 0.6008306741714478, "text": "Employer match doesn't incur FICA tax (social security, medicare) for you at all - either current year or when you withdraw. All you have to pay is income tax when you withdraw after retirement age. (Disclaimer - I'm not tax professional but has done my research)", "topk_rank": 4 }, { "id": "172872", "score": 0.6008282899856567, "text": "This person must pay taxes in both the overseas country and in the U.S. This is unusual; generally, only the U.S. demands this. Depending on the specific country, he would likely not be taxed twice as the U.S. generally recognises tax paid in a different country. Note there are some gotchas, though. For example, although Canada has a generally higher tax scheme than the U.S., you may still end up owing tax if you use the Tax-Free Savings Account system in Canada, as that is not recognised in the U.S. As to whether or not this person should form a company, that is far too broad a question. It's going to depend in large part on the tax situations of the countries involved. This person needs to consult an accountant specialising in this situation. That is, on personal versus business tax and on tax involving U.S. citizens. Yes, this person can and indeed must file and pay taxes in the U.S., from outside the U.S.", "topk_rank": 5 }, { "id": "265866", "score": 0.6008246541023254, "text": "I did the reverse several years ago, moving from NH to MA. You will need to file Form 1-NR/PY for 2017, reporting MA income as a part-year residence. I assume you will need to report the April capital gain on your MA tax return, as you incurred the gain while a MA resident. (I am not a lawyer or tax professional, so I don't want to state anything about this as a fact, but I would be very surprised if moving after you incurred the gain would have any affect on where you report it.)", "topk_rank": 6 }, { "id": "575421", "score": 0.6007741093635559, "text": "I would consult a tax professional for specific help. On my own research, I believe that you could. I know that when I made payments when I was in school for my undergraduate, I made payments on the interest. I believe that I was even told by my financial aid office that I could deduct the interest that I paid. I made not much money so I wasn't anywhere close to the MAGI >75k, but I believe you still could. Not only that but one other thing to consider is that if you have an unsubisidized loan, the interest still accrues when you are in school. In that case, it might be better to make at least some payments. It would save you from the total loan amount ballooning so much while you are in school.", "topk_rank": 7 }, { "id": "207788", "score": 0.6007232069969177, "text": "\"You have a sequence of questions here, so a sequence of answers: If you stopped at the point where you had multiple wins with a net profit of $72, then you would pay regular income tax on that $72. It's a short term capital gain, which does not get special tax treatment, and the fact that you made it on multiple transactions does not matter. When you enter your next transaction that takes the hypothetical loss the question gets more complicated. In either case, you are paying a percentage on net gains. If you took a two year view in the second case and you don't have anything to offset your loss in the second year, then I guess you could say that you paid more tax than you won in the total sequence of trades over the two years. Although you picked a sequence of trades where it does not appear to play, if you're going to pursue this type of strategy then you are likely at some point to run into a case where the \"\"wash sale\"\" rules apply, so you should be aware of that. You can find information on this elsewhere on this site and also, for example, here: http://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02 Basically these rules require you to defer recording a loss under some circumstances where you have rapid wins and losses on \"\"substantially identical\"\" securities. EDIT A slight correction, you can take part of your losses in the second year even if you have no off-setting gain. From the IRS: If your capital losses exceed your capital gains, the amount of the excess loss that you can claim on line 13 of Form 1040 to lower your income is the lesser of $3,000, ($1,500 if you are married filing separately)\"", "topk_rank": 8 }, { "id": "306893", "score": 0.6007148623466492, "text": "This answer will be US-centric but hopefully most of the information will be applicable to other jurisdictions: Generally speaking:", "topk_rank": 9 }, { "id": "313909", "score": 0.6006932854652405, "text": "You don't need to keep receipts for most things, and if you are not going to itemize your deductions (which as a college student, you probably won't), you need even fewer. Things that you should always keep: If you are itemizing your deductions, you want to keep receipts for anything that you can itemize. Some common things are: Another thing that you should do, but few people do, is keep track of your online purchases, since many states require you to pay sales tax on those purchases. Of course, the state has no way of knowing what you buy online, so it is all done on the honor system.", "topk_rank": 10 }, { "id": "539867", "score": 0.6006835103034973, "text": "I think it is too early to tell. They changed so many variables in an incredibly complex system, and a lot of it will depend on how the requirements in the legislation look once the bureaucrats and insurance companies get a chance to interpret them and implement them as policy. My gut feeling is that for most people, you should plan on some pretty price increases for insurance in the next few years as insurance companies try cover the costs of removing lifetime caps and insuring people with pre-existing conditions. That said, the personal finance issue that you really should be planning for is your portfolio not your insurance costs. The bill includes almost a 4% increase in capital gains taxes.", "topk_rank": 11 }, { "id": "198468", "score": 0.6006479859352112, "text": "One option might be to use tax certificates to save this money. At the moment they don't pay any interest (unless you deposit more than £100,000 at once), so they aren't very attractive from that point of view. But they do give you a clean way to segregate your money and for the purposes of charging penalty interest, HMRC will treat you as having made the payment at the time you purchased the certificate, if it turns out that you should have paid the actual tax earlier than you did. Another option is a regular saver account. These typically have limits of £250 per month, so you might have to open a few given the amount you have to save. That would add up to a lot of maintenance effort, particularly as you'd have to open new accounts again each year. However, they do typically offer good interest rates compared to what's available elsewhere, and the way they operate fits well with your needs (money coming in regularly and then going out all at once).", "topk_rank": 12 }, { "id": "293651", "score": 0.6005794405937195, "text": "In an open corporation scenario a stock holder may well be found liable. It's a very narrow and uncommon bunch of scenarios but it's well worth sharing. See the paragraph on open corporations in the following document: http://nationalparalegal.edu/public_documents/courseware_asp_files/businessLaw/RightsOfShareholders/LiabilityOfShareholders.asp", "topk_rank": 13 }, { "id": "29817", "score": 0.6005629897117615, "text": "\"You may be considered a resident for tax purposes. To meet the substantial presence test, you must have been physically present in the United States on at least: 31 days during the current year, and 183 days during the 3 year period that includes the current year and the 2 years immediately before. To satisfy the 183 days requirement, count: All of the days you were present in the current year, and One-third of the days you were present in the first year before the current year, and One-sixth of the days you were present in the second year before the current year. If you are exempt, I'd check that ending your residence in Germany doesn't violate terms of the visa, in which case you'd lose your exempt status. If you are certain that you can maintain your exempt status, then the income would definitively not be taxed by the US as it is not effectively connected income: You are considered to be engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant on an \"\"F,\"\" \"\"J,\"\" \"\"M,\"\" or \"\"Q\"\" visa. The taxable part of any U.S. source scholarship or fellowship grant received by a nonimmigrant in \"\"F,\"\" \"\"J,\"\" \"\"M,\"\" or \"\"Q\"\" status is treated as effectively connected with a trade or business in the United States. and your scholarship is sourced from outside the US: Generally, the source of scholarships, fellowship grants, grants, prizes, and awards is the residence of the payer regardless of who actually disburses the funds. I would look into this from a German perspective. If they have a rule similiar to the US for scholarships, then you will still be counted as a resident there.\"", "topk_rank": 14 }, { "id": "454931", "score": 0.6005363464355469, "text": "Get the worker put it in writing, and deduct it in December under constructive receipt rules. The fact that you're getting the actual cash in January isn't significant as long as you've secured the payment. Verify this with a tax adviser, but that's what I would do.", "topk_rank": 15 }, { "id": "176105", "score": 0.6005333662033081, "text": "Assuming that what you want to do is to counter the capital gains tax on the short term and long term gains, and that doing so will avoid any underpayment penalties, it is relatively simple to do so. Figure out the tax on the capital gains by determining your tax bracket. Lets say 25% short term and 15% long term or (0.25x7K) + (0.15*8K) or $2950. If you donate to charities an additional amount of items or money to cover that tax. So taking the numbers in step 1 divide by the marginal tax rate $2950/0.25 or $11,800. Money is easier to donate because you will be contributing enough value that the IRS may ask for proof of the value, and that proof needs to be gathered either before the donation is given or at the time the donation is given. Also don't wait until December 31st, if you miss the deadline and the donation is counted for next year, the purpose will have been missed. Now if the goal is just to avoid the underpayment penalty, you have two other options. The safe harbor is the easiest of the two to determine. Look at last years tax form. Look for the amount of tax you paid last year. Not what was withheld, but what you actually paid. If all your withholding this year, is greater than 110% of the total tax from last year, you have reached the safe harbor. There are a few more twists depending on AGI Special rules for farmers, fishermen, and higher income taxpayers. If at least two-thirds of your gross income for tax year 2014 or 2015 is from farming or fishing, substitute 662/3% for 90% in (2a) under the General rule, earlier. If your AGI for 2014 was more than $150,000 ($75,000 if your filing status for 2015 is married filing a separate return), substitute 110% for 100% in (2b) under General rule , earlier. See Figure 4-A and Publication 505, chapter 2 for more information.", "topk_rank": 16 }, { "id": "568324", "score": 0.6004356145858765, "text": "Because the question puts moral obligations aside, I'll answer from the practical point of view. There are two reasons for declaring side income, even cash income. If you buy a house in a year or two, the additional income will help qualify you for a mortgage. The IRS has ways to discover that you earned the money. a. A client might be audited. If the client deducts the cost of your services from their income, they could be asked for proof that they paid you. Suppose they saved ATM receipts that show the withdrawals of cash used to pay you, and kept records that document the dates they paid you. The IRS might want to ask you if you were paid by the client on those dates, and how much. The asking might be in the form of an audit, and you'd have to lie to the IRS to avoid penalty. b. A client might develop a grudge against you and report you to the IRS. Someone could do this even if they don't know for sure that you don't declare the income. If you were interviewed or audited, you'd have to lie to the IRS to avoid penalty. c. You could fall prey to an algorithm. There might be one that compares deductions and income. If you run a crazy-high ratio year after year, you could be flagged for audit. Once again, you'd have to lie to avoid penalty.", "topk_rank": 17 }, { "id": "9676", "score": 0.6004287600517273, "text": "\"First you must understand your Marginal Tax Rate (Tax Bracket) The exemptions you claim are like saying to your employer \"\"tax me on $4050 less, or more\"\" for each change up or down of 1 exemption. Say you look at the table (2016 tables at my main site) and see you are in the 15% bracket. And your refund is $2000. 2000/.15 is $13,333. So you want that $13K to not be taxed. Raising exemptions by 3 (3x4050 = 12,150) will get you close. $1822 closer to your goal. For what it's worth, you can read through the instructions for the W4, of course. But this answer skips through the details and gets you to your goal. One point to note, since the exemption is in whole numbers, and $4050 is it, you will get close, +/- $608 if in the 15% bracket, but to get dead on, you'd need a mid year adjustment. Not worth it. A refund of under $608 should be enough for a 15%er. ($1012 for a 25%er) If you ready want to nail the taxes to a closer accuracy, you can use the line requesting additional dollars be withheld. Most W4 discussions miss this point. The exact number withheld by your employer comes from an IRS document known as Circular E, but retrieved as Publication 15. It will help you confirm the validity of my dirty shortcut method. What I do recommend is that you use a quick online tax calculator to do a dry run of you return, early in the year. If you see your withholding is off in either direction, best to adjust as soon as possible. (The numbers here now reflect 2016's $4050 exemption, recent question on Money.SE have linked to this one, prompting me to update for 2016)\"", "topk_rank": 18 }, { "id": "261965", "score": 0.6004229784011841, "text": "I think the IRS doc you want is http://www.irs.gov/publications/p550/ch04.html#en_US_2010_publink100010601 I believe the answers are:", "topk_rank": 19 } ]
454	Can I Accept Gold?	[ { "id": "144927", "score": 0.6584514379501343, "text": "\"You can accept almost anything mutually agreeable to you and the other party as payment. That's the definition of \"\"barter\"\". If you agree to trade manufactured goods for livestock, as long as both parties agree on the terms, I'm not aware of any law that would prohibit it. I hedged with \"\"almost\"\" because of course you can't accept something that is explicitly illegal. Like you can't say you'll accept cocaine as payment. Less obviously, there are laws regulating the sale of guns, nuclear fuel, agricultural products, etc. You'd still have to pay taxes, and it can get complicated to determine the taxable value of the transaction. Sorry, but you can't avoid taxes by getting your income in something other than cash.\"" }, { "id": "295980", "score": 0.8012435436248779, "text": "Of course you can accept gold as payment. Would anyone pay in gold? Would it have tax consequences on your federal taxes? These additional questions are off-topic on this site about personal finance." }, { "id": "110387", "score": 0.6919440627098083, "text": "\"Yes. \"\"There is, ...no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services.\"\" Taken from the US Department of the Treasury.\"" }, { "id": "201183", "score": 0.736673891544342, "text": "Yes. But the question is do you want to have gold? If you are going to buy gold anyway, and if you can get a good conversion rate between USD:gold, then why not? If you are looking to use your earnings on things that you cannot buy using gold, then I'd recommend you take USD instead. Have fun!" } ]	[ { "id": "201222", "score": 0.6810966730117798, "text": "I agree that there is no reliable way to buy gold for less than spot, no more than there is for any other commodity. However, you can buy many things below market from motivated sellers. That is why you see so many stores buying gold now. It will be hard to find such sellers now with the saturation of buyers, but if you keep an eye on private sales and auctions you may be able to pick up something others miss.", "topk_rank": 0 }, { "id": "20215", "score": 0.6807494759559631, "text": "The answer is no. Paypal will always ask for permission before adding or withdrawing money.", "topk_rank": 1 }, { "id": "48691", "score": 0.6800515651702881, "text": "\"And you have hit the nail on the head of holding gold as an alternative to liquid currency. There is simply no way to reliably buy and sell physical gold at the spot price unless you have millions of dollars. Exhibit A) The stock symbol GLD is an ETF backed by gold. Its shares are redeemable for gold if you have more than 100,000 shares then you can be assisted by an \"\"Authorized Participant\"\". Read the fund's details. Less than 100,000 shares? no physical gold for you. With GLD's share price being $155.55 this would mean you need to have over 15 million dollars, and be financially solvent enough to be willing to exchange the liquidity of shares and dollars for illiquid gold, that you wouldn't be able to sell at a fair price in smaller denominations. The ETF trades at a different price than the gold spot market, so you technically are dealing with a spread here too. Exhibit B) The futures market. Accepting delivery of a gold futures contract also requires that you get 1000 units of the underlying asset. This means 1000 gold bars which are currently $1,610.70 each. This means you would need $1,610,700 that you would be comfortable with exchanging for gold bars, which: In contrast, securitized gold (gold in an ETF, for instance) can be hedged very easily, and one can sell covered calls to negate transaction fees, hedge, and collect dividends from the fund. quickly recuperating any \"\"spread tax\"\" that you encounter from opening the position. Also, leverage: no bank would grant you a loan to buy 4 to 20 times more gold than you can actually afford, but in the stock market 4 - 20 times your account value on margin is possible and in the futures market 20 times is pretty normal (\"\"initial margin and maintenance margin\"\"), effectively bringing your access to the spot market for physical gold more so within reach. caveat emptor.\"", "topk_rank": 2 }, { "id": "154953", "score": 0.6787858605384827, "text": "\"Two points: One, yes -- the price of gold has been going up. [gold ETF chart here](http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1349467200000&chddm=495788&chls=IntervalBasedLine&q=NYSEARCA:IAU&ntsp=0&ei=PQhvUMjiAZGQ0QG5pQE) Two, the US has confiscated gold in the past. They did it in the 1930s. Owning antique gold coins is stupid because you're paying for gold + the supply / demand imbalance forced upon that particular coin by the coin collector market. If you want to have exposure to gold in your portfolio, the cheapest way is through an ETF. If you want to own physical gold because a) it's shiny or b) you fear impending economic collapse -- you're probably better off with bullion from a reputable dealer. You can buy it in grams or ounces -- you can also buy it in coins. Physical gold will generally cost you a little more than the spot price (think 5% - 10%? -- not really sure) but it can vary wildly. You might even be able to buy it for under the spot price if you find somebody that isn't very bright willing to sell. Buyer beware though -- there are lots of shady folks in the \"\"we buy gold\"\" market.\"", "topk_rank": 3 }, { "id": "495826", "score": 0.6786434054374695, "text": "Well first of all which Asian currency are you talking about,why i ask is because some Asian currencies are not fully convertible.So a bank may not accept them. So first you need to find out if they are fully convertible or not,if not then the best thing you can do is find a travel agent who have tourist packages to that country and they will buy,as they can later sell it to people going to that country.", "topk_rank": 4 }, { "id": "308684", "score": 0.6767552495002747, "text": "I came across this €1000 coin, which can actually be bought for €1000. It contains 17 grams of gold, worth about €600 today. Is there any downside to this over keeping €1000 in regular banknotes? These are bullions / medallions / collectibles / Non Circulating Tenders or whatever name one wants to call it. A coin has a value because the Central Banks says so that enforces everyone accept it at that. This as such is not a coin. Banks or anyone else will not accept this for face value. These are of numismatic interest and certain people do collect such items. They are collectibles to the extent the price is dependent on general interest in future on such items and quantity available. So if future the price may go up much higher than the gold price or may retain its gold price. Mints make these with intricate design, best finish, limited quantity to charge the additional premium. If you are not into numismatics, stay away, a better options is buy simple gold bullion of similar weight for actual gold price.", "topk_rank": 5 }, { "id": "19986", "score": 0.6755696535110474, "text": "\"Currencies such as the dollar, the Euro, and most others are no longer tied to gold in any way. They are just paper that is worth what it's worth because everyone agrees to accept it. Previously, currencies used to be commonly tied to gold reserves, and could theoretically be \"\"cashed in\"\" for gold, although not usually as much as the currency denomination (i.e., gold on the open market tended to sell for higher prices than what the government would give you for it).\"", "topk_rank": 6 }, { "id": "546027", "score": 0.6742733120918274, "text": "With gold at US$1300 or so, a gram is about $40. For your purposes, you have the choice between the GLD ETF, which represents a bit less than 1/10oz gold equivalent per share, or the physical metal itself. Either choice has a cost: the commission on the buy plus, eventually, the sale of the gold. There may be ongoing fees as well (fund fees, storage, etc.) GLD trades like a stock and you can enter limit orders or any other type of order the broker accepts.", "topk_rank": 7 }, { "id": "443094", "score": 0.6720574498176575, "text": "\"In addition to the possibility of buying gold ETFs or tradable certificates, there are also firms specializing in providing \"\"bank accounts\"\" of sorts which are denominated in units of weight of precious metal. While these usually charge some fees, they do meet your criteria of being able to buy and sell precious metals without needing to store them yourself; also, these fees are likely lower than similar storage arranged by yourself. Depending on the specifics, they may also make buying small amounts practical (buying small amounts of physical precious metals usually comes with a large mark-up over the spot price, sometimes to the tune of a 50% or so immediate loss if you buy and then immediately sell). Do note that, as pointed out by John Bensin, buying gold gets you an amount of metal, the local currency value of which will vary over time, sometimes wildly, so it is not the same thing as depositing the original amount of money in a bank account. Since 2006, the price of an ounce (about 31.1 grams) of gold has gone from under $500 US to over $1800 US to under $1100 US. Few other investment classes are anywhere near this volatile. If you are interested in this type of service, you might want to check out BitGold (not the same thing at all as Bitcoin) or GoldMoney. (I am not affiliated with either.) Make sure to do your research thoroughly as these may or may not be covered by the same regulations as regular banks, particularly if you choose a company based outside of or a storage location outside of your own country.\"", "topk_rank": 8 }, { "id": "483389", "score": 0.6718199849128723, "text": "\"Are you talking about a country besides the US? And you're talking about a commercial bank, right? In the US, banks don't buy gold from consumers. The last time they sort of did (in the early 1900s), they were trading gold coins for gold certificates, and then they later stopped allowing consumers to trade them back. This is known by a well-known financial term: \"\"Gotcha, suckers!\"\" If someone were naive enough to deposit a $50 Gold American Eagle today in a bank, the depositor will get a credit of $50 on their account, and later some clever person will ask the teller if they have any \"\"strange money\"\" lying around, and that lucky person will be able to withdraw a $1,700 coin for $50, if it lasted for even a second in the teller's drawer. But let's say you're going to a place that does indeed still buy gold coins. The discount depends on the type of coin, and the type of damage. An old (collectible) coin has a part of its value set by the gold value, and part by the collector's premium. Better specimens command better collector's premiums, so a damaged coin, as long as it isn't a chunk of the coin missing, won't be worth less than the melt value. (You may not get that much from a dealer, but it should be fairly close.) If part of the coin is missing, then the person buying it should weigh the coin and adjust the price proportionately. It's likely, though, that if you have the items in a safe, you may have a puddle or blob of gold, but it should still all be there unless someone takes it. Gold melts at about 1850 degrees Fahrenheit, but it would take half the surface temperature of the sun for it to boil away. If it's unidentifiable, it may need to be assayed again.\"", "topk_rank": 9 }, { "id": "474248", "score": 0.6716836094856262, "text": "The Federal Reserve website notes that creditors must accept cash for debts on services already rendered, but that businesses may refuse cash for services not yet rendered unless prohibited by local law. The Treasury website includes examples of businesses limiting what cash they will accept: For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.", "topk_rank": 10 }, { "id": "200457", "score": 0.6716090440750122, "text": "The U.S. Treasury said the same thing on the lawfulness of retailers refusing legal tender at point of sale - retailers are allowed to refuse any denomination of U.S. currency: [...]all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. [...]", "topk_rank": 11 }, { "id": "345475", "score": 0.6711655855178833, "text": "In any country, individuals (and shops) can reject any form of payment that is not Legal Tender - defined by law as a payment form that must be accepted. Shops are typically more generous, because they want to do business with you, but individuals are in a different position. In France, only official coins and bills are declared as Legal Tender (so if they don't want to, individuals don't even need to accept bank transfers). This is for doubts you need to pay. In addition, as you are not forced to do business with them, people and shops can require whatever they feel like to require - if you want to buy their car, they can ask you to stand on your head and spit coins, and if you don't like it, they don't sell to you. (They won't do much business then, probably)", "topk_rank": 12 }, { "id": "534220", "score": 0.6710020303726196, "text": "\"Congratulations! You see the problem. You can't get away from unstable currencies. The other problem is that the US will shut down anything that appears to be providing a replacement for the US Dollar. Once a token or medallion or gift certificate or whatever starts being used outside the confines of one business or one network of businesses, it will be shut down, quickly. It happened with Las Vegas gambling tokens. Another more recent attempt was with the Liberty Dollar, gold and silver coins and certificates that not only had precious metal backing, but whose proponents encouraged taking them to retailers and paying with them as if they were US Dollars. There were other problems with this idea, but it was the competitive stature of the Liberty dollar that got the headquarters raided and the main site shut down. Basically, all signs point toward dealing with currencies and their state of being systematically eroded over time. If you do find one that appears to exist, be wary, because the rules can change at any time, and the \"\"money\"\" will be nowhere near as liquid as a proper currency.\"", "topk_rank": 13 }, { "id": "212157", "score": 0.670804500579834, "text": "Without getting into whether you should invest in Gold or Not ... 1.Where do I go and make this purchase. I would like to get the best possible price. If you are talking about Physical Gold then Banks, Leading Jewelry store in your city. Other options are buying Gold Mutual Fund or ETF from leading fund houses. 2.How do I assure myself of quality. Is there some certificate of quality/purity? This is mostly on trust. Generally Banks and leading Jewelry stores will not sell of inferior purity. There are certain branded stores that give you certificate of authenticity 3.When I do choose to sell this commodity, when and where will I get the best cost? If you are talking about selling physical gold, Jewelry store is the only place. Banks do not buy back the gold they sold you. Jewelry stores will buy back any gold, however note there is a buy price and sell price. So if you buy 10 g and sell it back immediately you will not get the same price. If you have purchased Mutual Funds / ETF you can sell in the market.", "topk_rank": 14 }, { "id": "453625", "score": 0.6702060699462891, "text": "Are you going to South Africa or from? (Looking on your profile for this info.) If you're going to South Africa, you could do worse than to buy five or six one-ounce krugerrands. Maybe wait until next year to buy a few; you may get a slightly better deal. Not only is it gold, it's minted by that country, so it's easier to liquidate should you need to. Plus, they go for a smaller premium in the US than some other forms of gold. As for the rest of the $100k, I don't know ... either park it in CD ladders or put it in something that benefits if the economy gets worse. (Cheery, ain't I? ;) )", "topk_rank": 15 }, { "id": "560557", "score": 0.67005854845047, "text": "Generally, I consider it bad etiquette to inconvenience others. I would recommend cash for small purchases. Try to offer as close to the required amount as possible. Don't pay with several dollars worth of change if you can avoid it. You shouldn't need to carry a lot of cash. When you do don't make it obvious.", "topk_rank": 16 }, { "id": "528940", "score": 0.6699017286300659, "text": "If you want to buy physical gold, I would suggest pawn shops. Just have an idea of the price of gold and how to calculate value from carat weight. Also the type of gold affects resale value. I would buy the darker colored Indian or Thai gold. Thai Bot chains are probably the best.", "topk_rank": 17 }, { "id": "94089", "score": 0.6698360443115234, "text": "\"The gold itself isn't debt, but most people stashed their gold away in a \"\"bank\"\" of some sort and got a piece of paper saying something along the lines of (Reddit bank owes you 50 grams of gold) and you would trade this as a form of money.\"", "topk_rank": 18 }, { "id": "289700", "score": 0.6697942018508911, "text": "The laws of the United States of America require that the federal currency issued is accepted as legal tender for all goods and services anywhere within this country. One really has to wonder what the motivation behind this story is. VISA obviously knows that such a move is illegal. I am skeptical that there's any truth to the article at all.", "topk_rank": 19 } ]
456	Can a company have a credit rating better than that of the country where it is located?	[ { "id": "146995", "score": 0.7202566266059875, "text": "\"BlackJack's answer is technically correct: government credit ratings are independent of corporate credit ratings. The rating should reflect the borrower's ability to repay its obligations. One reason the book you read may have stated that corporate credit ratings cannot be better than the government's credit rating is that the government, unlike the corporation, can steal (or in government parlance \"\"tax\"\") from anywhere or anyone. So if a government finds itself in financial difficulty it could simply take the cash from corporations or people with high credit ratings by a variety of methods: implement windfall profit taxes, take over industries, take peoples gold, tax pension savings, or simply take peoples pensions or retirement savings. This increases the risk of doing business in a country with an over-extended government. Over extended governments do not die gracefully. They only die when there is nothing left to steal.\"" }, { "id": "168382", "score": 0.7881763577461243, "text": "\"In one personal finance book I read that if a company is located in a country with credit rating X it can't have credit rating better (lower - i.e. further from AAA level) than X. This is simply wrong. Real world evidence proves it wrong. Automatic Data Processing (ADP), Exxon Mobile (XOM), Johnson & Johnson (JNJ), and Microsoft (MSFT) all have a triple-A rating today, even though the United States doesn't. Toyota (TM) remained triple-A for many years even after Japanese debt was downgraded. The explanation was the following: country has rating X because risk of doing business with it is X and so risk of doing business with any company located in that country automatically can't be better than X. When reading financial literature, you should always be critical. Let's evaluate this statement. First off, a credit rating is not the \"\"risk of doing business.\"\" That is way too generic. Specifically, a credit rating attempts to define an individual or company's ability to repay it's obligations. Buying treasuries constitutes as doing business with the gov't, but you can argue that buying stamps at USPS is also doing business with the gov't, and a credit rating won't affect the latter too much. So a credit rating reflects the ability of an entity to repay it's obligations. What does the ability of a government to repay have to do with the ability of companies in that country to repay? Not much. Certainly, if a company keeps it's surplus cash all in treasuries, then downgrading the government will affect the company, but in general, the credit rating of a company determines the company's ability to pay.\"" } ]	[ { "id": "309199", "score": 0.7150197625160217, "text": "It is very important to note the strength and reputation of the country's regulatory agency. You cannot assume the standards of say the SEC (US Securities and Exchange Commission) apply in other countries (even well-developed ones). These regulations force companies to disclose certain information to inform and protect investors. The standards for such practices vary internationally.", "topk_rank": 0 }, { "id": "184365", "score": 0.7126269340515137, "text": "\"It's not just that credit history is local; it's that it's a private business run for profit. The \"\"big three\"\" credit bureaus in the US are Experian, Equifax and Transunion. They collect information on debt usage and abuse from various companies in the US, and charge a fee to provide that information (and their judgement of you) to companies interested in offering you further credit. But there's nothing stopping a company from collecting international credit histories, or specialized credit histories either (for instance, there's a company called ChexSystems which focuses on retail purchase financing (mostly auto) and checking account abuse, while ignoring other types of lending). That being said, I don't know of any companies which currently collect international credit histories. Perhaps in Europe, with more nations in close geographic proximity, there would be, but not in North America.\"", "topk_rank": 1 }, { "id": "486729", "score": 0.6912863254547119, "text": "Someone else might be able to provide more details - but generally yes, of course. International corporations can pursue debt collection across borders - whether or not they do is a matter of convenience rather than law. My understanding is that a company's ability to report on your credit report is dependent on their membership in Equifax, USA etc. - so while most of your credit is country by country, international companies or companies with any relationship in other countries can follow you cross-border if they find out your new address and report the debt w/ that address. Since virtually every major company has some American affiliate, I wouldn't hold my breath that you can escape it indefinitely ESPECIALLY since you don't already have the debt, and have the power to actually pay for the service that you're using. Also - this is an incredibly scummy thing to do, and no matter how you dress it up as a financial decision it's just theft. Would you leave the country without paying your landlord? Without paying for groceries or other physical goods? Why is stealing from a telecom company any different?", "topk_rank": 2 }, { "id": "534472", "score": 0.6827956438064575, "text": "No. I have several that I haven't used in a year or so (legacy of the time when they gave you money to sign up :-)), and credit rating's something over 800 last I checked.", "topk_rank": 3 }, { "id": "154699", "score": 0.6822825074195862, "text": "\"If you have trouble with the USA then you might also consider an account in Singapore. They're also better about international situations than the USA. They also have a reputation for \"\"slapping down\"\" on corruption.\"", "topk_rank": 4 }, { "id": "528472", "score": 0.6782887578010559, "text": "Sure you can, esp if you are creating a special class of unsecured creditor. Its going to piss off businesses and add an additional factor when validating the credit-worthiness (thus credit does cost a bit more) of a company but that may not be a bad thing considering that screwing over your employees for some cash should be more of a black mark than it is.", "topk_rank": 5 }, { "id": "227134", "score": 0.6780843734741211, "text": "Credit agency sovereign ratings take into account the amount of external support the government is likely to get during a time of stress. The whole EU just came to Spain's rescue, but who would come to India's rescue so as to be sufficient to prevent default? See, the fact that Spain was able to get a bailout is most of the reason Spain's credit rating is higher than India's.", "topk_rank": 6 }, { "id": "299174", "score": 0.6758593916893005, "text": "Think about India's government, and then think about Spain's. Credit rating is a measure of risk of default. What government is more likely to default: A developed, relatively transparent European government with mature industries and an educated populous. Or a developing, relatively opaque SouthEast Asian government with a large amount of its populous uneducated, living in poverty. Ask yourself, would you rather make a loan to Spain or India? Which is more likely to pay you back? edit: Despite the fact that Spain needs a bailout, it already has a very mature, very advanced infrastructure/economy in place. With a little cash, the government can get that industrial machine working at efficiency again.", "topk_rank": 7 }, { "id": "346166", "score": 0.6731535196304321, "text": "Currently the credit history are not International but are local. Many countries don't have a concept of credit history yet. Having said that, if you are moving to US, depending on your history in your country, you can ask the same bank to provide you with a card and then start building history. For example in India I had a card with Citi Bank and when I moved to US for a short period, I was given a card based on my India Card, with equivalent credit in USD. If you are moving often internationally, it would make sense to Bank with a leading bank that provide services in geographies of your interest [Citi, HSBC, etc] and then in a new country approach these institutions to get you some starting credit for you to build a history.", "topk_rank": 8 }, { "id": "259228", "score": 0.6728153824806213, "text": "If you can set up automatic payments (like direct debits in the UK) and you can be disciplined enough to not spend the money on something else then this can be a good way of building/improving your credit rating. Banks / Lenders like it when they see you have previously taken, and repaid, credit. This can help you get better finance deals etc. in the future. Update: as noted in the comments France had a different financial system and people do not have credit ratings, so this point isn't valid in France", "topk_rank": 9 }, { "id": "54019", "score": 0.6699807047843933, "text": "The big risk for a bank in country X is that they would be unfamiliar with all the lending rules and regulations in country Y. What forms and disclosures are required, and all the national and local steps that would be required. A mistake could leave them exposed, or in violation of some obscure law. Plus they wouldn't have the resources in country Y to verify the existence and the actual ownership of the property. The fear would be that it was a scam. This would likely cause them to have to charge a higher interest rate and higher fees. Not to mention that the currency ratio will change over the decades. The risks would be large.", "topk_rank": 10 }, { "id": "590370", "score": 0.6697070002555847, "text": "In six months, there is little you can do that will significantly affect your future credit rating other than trying to avoid paying for something by leaving the country. As we keep telling people, the best things you can do for your credit rating are to have a good income and Don't Be Stupid about misusing credit.", "topk_rank": 11 }, { "id": "494439", "score": 0.6693480014801025, "text": "This is not shocking news actually. Nothing happened to these banks that made them lose their ratings. Rather, it's the rating agencies that have set up more strict rules, especially when it comes to triple A status. Specifically, it's no longer possible that banks or similar institutions can have a triple A status.This effectively means that only the richer countries can be triple A.", "topk_rank": 12 }, { "id": "589625", "score": 0.6687321662902832, "text": "Yes, However if you live in the USA a lot of companies will refuse to sent you any report and will not let you take part in “right issues” as they don’t wish to come under USA investment law.", "topk_rank": 13 }, { "id": "382827", "score": 0.6685811281204224, "text": "All Companies Can Take Advantage of [Local Business Listing](http://come2ourdeals.com.au/) .First of all, a company is not a enterprise. While we will discuss this in more details later on, we have to keep in mind that nation wide businesses with regional lifetime are also reliant upon the regional financial system for their income.", "topk_rank": 14 }, { "id": "182199", "score": 0.665127158164978, "text": "\"Not entirely. For a creditor to go after the \"\"parent company\"\" in one of these cases requires the courts to be willing to \"\"pierce the corporate veil\"\" (in legal parlance). Typically this is only done if the parent company set up the wholly-owned-subsidiary in order to perpetrate a fraud. In this case, the subsidiary has a totally legitimate function - to sequester risk. While you're right that the parent company may have to offer some form of credit guarantees to get the subsidiary to get a loan, often those guarantees still don't create nearly as much exposure for the parent company.\"", "topk_rank": 15 }, { "id": "430472", "score": 0.664656400680542, "text": "\"Rating agencies are pretty garbage, the market is always a few steps ahead of them. However, India is rated lower as it has not been an economic \"\"power\"\" for a long time ans is still developing. However the market rates on bonds tell a different story, and that is that India is safer than Spain to lend to. It is also easier to go after assets in Spain a Eurozone country than India, however Indian debt in Rupees should be safer than Spanish debt in Euros as India can fire up the printer if necessary. Indian yield on the 10 year is ~ 8.5% inflation is 7.5% giving a real yield of 1% Spanish 10 year is 6.87% and Eurozone inflation is 2.4% giving a real yield of 4.47%. The market doesn't agree with S&P.\"", "topk_rank": 16 }, { "id": "21872", "score": 0.6644861698150635, "text": "You borrow on the international makets. [Moody's predicts Scotland would get an 'A' credit rating](http://www.bbc.co.uk/news/uk-scotland-scotland-politics-27247870) [Standard & Poors - Independent Scotland could be AAA rated](http://www.businessforscotland.co.uk/independent-scotland-could-be-aaa-rated-standard-poors) [Credit Suisse report independent Scotland would be ranked four places higher than the rUK.](http://www.newsnetscotland.com/index.php/scottish-news/9637-scotland-ahead-of-ruk-even-without-oil-says-credit-suisse-report) [An independent Scotland would be a wealthy and financially viable country like New Zealand, but could suffer initial growing pains, according to credit ratings agency Standard & Poor's.](http://www.theguardian.com/politics/2014/feb/27/independent-scottish-economy-viable-slow-first-standard-poors)", "topk_rank": 17 }, { "id": "307411", "score": 0.6616371870040894, "text": "The credit scale is deceptive, it goes: AAA, AA, A, BBB, BBB-, BB+, BB, B, CCC, CC, C, D. In reality it should be A,B,C,D,E, F, G,H, I, etc. The current scale does not reflect with clarity the ranking of risks and ratings. AA is much worse than AAA, but the uncertainty involved can be scary. Check out these corporate and sovereign debt credit ratings.", "topk_rank": 18 }, { "id": "106831", "score": 0.6613802313804626, "text": "Is it possible for the card issuing banks to check my score without my permission? As far as I understand these things, that is exactly the whole purpose of these sorts of credit-rating institutions. The banks and other financial businesses are their customers. They exist to serve those customers. Their relationship, if any, with a consumer is probably secondary to that. When you apply for credit, you give that business any permission needed.", "topk_rank": 19 } ]
457	Do I owe taxes in the US for my LLC formed in the US but owned by an Indian citizen?	[ { "id": "59686", "score": 0.7312472462654114, "text": "You're doing business in the US and derive income from the US, so I'd say that yes, you should file a non-resident tax return in the US. And in Connecticut, as well, since that's where you're conducting business (via your domestic LLC registered there). Since you paid more than $600 to your contractor, you're probably also supposed to send a 1099 to him on that account on behalf of your LLC (which is you, essentially, if you're the only member)." }, { "id": "276411", "score": 0.7730451822280884, "text": "This is a complicated question that relies on the US-India Tax Treaty to determine whether the income is taxable to the US or to India. The relevant provision is likely Article 15 on Personal Services. http://www.irs.gov/pub/irs-trty/india.pdf It seems plausible that your business is personal services, but that's a fact-driven question based on your business model. If the online training is 'personal services' provided by you from India, then it is likely foreign source income under the treaty. The 'fixed base' and '90 days' provisions in Article 15 would not apply to an India resident working solely outside the US. The question is whether your US LLC was a US taxpayer. If the LLC was a taxpayer, then it has an obligation to pay US tax on any worldwide income and it also arguably disqualifies you from Article 15 (which applies to individuals and firms of individuals, but not companies). If you were the sole owner of the US LLC, and you did not make a Form 8832 election to be treated as subject to entity taxation, then the LLC was a disregarded entity. If you had other owners, and did not make an election, then you are a partnership and I suspect but cannot conclude that the treaty analysis is still valid. So this is fact-dependent, but you may be exempt from US tax under the tax treaty. However, you may have still had an obligation to file Forms 1099 for your worker. You can also late-file Forms 1099 reporting the nonemployee compensation paid to your worker. Note that this may have tax consequences on the worker if the worker failed to report the income in those years." } ]	[ { "id": "353926", "score": 0.7134243249893188, "text": "Yes, you can still file a 1040nr. You are a nonresident alien and were: engaged in a trade or business in the United States Normally, assuming your withholding was correct, you would get a minimal amount back. Income earned in the US is definitely Effectively Connected Income and is taxed at the graduated rates that apply to U.S. citizens and resident aliens. However, there is a tax treaty between US and India, and it suggests that you would be taxed on the entirety of the income by India. This suggests to me that you would get everything that was withheld back.", "topk_rank": 0 }, { "id": "446190", "score": 0.7132516503334045, "text": "\"I assume you are filing US taxes because you are a US citizen, resident alien, or other \"\"US person\"\". If you have a total of $10,000 or more in assets in non-US accounts, you are required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts, also known as FBAR, to report those accounts. See Comparison of Form 8938 and FBAR Requirements. Note this refers to the total balance in the account (combined with any other accounts you may have); the amount you transferred this year is not relevant. Also note that the FBAR is filed separately from your income tax return (it does not go to the IRS), though if you have over $50,000 in offshore assets you may also have to file IRS Form 8938. Simply reporting those accounts does not necessarily mean you will owe extra taxes. Most US taxes are based on income, not assets. According to the page linked, the maximum penalty for a \"\"willful\"\" failure to report such accounts is a fine of $100,000 or 50% of the assets in question, whichever is greater, in addition to possible criminal sanctions. There may be other US filing requirements that I don't know about, so you may want to consult a tax professional. I do not know anything about your filing requirements under Indian law.\"", "topk_rank": 1 }, { "id": "206114", "score": 0.7116130590438843, "text": "\"Generally, you pick the State which you're located at, because you'll have to register your LLC there in any case. In your case that would be either Colorado or Oklahoma - register as domestic in one, as foreign in the other. If your concern is anything other than mere convenience/costs - then you need to talk to a lawyer, however most State LLC laws are fairly alike (and modeled after the \"\"Uniform Limited Liability Company Act\"\". Keep in mind that most of the sites talking about \"\"forming LLC out of state\"\" are either sales sites or targeted to foreigners attempting to form a US company. All the cr@p you hear about forming in Delaware/Nevada/Wyoming - is useless and worthless for someone who's a resident of any of the US States. If you're a US resident - you will always have to register in the State you're located at and do the work at, so if you register elsewhere - you just need to register again in your home State. In your case you already span across States, so you'll have to register in two States as it is - why add the costs of registering in a third one?\"", "topk_rank": 2 }, { "id": "231254", "score": 0.7098419666290283, "text": "\"This is an answer grounded in reality, not advice. Most states have no means of enforcing their foreign business entity registration statutes. Some states never even codified consequences. (California is a notable exception.). Some states have 'business licenses' that you need in order to defend your entity in court, but will retroactively apply the corporate veil when you get the license. The \"\"do I have to register\"\" question is analogous to asking a barber if you need a haircut. But this doesn't absolve you of looking in the mirror (doing your research). Registration and INCOME taxes are different stories. If a state calls their fee a franchise tax and it is applicable and there are real consequences for not, then you will have to pay that tax. Anyway, this isn't advocating breaking the law, but since it describes ignoring toothless state-chartered agencies, then there are people that will disagree with this post, despite being in line with business climate in the United States. Hope that helps\"", "topk_rank": 3 }, { "id": "332314", "score": 0.7080458998680115, "text": "If you have income in the US, you will owe US income tax on it, unless there is a treaty with your country that says otherwise.", "topk_rank": 4 }, { "id": "360629", "score": 0.7073758840560913, "text": "\"Do I need to pay taxes in India in this scenario? For India tax purposes, you would still qualify as \"\"Resident Indian\"\". As a resident Indian you have to pay taxes on Global income. It is not relevant whether you transfer the money back to India to keep in US. The income is generated and taxable. Depending on your contract, presumably you are working as a free lance; certain expenses are allowed to be deducted from your income, for example if you purchase equipment to help carry out the work, stay / entertainment costs, etc. Consult a professional CA who should be able to guide you on what is eligible and what is not. The balance along with your other income will be taxed as per tax brackets. There is exemption for certain category of workers, mostly in entertainment industry where such income is not taxable. This does not apply to your case.\"", "topk_rank": 5 }, { "id": "34087", "score": 0.7071431875228882, "text": "If it is a sole proprietorship and you didn't make another mistake by explicitly asking the IRS to treat it as a corporation - there are no IRS forms to fill. You'll need to dissolve the LLC with your State, though, check the State's department of State/Corporations (depending on the State, the names of the departments dealing with business entities vary).", "topk_rank": 6 }, { "id": "85622", "score": 0.7058504819869995, "text": "\"Assuming you are talking about an LLC in the United States, there are no tax repercussions on the LLC itself, because LLCs use pass-through taxation in the U.S., meaning that the LLC does not pay taxes. Whatever you take out of the LLC in the form of distributions goes onto your personal income tax as ordinary income, and you pay personal income tax on it. See this link on the subject from the Nolo.com web site: Tax treatment of an LLC from the Nolo.com web site Repayment of your loan by the LLC would just be another business expense for the business itself. I guess the question would then turn on what your personal tax repercussion would be for payments received from the LLC on the loan. I would guess (and I emphasize \"\"guess\"\") that you would pay tax on any interest gain from the loan payments, which makes the assumption you made the loan to include interest. If not (in other words, if you made this an interest-free loan) then it would be considered a wash for tax purposes and you would have no tax liability for yourself. To reiterate, the LLC (if it is a U.S.. entity) does not pay taxes. Taxation of LLC income is based on whatever distributions the principals take out of it, which is then claimed as taxable personal income. My apologies to littleadv for not making my prior answer (I deleted it) more clear about my answer assuming you were speaking of a U.S.-chartered LLC. I hope this helps. Good luck!\"", "topk_rank": 7 }, { "id": "133299", "score": 0.7049788236618042, "text": "Payment of taxes for your personal return filed with the IRS always come from your personal account, regardless of how the money was earned. Sales tax would be paid from your business account, so would corporate taxes, if those apply; but if you're talking about your tax payments to the IRS for your personal income that should be paid from your personal account. Also, stating the obvious, if you're paying an accountant to handle things you can always ask them for clarification as well. They will have more precise answers. EDIT Adding on for your last part of the question I missed: In virtually all cases LLC's are what's called a pass through entity. For these entities, all income in the eyes of the federal government passes directly through the entity to the owners at the end of each year. They are then taxed personally on this net income at their individual tax rate, that's the very abridged version at least. The LLC pays no taxes directly to the federal government related to your income. Here's a resource if you'd like to learn more about LLC's: http://www.nolo.com/legal-encyclopedia/llc-basics-30163.html", "topk_rank": 8 }, { "id": "95724", "score": 0.7041237354278564, "text": "You won't be paying any taxes for income generated in the US as long as you are not-resident in India. You pay US taxes. You can file a null return in India just in case (all zeroes). If you have any income in India - bank deposits in your name, house rental income and so on - that needs to be declared and tax needs to be paid in India.", "topk_rank": 9 }, { "id": "144190", "score": 0.7040894627571106, "text": "You can receive funds from US Client as an individual. There is no legal requirement for you to have a company. If the transactions are large say more than 20 lacs in a year, its advisable to open a Private Ltd. Although its simple opening & Registering a company [A CA or a Laywer would get one at a nominal price of Rs 5000] you can do yourself. Whatever be the case, its advisable to have seperate accounts for this business / professional service transactions. Maintain proper records of the funds received. There are certain benefits you can claim, a CA can help you. Paying taxes in Advance is your responsibility and hence make sure you keep paying every quarter as advance tax. Related questions Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? Freelancer in India working for Swiss Company Freelancing to UK company from India How do I account for money paid to colleagues out of my professional income?", "topk_rank": 10 }, { "id": "68969", "score": 0.7040598392486572, "text": "According to the Illinois Department of Revenue, you don't have to file any taxes that are specific to a LLC, only your personal taxes. LLC on Federal level is disregarded, instead you submit all your business income/expenses on Schedule C. On the state level - it seems to be the same (only individual tax return). Consult your state certified tax specialist. That is not the case in other states, for example in California LLC has to file its own tax return and pay its own taxes, in additional to the individual taxes.", "topk_rank": 11 }, { "id": "282958", "score": 0.7027277946472168, "text": "As a nonresident sole proprietor or partnership You are not a sole proprietor or a member of a legal partnership. You are an employee for a corporation. Does the nature of your work require you to be present in New York regularly? If you are in New York for personal reasons, you are simply telecommuting. You must pay taxes personally for your W-2 income, but your business entity never moved from Wyoming. If this were not true, companies would have to pay corporate income tax to every state in which they have a telecommuter. For example, I live in Florida but telecommute to a company in Michigan. Does my employer pay Florida business tax? Of course not. Your business would only owe New York if the nature of the business requires a consistent and regular business presence in New York, such as maintaining an office for a portion of every year so clients could see you.", "topk_rank": 12 }, { "id": "354943", "score": 0.7025141716003418, "text": "If the 'gratuity' is a payment from your previous Indian company made when you left them, then the US tax system will treat it exactly the same as wages paid by your previous company. Whether or not you need to pay taxes on your wages and gratuity will depend on whether your are considered resident in the US for tax purposes for this financial year. It is likely that you will be. Assuming you are, then the US requires that you pay tax on all income, wherever it is earned in the world. You will need to fill in a tax return and declare both your gratuity and your wages in India for that year. India and the US have a 'double tax agreement', which means essentially that you won't be taxed twice if you have already paid tax on the gratuity and wages in India. But you do have to declare them.", "topk_rank": 13 }, { "id": "349424", "score": 0.7010895013809204, "text": "\"As you are earning an income by working in India, you are required to pay tax in India. If you contract is of freelance, then the income earned by you has to be self declared and taxes paid accordingly. There are some expenses one can claim, a CA should be able to guide you. Not sure why the Swiss comapny is paying taxes?. Are they depositing this with Income Tax, India, do they have a TAN Number. If yes, then you don't need to pay tax. But you need to get a statement from your company showing the tax paid on behalf of you. You can also verify the tax paid on your behalf via \"\"http://incometaxindia.gov.in/26ASTaxCreditStatement.asp\"\" you cna register. Alternatively if you have a Bank Account in India with a PAN card on their records, most Banks provide a link to directly see\"", "topk_rank": 14 }, { "id": "55108", "score": 0.6994792819023132, "text": "From what I understand this is what you can do : You need to raise an invoice to your brother's company in USA Your brother makes a payment into your Indian company's bank account using wire transfer straight into a bank account in your company's name. Your brother wont have to pay taxes on the money that he pays you against an invoice as it would be an expense and would not be considered as profit for tax purposes. Once you have the money you can then file your income tax returns after deducting your own expenses etc in India. I hope this helps.", "topk_rank": 15 }, { "id": "248651", "score": 0.6992043852806091, "text": "Many states have a simple method for assessing income tax on nonresidents. If you have $X income in State A where you claim nonresident status and $Y income overall, then you owe State A a fraction (X/Y) of the income tax that would have been due on $Y income had you been a resident of State A. In other words, compute the state income tax on $Y as per State A rules, and send us (X/Y) of that amount. If you are a resident of State B, then State B will tax you on $Y but give you some credit for taxes paid to State A. Thus, you might be required to file a State A income tax return regardless of how small $X is. As a practical matter, many commercial real-estate investments are set up as limited partnerships in which most of the annual taxable income is a small amount of portfolio income (usually interest income that you report on Schedule B of Form 1040), and the annual bottom line is lots of passive losses which the limited partners report (but do not get to deduct) on the Federal return. As a result, State A is unlikely to come after you for the tax on, say, $100 of interest income each year because it will cost them more to go after you than they will recover from you. But, when the real estate is sold, there will (hopefully) be a big capital gain, most of which will be sheltered from Federal tax since the passive losses finally get to be deducted. At this point, State A is not only owed a lot of money (it knows nothing of your passive losses etc) but, after it processes the income tax return that you filed for that year, it will likely demand that you file income tax returns for previous years as well.", "topk_rank": 16 }, { "id": "102287", "score": 0.6980180144309998, "text": "\"I'm assuming that by saying \"\"I'm a US resident now\"\" you're referring to the residency determination for tax purposes. Should I file a return in the US even though there is no income here ? Yes. US taxes its residents for tax purposes (which is not the same as residents for immigration or other purposes) on worldwide income. If yes, do I get credits for the taxes I paid in India. What form would I need to submit for the same ? I am assuming this form has to be issued by IT Dept in India or the employer in India ? The IRS doesn't require you to submit your Indian tax return with your US tax return, however they may ask for it later if your US tax return comes under examination. Generally, you claim foreign tax credits using form 1116 attached to your tax return. Specifically for India there may also be some clause in the Indo-US tax treaty that might be relevant to you. Treaty claims are made using form 8833 attached to your tax return, and I suggest having a professional (EA/CPA licensed in your State) prepare such a return. Although no stock transactions were done last year, should I still declare the value of total stocks I own ? If so what is an approx. tax rate or the maximum tax rate. Yes, this is done using form 8938 attached to your tax return and also form 114 (FBAR) filed separately with FinCEN. Pay attention: the forms are very similar with regard to the information you provide on them, but they go to different agencies and have different filing requirements and penalties for non-compliance. As to tax rates - that depends on the types of stocks and how you decide to treat them. Generally, the tax rate for PFIC is very high, so that if any of your stocks are classified as PFIC - you'd better talk to a professional tax adviser (EA/CPA licensed in your State) about how to deal with them. Non-PFIC stocks are dealt with the same as if they were in the US, unless you match certain criteria described in the instructions to form 5471 (then a different set of rules apply, talk to a licensed tax adviser). I will be transferring most of my stock to my father this year, will this need to be declared ? Yes, using form 709. Gift tax may be due. Talk to a licensed tax adviser (EA/CPA licensed in your State). I have an apartment in India this year, will this need to be declared or only when I sell the same later on ? If there's no income from it - then no (assuming you own it directly in your own name, for indirect ownership - yes, you do), but when you sell you will have to declare the sale and pay tax on the gains. Again, treaty may come into play, talk to a tax adviser. Also, be aware of Section 121 exclusion which may make it more beneficial for you to sell earlier.\"", "topk_rank": 17 }, { "id": "454563", "score": 0.6977262496948242, "text": "If you are tax-resident in the US, then you must report income from sources within and without the United States. Your foreign income generally must be reported to the IRS. You will generally be eligible for a credit for foreign income taxes paid, via Form 1116. The question of the stock transfer is more complicated, but revolves around the beneficial owner. If the stocks are yours but held by your brother, it is possible that you are the beneficial owner and you will have to report any income. There is no tax for bringing the money into the US. As a US tax resident, you are already subject to income tax on the gain from the sale in India. However, if the investment is held by a separate entity in India, which is not a US domestic entity or tax resident, then there is a separate analysis. Paying a dividend to you of the sale proceeds (or part of the proceeds) would be taxable. Your sale of the entity containing the investments would be taxable. There are look-through provisions if the entity is insufficiently foreign (de facto US, such as a Subpart-F CFC). There are ways to structure that transaction that are not taxable, such as making it a bona fide loan (which is enforceable and you must pay back on reasonable terms). But if you are holding property directly, not through a foreign separate entity, then the sale triggers US tax; the transfer into the US is not meaningful for your taxes, except for reporting foreign accounts. Please review Publication 519 for general information on taxation of resident aliens.", "topk_rank": 18 }, { "id": "341220", "score": 0.6970780491828918, "text": "\"No, there are no issues. When you form the corp in DE, you pick a business there to serve as your \"\"agent\"\" (essentially someone who knows to get in contact with you). The \"\"agent\"\" will notify you about taxes and any mail you get, but besides the fee they charge you for being the agent, you should file all the taxes directly with DE (franchise tax is easy to file on the web) instead of going through the agent and paying a surcharge. When your LLC files taxes, you'll do so in DE and then the LLC will issue you a federal and state K1. You'll file taxes where you reside and use the federal K1, but I think you might have to file DE state taxes (unsure about this part, feel free to edit or comment and I'll correct).\"", "topk_rank": 19 } ]
458	How would IRS treat reimbursement in a later year of moving expenses?	[ { "id": "263485", "score": 0.8153113126754761, "text": "IRS pub 521 has all the information you need. Expenses reimbursed. If you are reimbursed for your expenses and you use the cash method of accounting, you can deduct your expenses either in the year you paid them or in the year you received the reimbursement. If you use the cash method of accounting, you can choose to deduct the expenses in the year you are reimbursed even though you paid the expenses in a different year. See Choosing when to deduct, next. If you deduct your expenses and you receive the reimbursement in a later year, you must include the reimbursement in your income on Form 1040, line 21 This is not unusual. Anybody who moves near the end of the year can have this problem. The 39 week time test also can be an issue that span over 2 tax years. I would take the deduction for the expenses as soon a I could, and then count the income in the later year if they pay me back. IF they do so before April 15th, then I would put them on the same tax form to make things easier." }, { "id": "218858", "score": 0.8194048404693604, "text": "I believe moving reimbursement has to be counted as income no matter when you get it. I'd just put it under miscellaneous income with an explanation." } ]	[ { "id": "503651", "score": 0.765253484249115, "text": "You cannot deduct anything. Since you're actually moving, your tax home will move with you. You can only deduct the moving expenses (actual moving - packing, shipping, and hotels while you drive yourself there).", "topk_rank": 0 }, { "id": "160340", "score": 0.7611340284347534, "text": "\"If all of the relocation expenses are paid by your employer to the moving companies, then you should not have any tax liability for those payments. Relocation expenses should be treated as normal business expenses by your employer. Note I emphasize \"\"should\"\" because it's possible that your employer \"\"could\"\" consider it income to you, but companies generally do not go out of their way to classify normal business expenses as income since it costs both them and you more money in taxes. As a side note, the reason your company is paying these expenses directly is probably to lessen the likelihood of these expenses being questioned in an audit (in comparison to if they cut you a reimbursement check which could get more scrutiny).\"", "topk_rank": 1 }, { "id": "233423", "score": 0.7449840903282166, "text": "Not correct. First - when you say they don't tax the reimbursement, they are classifying it in a way that makes it taxable to you (just not withholding tax at that time). In effect, they are under-withholding, if these reimbursement are high enough, you'll have not just a tax bill, but penalties for not paying enough all year. My reimbursements do not produce any kind of pay stub, they are a direct deposit, and are not added to my income, not as they occur, nor at year end on W2. Have you asked them why they handle it this way? It's wrong, and it's costing you.", "topk_rank": 2 }, { "id": "300254", "score": 0.7412590980529785, "text": "I suggest you have a professional assist you with this audit, if the issue comes into questioning. It might be that it wouldn't. There are several different options to deal with such situation, and each can be attacked by the IRS. You'll need to figure out the following: Have you paid taxes on the reimbursement? Most likely you haven't, but if you had - it simplifies the issue for you. Is the program qualified under the employers' plan, and the only reason you're not qualified for reimbursement is that you decided to quit your job? If so, you might not be able to deduct it at all, because you can't take tax benefits on something you can be reimbursed for, but chose not to. IRS might claim that you quitting your job is choosing not to get reimbursement you would otherwise get. I couldn't find from my brief search any examples of what happened after such a decision. You can claim it was a loan, but I doubt the IRS will agree. The employer most likely reported it as an expense. If the IRS don't contest based on what I described in #2, and you haven't paid taxes on the reimbursement (#1), I'd say what you did was reasonable and should be accepted (assuming of course you otherwise qualify for all the benefits you're asking for). I would suggest getting a professional advice. Talk to a EA or a a CPA in your area. This answer was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer", "topk_rank": 3 }, { "id": "131451", "score": 0.7400525808334351, "text": "\"For example, for my employer I received a signing bonus, and a \"\"relocation lump sum\"\" separate from that signing bonus. The relocation lump sum is taxed and will appear as income on my W-2, and I can spend it on anything I want. That said, should the relocation lump sum count towards the entry quoted above in Form 3903, or would it be considered the same as any other bonus; thus allowing me to take a full deduction for all of my deductible travel expenses? The signing bonus and relocation lump sum will appear as regular income on your W-2. You can think of the relocation bonus as something to cover the pain and suffering the cost of moving, without needing to send in receipts. Lets assume that you meet the distance and time tests, so there is potential to save money on your taxes. Lets also put your actual moving expenses as $2500. If you have valid moving expenses the IRS will allow you to use them to reduce your AGI. So now you can reduce your AGI by the $2500. Enter the total amount your employer paid you for the expenses listed on lines 1 and 2 that is not included in box 1 of your Form W-2 (wages). This amount should be shown in box 12 of your Form W-2 with code P. My question is: what exact payments from your employer should be entered here? I realize that you can just write the number you get in box 12 with code P on your W-2, but I'm curious how they come up with this number. In some cases the company will reimburse you your moving expenses up to a maximum of $x. For example a maximum of $1000 That means you submit receipts for those expenses and they give you a check or add it to your next paycheck. The check will either be for the amount on your receipts or the maximum amount, whichever is smaller. In this situation with actual expenses of $2500 and a reimbursement of $1000 you can reduce your AGI by $1500.\"", "topk_rank": 4 }, { "id": "144221", "score": 0.7398171424865723, "text": "Go through the IRS Publication 521. Generally, relocation assistance is given either as : or", "topk_rank": 5 }, { "id": "556248", "score": 0.7392825484275818, "text": "\"The short answer is that the IRS knows this is an issue, so they are prepared to deal with the \"\"discrepancies.\"\" The filer does not need to something special to call it to their attention. Keep good records and consistently report according to your accounting processes. Exactly how the IRS resolves / flags this, I don't know. Maybe someone else can answer, but you can imagine that if they track you for multiple years they should have some idea of how many dollars are rolling over and whether you might have \"\"forgotten\"\" to report something from a few years ago that happened at a year-end break.\"", "topk_rank": 6 }, { "id": "599684", "score": 0.7346220016479492, "text": "\"What they are doing is wrong. The IRS and the state might not be happy with what they are doing. One thing you can ask for them to do is to give you a credit card for business and travel expenses. You will still have to submit receipts for expenses, but it will also make it clear to the IRS that these checks are not income. Keep the pay stubs for the year, or the pdf files if they don't give you a physical stub. Pay attention to the YTD numbers on each stub to make sure they aren't sneaking in the expenses as income. If they continue to do this, ask about ownership of the items purchased, since you will be paying the tax shouldn't you own it? You can in the future tell them \"\"I was going to buy X like the customer wanted, but I just bought a new washer at home and their wasn't enough room on the credit card. Maybe next month\"\"\"", "topk_rank": 7 }, { "id": "31144", "score": 0.7343493103981018, "text": "The regulations you're talking about (TR 1.263) are going into effect starting tax year 2016, so for purchases you made last year they're (kindof...) irrelevant. Kindof, because the IRS promises to not audit those that qualify under the regulations even if they use it before it goes into effect, but it doesn't legally have to. Since the regulations are new, I suggest you talk to a licensed professional who'd explain them to you and interpret them with regards to your specific situation. From my brief read, you can expense under these rules things that you would otherwise capitalize, with the $500 limit to the invoice. Meaning, if you bought a computer paying $500, which you use 50% for your business - you can expense $250. The benefit, comparing to the Sec. 179, is that you're not limited to new items, nor are you limited to business revenue. Otherwise, it looks like the applicability is similar. As I said - talk to a licensed tax adviser (EA/CPA licensed in your State), since these rules are new and untested, and you should probably have a professional provide guidance. I'm not such a professional.", "topk_rank": 8 }, { "id": "588372", "score": 0.7322289347648621, "text": "Your administrator will pull from last year's funds first, before automatically moving on to the new year. The procedures are under guidelines from the IRS so it should be pretty standard. You likely only have to submit the claim once, but your administrator may have a special grace period form to fill out.", "topk_rank": 9 }, { "id": "235074", "score": 0.7321907877922058, "text": "If you're correct that it's not taxable because it's non-taxable reimbursement (which is supported by your W-2), then it should not go on your 1040 at all. If it is taxable, then it really should have appeared on your W-2 and would probably end up on Line 7 of your Form 1040.", "topk_rank": 10 }, { "id": "11454", "score": 0.7320303916931152, "text": "\"Assuming U.S. law, there are \"\"safe harbor\"\" provisions for exactly this kind of situation. There are several possibilities, but the most likely one is that if your withholding and estimated tax payments for 2016 totaled at least as much as your tax bill for 2015 there's no penalty. For the full rules, see IRS Publication 17.\"", "topk_rank": 11 }, { "id": "250798", "score": 0.7317292094230652, "text": "(I am making the assumption that this is a US based question). Keep in mind that the alternative is to amend your tax forms from 2010, and 2011. The IRS and the State will want their money, they might not to wait for 78 paychecks. That is 3 years. Ask for lots of documentation, so you understand what they are doing.", "topk_rank": 12 }, { "id": "384187", "score": 0.727415144443512, "text": "Aside from the fact that probably nobody is ever going to come and ask for that proof unless your amounts get five digits (or you're unlucky), if you never before reimbursed yourself, your old tax declarations would clearly show that. You can't prove a negative, so the only potential is that you had reimbursements before, and an audit might ask you to prove that the new ones are not duplicates of those. In this case, if you have other receipts / proof for all those other reimbursements, they are obviously not duplicates.", "topk_rank": 13 }, { "id": "73252", "score": 0.7264865636825562, "text": "The FSA can only pay for expenses incurred after it was open. This also applies in case of a mid-year change in election (such as due to marriage, divorce, child birth, etc.) For example, according to this page: You can only be reimbursed for qualifying expenses, from the election that was in place at the time the expense was incurred. So, say you had $500 available from January to June, then on July 1 had a qualifying event, you then elected $2000. You can be reimbursed for up to $500 in expenses incurred prior to July 1, and then an additional $1500 in expenses incurred after (up to $2000 if you didn't use your full $500). More specifically, from the IRS Publication: Generally, distributions from a health FSA must be paid only to reimburse you for qualified medical expenses you incurred during the period of coverage. -- The HSA question is more complicated. I would talk to a tax accountant, or at minimum your benefits coordinator. Also read the publication I linked above, the first part is about HSAs. The short answer to your specific question: stop contributing to the HSA, unless you were contributing well under the limit of the HSA. If you know your limit, and you know you're under it, you can continue contributing until April 15 of next year: If you fail to be an eligible individual during 2013, you can still make contributions, up until April 15, 2014, for the months you were an eligible individual. The general rule is you can contribute up to (1/12)(your limit)(number of months you were eligible). So, if you changed jobs Oct 1, and you're single, then you could contribute (3250)(1/12)(9), or just over $2400 in total for the year. If you've contributed less than that to date, you may continue contributing up to that amount - but again, contact your benefits coordinator or preferably a tax accountant, as the rules can be complicated. You definitely cannot deduct any expenses from the account that you incur after you are no longer eligible, and the rules on distributions are pretty complicated - and if you get it wrong, you may owe a 10% penalty on top of the tax you would normally owe, so there is significant incentive not to get it wrong.", "topk_rank": 14 }, { "id": "531442", "score": 0.7258128523826599, "text": "\"According to this post on TurboTax forums, you could deduct it as an \"\"Unreimbursed Employee\"\" expense. This would seem consistent with the IRS Guidelines on such deductions: An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense does not have to be required to be considered necessary. Office rent is not listed explicitly among the examples of deductible unreimbursed employee expenses, but this doesn't mean it's not allowed. Of course you should check with a tax professional if you want to be sure.\"", "topk_rank": 15 }, { "id": "469601", "score": 0.7248496413230896, "text": "Here's an answer received elsewhere. Yes, it looks like you have a pretty good understanding the concept and the process. Your wife's income will be so low - why? If she is a full-time student in any of those months, you may attribute $250 x 2 children worth of income for each of those months. Incidentally, even if you do end up paying taxes on the extra $3000, you won't be paying the employee's share of Social Security and Medicare (7.65%) or state disability on those funds. So you still end up saving some tax money. No doubt, there's no need to remind you to be sure that you submit all the valid receipts to the administrator in time to get reimbursed. And a must-have disclaimer: Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this email, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. ... Any information contained in this email does not fall under the guidelines of IRS Circular 230.", "topk_rank": 16 }, { "id": "417981", "score": 0.7240861058235168, "text": "\"While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do I quantify the travel expenses? Generally, \"\"necessary and ordinary\"\" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say \"\"no\"\" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000 miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal (\"\"pleasure\"\") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is \"\"business\"\" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the property? Although, again, the \"\"necessary and ordinary\"\" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA).\"", "topk_rank": 17 }, { "id": "76618", "score": 0.7236165404319763, "text": "\"Some of the 45,000 might be taxable. The question is how was the stipend determined. Was it based on the days away? The mile driven? The cities you worked in? The IRS has guidelines regarding what is taxable in IRS Pub 15 Per diem or other fixed allowance. You may reimburse your employees by travel days, miles, or some other fixed allowance under the applicable revenue procedure. In these cases, your employee is considered to have accounted to you if your reimbursement doesn't exceed rates established by the Federal Government. The 2015 standard mileage rate for auto expenses was 57.5 cents per mile. The rate for 2016 is 54 cents per mile. The government per diem rates for meals and lodging in the continental United States can be found by visiting the U.S. General Services Administration website at www.GSA.gov and entering \"\"per diem rates\"\" in the search box. Other than the amount of these expenses, your employees' business expenses must be substantiated (for example, the business purpose of the travel or the number of business miles driven). For information on substantiation methods, see Pub. 463. If the per diem or allowance paid exceeds the amounts substantiated, you must report the excess amount as wages. This excess amount is subject to income tax with-holding and payment of social security, Medicare, and FUTA taxes. Show the amount equal to the substantiated amount (for example, the nontaxable portion) in box 12 of Form W-2 using code “L\"\"\"", "topk_rank": 18 }, { "id": "101382", "score": 0.7234023809432983, "text": "One piece of documentation that might help here is a confirmation of your benefit selections through your employer for each year since the expenses in question were incurred, assuming you have a job with eligibility for benefits. If you can prove which accounts you maintained through your/your spouse's (if applicable) employer(s), then it is relatively simple to go back through the records for those specific accounts and see if a specific expense was ever reimbursed. Obviously, you can't prove through documentation that you didn't have accounts that don't exist. This seems like it would be more important for the accounts elected by a significant other, since I believe reimbursements from an account in your name would typically be reported to the IRS on your behalf anyway. Also, keep in mind that the IRS won't care about each line item individually. Their focus will be on whether, for any given snapshot in time, your total reimbursed amount exceeded your total eligible expenses.", "topk_rank": 19 } ]
461	I have $100,000 in play money… what to do?	[ { "id": "237392", "score": null, "text": "" }, { "id": "159156", "score": 0.6677331924438477, "text": "\"For any sort of investment you need to understand your risks first. If you're going to put money into the stock or bond market I would get a hold of Graham's \"\"The Intelligent Investor\"\" first, or any other solid value investing book, and educate yourself on what the risks are. I can't speak about real estate investing but I am sure there are plenty of books describing risks and benefits of that as well. I could see inflation/deflation having an effect there but I think the biggest impact on the landlord front is quality of life in the area you are renting and the quality of the tenant you can get. One crazy tenant and you will be driven mad yourself. As for starting a business, one thing I would like to say is that money does not automatically make money. The business should be driven by a product or service that you can provide first, and the backing seed capital second. In my opinion you will have to put energy and time worth much more than the 100k into a business over time to make it successful so the availability of capital should not be the driving decision here. Hope this helps more than it confuses.\"" }, { "id": "101329", "score": null, "text": "You can start a software company. Than your office will be around the world and you can work whenever you want. If you can appoint some people who can collect work from here and there and the coder around the world can give you the job done(this can be done by posting your work in various freelancing site). It is challenging, because you have to get yourself up-to-date with the technological things." }, { "id": "239459", "score": 0.6705434918403625, "text": "As you have already good on your retirement kitty. Assuming you have a sufficient cash for difficult situations, explore the options of investing in Shares and Mutual Funds. As you are new to Stock Market, begin slowly by investing into Mutual Funds and ETF for precious metals. This will help you understand and give you confidence on markets and returns. Real estate is a good option, the down side being the hassle of getting rental and the illiquid nature of the investment." }, { "id": "502203", "score": null, "text": "If you want a concrete investment tip, precious metals (e.g. gold, silver) are on a pretty good run these days, personally I still think they have ways to go as there are just too many problems with modern monetary policy of an almost existential nature, and gold and silver are better stores of value than fiat money. Silver is particularly hot right now, but keep in mind that the increased volatility means increased risk. If the Fed keeps its foot on the pedals of the dollar printing press and we get QE3 this summer, that will most likely mean more people piling into the PMs to hedge against inflation. If the Fed starts to tighten it's policy then that's probably bad news for both equities and bonds and so PMs could be seen as a safe haven investment. These are the main reasons why PMs take up a good portion of my portfolio and will continue to do so untill I see how the global economy plays out over the next couple of years." } ]	[ { "id": "30825", "score": 0.6356812119483948, "text": "First of all, make sure you have all your credit cards paid in full -the compounding interests on those can zero out returns on any of your private investments. Fundamentally, there are 2 major parts of personal finance: optimizing the savings output (see frugal blogs for getting costs down, and entrepreneur sites for upping revenues), and matching investment vehicles to your particular taste of risk/reward. For the later, Fool's 13 steps to invest provides a sound foundation, by explaining the basics of stocks, indexes, long-holding strategy, etc. A full list Financial instruments can be found on Wikipedia; however, you will find most of these to be irrelevant to your goals listed above. For a more detailed guide to long-term strategies on portfolio composition, I'd recommend A Random Walk Down Wall Street: The Time-tested Strategy for Successful Investing. One of the most handy charts can be found in the second half of this book, which basically outlines for a given age a recommended asset allocation for wealth creation. Good luck!", "topk_rank": 0 }, { "id": "390655", "score": 0.6356799602508545, "text": "Pay the debt down. Any kind of debt equals risk. No debt equals no risk and a better chance to have that money earn you income down the road once it's invested. That and you will sleep so much better knowing you have ZERO debt. You 6 month emergency fund is probably good. Remember to keep it at 6 months living expenses (restaurants don't count as living expenses).", "topk_rank": 1 }, { "id": "163834", "score": 0.6356633305549622, "text": "In addition to George Marian's excellent advice, I'll add that if you're hitting the limits on IRA contributions, then you'd go back to your 401(k). So, put enough into your 401(k) to get the match, then max out IRA contributions to give you access to more and better investment options, then go back to your 401(k) until you top that out as well, assuming you have that much available to invest for retirement.", "topk_rank": 2 }, { "id": "547196", "score": 0.6356186270713806, "text": "Hmm, if your financially savvy enough to have saved up half a million dollars, I'd think you would be savvy enough to spend it wisely. :-) I think I'd spend the cash before running down stocks and bonds, as cash almost surely has a lower rate of return. I'd look into what rate of return you're getting on the rental property versus what you're getting from other investments. If the rental property has a lower return, I'd sell that before selling off stocks. (I own a rental property on which I am losing money every month. I'm still paying a mortgage on it, but even without that, the ROI would be about 4% under current market conditions.) Besides that, your plan looks good to me. Might need to add, 8. Beg on the streets, and 9. Burglary.", "topk_rank": 3 }, { "id": "314279", "score": 0.635604977607727, "text": "You're creating more liabilities for yourself in the future, although yes this could definitely be a profitable move for you. However, some small mistakes you made, from what I can see using the tools at Hargreaves Lansdown. The first, is that the government relief would only be 20%, not 60%. The second is that the tax relief goes directly into the SIPP, it's not something you get given back to you in cash. In order for this to be worthwhile, you need to be sure that you can make a post-tax gain of more than 3.4% on this money per year - which should be very feasible. It sounds like you have enough security that you could afford to take this risk.", "topk_rank": 4 }, { "id": "302010", "score": 0.6355981826782227, "text": "Gold and silver are for after the crisis, not during. Gold and silver are far more likely to be able to be exchanged for things you need, since they are rare, easily divided, etc. Getting land away from where the crap is happening is also good, but it's more than that. Say you have land somewhere. How will the locals view you if you move there to hunker down only when things go bad? They won't really trust you, and you'll inherit a new set of problems. Building relationships in an off-the-beaten-path area requires a time investment. Investing in lifestyle in general is good. Lifestyle isn't just toys, but it's privacy, peace of mind, relationships with people with whom you can barter skills, as well as the skills you might think you'd need to do more than just get by in whatever scenario you envision. For the immediate crisis, you'd better have the things you'll need for a few months. Stores probably won't be supplied on any regular basis, and the shelves will be bare. Trying to use gold or silver during the crisis just makes you a target for theft. With regard to food, it's best to get acclimated to a diet of what you'd have on hand. If you get freeze-dried food, eat it now, so that it's not a shock to your system when you have to eat it. (Can you tell I've been thinking about this? :) )", "topk_rank": 5 }, { "id": "510676", "score": 0.6355885863304138, "text": "The biggest issue is your lack of diversification. Your real estate investments have performed quite well so far, but you have also likely enjoyed a period of unprecedented growth that is not sustainable. In the long term, stocks have always outperformed real estate investments, which tend to track more closely to the inflation rate. You need more balance for when when the real estate market cools off. You don't mention tax-deferred retirement savings accounts. You should prioritize your attention to these to keep your income tax low. Consider selling one of your investment properties if you can't adequately fund the 401k.", "topk_rank": 6 }, { "id": "353625", "score": 0.6355719566345215, "text": "\"For easy math, say you are in the 25% tax bracket. A thousand deposited dollars is $750 out of your pocket, but $2000 after the match. Now, you say you want to take the $750 and pay down the card. If you wait a year (at 20%) you'll owe $900, but have access to borrow a full $1000, at a low rate, 4% or so. The payment is less than $19/mo for 5 years. So long as one is comfortable juggling their debt a bit, the impact of a fully matched 401(k) cannot be beat. Keep in mind, this is a different story than those who just say \"\"don't take a 401(k) loan.\"\" Here, it's the loan that offers you the chance to fund the account. If you are let go, and withdraw the money, even at the 25% rate, you net $1500 less the $200 penalty, or $1300 compared to the $750 you are out of pocket. If you don't want to take the loan, you're still ahead so long as you are able to pay the cards over a reasonable time. I'll admit, a 20% card paid over 10+ years can still trash a 100% return. This is why I add the 401(k) loan to the mix. The question for you - jldugger - is how tight is the budget? And how much is the match? Is it dollar for dollar on first X%?\"", "topk_rank": 7 }, { "id": "254542", "score": 0.6355673670768738, "text": "If you want to buy once the price goes up to $101 or above you can place a conditional order to be triggered at $101 or above and for a limit order to entered to buy at $102. This will mean that as soon as the price reaches $101 or above, your limit order will enter the market and you will buy at any price from $102 or below. So if the price just trickles over $101 you will end up buying at around $101 or just over $101. However, if the price gaps above $101, say it gaps up to $101.50, then you will end up buying at around $101.50. If the price gaps up above $102, say $102.50, then your limit order at $102 will hit the market but it will not trade until the price drops back to $102 or below.", "topk_rank": 8 }, { "id": "269055", "score": 0.63556307554245, "text": "First off, I do not recommend buying individual bonds yourself. Instead buy a bond fund (ETF or mutual fund). That way you get some diversification. The risk-reward ratio will be evident in what you find to invest in. Junk bond funds pay the highest rates. Treasury bond funds pay the lowest. So you have to ask yourself how comfortable are you with risk? Buy the funds that pay the highest rate but still let you sleep at night.", "topk_rank": 9 }, { "id": "387647", "score": 0.6355518102645874, "text": "Don't worry about minimizing taxes too much - worry about maximizing post-tax income. Keep in mind that if you just got a job then it's likely that the taxes being automatically withheld are based on the assumption you've been earning this much all year, which could mean that you're likely going to be due a refund come April (basically, if you're making 100k/year, but only actually getting 20k this year, they'll still take taxes out as though you were making the full 100k). If you're maxing out your 401K, you can also contribute to an IRA to reduce taxes (or contribute to a Roth to invest more if you max it out). For investment I like Betterment, it's well diversified and avoids many common investment pitfalls. Much better than a savings account, but you should also consider the need to have readily-accessible money in case of emergencies.", "topk_rank": 10 }, { "id": "326542", "score": 0.6355340480804443, "text": "The main factors you have to consider are: Could you get a better return on that money by investing it somewhere? The investment rate should basically be more than the mortgage rate. If you find yourself suddenly in need of money (eg, loss of job) do you have enough savings to ride that out? If not, investing the extra money in an instant access investment, even at a lower rate, may make sense as it gives you future flexibility. Do you have any other debts that are at a higher rate? If so, pay those off first as you will get more bang for your buck.", "topk_rank": 11 }, { "id": "152286", "score": 0.6354628205299377, "text": "I don't want to get involved in trading chasing immediate profit That is the best part. There is an answer in the other question, where a guy only invested in small amounts and had a big sum by the time he retired. There is good logic in the answer. If you put in lump sum in a single stroke you will get at a single price. But if you distribute it over a time, you will get opportunities to buy at favorable prices, because that is an inherent behavior of stocks. They inherently go up and down, don't remain stable. Stock markets are for everybody rich or poor as long as you have money, doesn't matter in millions or hundreds, to invest and you select stocks with proper research and with a long term view. Investment should always start in small amounts before you graduate to investing in bigger amounts. Gives you ample time to learn. Where do I go to do this ? To a bank ? To the company, most probably a brokerage firm. Any place to your liking. Check how much they charge for brokerage, annual charges and what all services they provide. Compare them online on what services you require, not what they provide ? Ask friends and colleagues and get their opinions. It is better to get firsthand knowledge about the products. Can the company I'm investing to be abroad? At the moment stay away from it, unless you are sure about it because you are starting. Can try buying ADRs, like in US. This is an option in UK. But they come with inherent risk. How much do you know about the country where the company does its business ? Will I be subject to some fees I must care about after I buy a stock? Yes, capital gains tax will be levied and stamp duties and all.", "topk_rank": 12 }, { "id": "282623", "score": 0.6354532837867737, "text": "\"I'm not a fan of using cash for \"\"emergency\"\" savings. Put it in a stable investment that you can liquidate fairly quickly if you have to. I'd rather use credit cards for a while and then pay them off with investment funds if I must. Meanwhile those investments earn a lot more than the 0.1 percent savings or money market accounts will. Investment grade bond funds, for example, should get you a yield of between 4-6% right now. If you want to take a longer term view put that money into a stock index fund like QQQ or DIA. There is the risk it will go down significantly in a recession but over time the return is 10%. (Currently a lot more than that!) In any event you can liquidate securities and get the money into your bank is less than a week. If you leave it in cash it basically earns nothing while you wait for that rainy day which many never come.\"", "topk_rank": 13 }, { "id": "150450", "score": 0.6354467272758484, "text": "First of all, I've raised VC money before so I have experience in this area. The other commenter who said they'll only cause trouble is wrong, as a general statement. Some may, but that just means you've chosen your investors poorly. Choosing an investor is a very important decision and you should choose someone who you think will be able truly add value to your business, rather than just someone who is willing to write a check. Cultural alignment is important, and having a shared set of goals and timelines for the business is important. That said, no one here is going to be able to tell you how to structure your deal because it varies so much based on the business. In general I think it's a good idea to only take money when you need it and have a solid plan for how you're going to use it. Every time you take money you're diluting your ownership and reducing your long-term upside. Keep in mind that, as the other commenter said, if you take a deal now that means that you maintain 51% and then you take more money in the future, that 51% will be diluted further. That said with more investors in the mix you still are likely to be the largest shareholder, but again, that depends on how the deals are structured. My advice: seek out as much advice from as many sources as you can. And hire a good law firm to handle your financing transaction because their advice is invaluable as you negotiate terms. Finally, you should have more conditions than just retaining 51% ownership -- there are a lot of terms that get baked into these deals that have an impact on the long-term upside. Learn those terms. Do a bunch of googling and a bunch of reading. And ask for more advice. :)", "topk_rank": 14 }, { "id": "373449", "score": 0.6354399919509888, "text": "Why not use the money and pay the cards off? You say you'll have no money to your name, and while that's true, you do have $36,000 in available credit should an emergency arise. If it were me, I'd pay them off, make every effort to live on the cash I have without using credit and leave the cards open as a source of emergency funds (new home theaters are not emergencies!) until I got enough savings built up to not have to use credit at all.", "topk_rank": 15 }, { "id": "430034", "score": 0.6354004144668579, "text": "Yes, there are some real dangers in having your money locked into an investment. Those dangers are well worth thinking about and planning for. Where you are going off the rails is acting like those are the only dangers to your money, and perhaps having an exaggerated idea of the size of the dangers. It is an excellent idea to keep an emergency fund with a few months living expenses in a readily accessible savings or checking account. However, a standard retail savings account is always going to pay less in interest then you are loosing through inflation. We're living in a low-inflation period, but it's still continuously eating away at the value of your savings. It makes sense to accept the danger of inflation for your emergency fund, but probably not for your retirement savings. To reduce the hazards of inflation, you need to find an investment that has some chance of paying more than the inflation rate. This is inevitably going to mean locking up your money for some period of time or accepting some other type of risk. There is no guaranteed safe path in the world. You can only do your best to understand the risks you are running. As an example, you could put your savings in a CD rather than a vanilla savings account. A CD these days won't pay much in interest, but it will be more than a savings account. However, you have to commit to a term for the CD. If you take your money out early you will have to pay a penalty. How much of a penalty? In the worse case it could be in the neighborhood of 4% of the amount you withdraw. So, yeah if you deposit $10,000 in a 5-year CD and end up needing it all back the very next day, you could end up paying the bank $400. If you withdraw money from a 401k before you are 59 1/2, you will pay a 10% penalty, and you will have to have income tax withheld on the amount you withdraw. On the other hand, if your employer matches 100% of your 401k contributions, you could be throwing away 50% of your possible retirement savings because of your fear of the possibility of a 10% loss! In addition 401k plans do have some exceptions to the early withdrawal penalty. There are provisions for medical emergencies and home purchases for example. However, the qualifications are not entirely straight-forward, and you should read up on them before enrolling. The real answer to your fears is planning. Figure out your living expenses. Figure out how much you want in an emergency fund. Figure out when you will be wanting to buy a house, have a child, or go back to school. Set aside the savings you'll need for all those, and then for the remainder of your money you can consider long term investments with some confidence that you probably won't need to face the early withdrawal penalties.", "topk_rank": 16 }, { "id": "318873", "score": 0.6353776454925537, "text": "One of the things I would suggest looking into is peer-to-peer lending. I do lendingclub.com, but with a lot less money, and have only done it a short period of time. Still my return is about 13%. In your case you would probably have to commit to about 3.5 years to invest your money. Buy 3 year notes, and as they are paid off pull the money out and put into a CD or money market.. They sell notes that are 3 or 5 year and you may not want to tie your money up that long.", "topk_rank": 17 }, { "id": "447498", "score": 0.6353445649147034, "text": "Consider not buying the house? Consider a cheaper property? What are your actual goals? Owning vs renting? Perhaps an actual investment goal? What is your rent now vs the mortgage on the house? What is the time frame for the mortgage you are considering? Those are the real questions you need to ask yourself. It does sound like you can become overleveraged with this property, although your down payment is quite substantial, but one single thing goes wrong and your cash flow is irreparably constricted. I personally wouldn't take that risk if I had the same forecast of expenditures, but this could be altered if there were particular investment goals I had in mind.", "topk_rank": 18 }, { "id": "427076", "score": 0.6353145241737366, "text": "I would first get rid of the student loan. This will leave you with 11K. I would then use this to fund your ROTH. If you are married you can put up to 5K per year each. For any money left over, I would open a regular (not tax advantaged) mutual fund. You can contribute half the money you were paying toward your student loans, and the other half can go to your mortgage. Also I would look at doing a refi on your house. You might be able to move a 10 or 15 year at your current mortgage payment.", "topk_rank": 19 } ]
462	Is it possible, anywhere in the US for a funding firm to not have a license number showing somewhere?	[ { "id": "447167", "score": null, "text": "In the United states the US government has the Small Business Administration. They also have Small Business Development Centers SMDC to help. These are also supported by state governments and colleges and universities. SBDCs provide services through professional business advisors such as: development of business plans; manufacturing assistance; financial packaging and lending assistance; exporting and importing support; disaster recovery assistance; procurement and contracting aid; market research services; aid to 8(a) firms in all stages; and healthcare information. SBDCs serve all populations, including: minorities; women; veterans, including reservists, active duty, disabled personnel, and those returning from deployment; personnel with disabilities; youth and encore entrepreneurs; as well as individuals in low and moderate income urban and rural areas. Based on client needs, local business trends and individual business requirements, SBDCs modify their services to meet the evolving needs of the hundreds of small business community in which they are situated. SBDC assistance is available virtually anywhere with 63 Host networks branching out with more than 900 service delivery points throughout the U.S., the District of Columbia, Guam, Puerto Rico, American Samoa and the U.S. Virgin Islands,. Your local SBDC should be able to help you identify local sources of funds, including government backed loans for small businesses." }, { "id": "393152", "score": 0.6088178753852844, "text": "Well, these can range from loan broker to outright scams. It is pretty typical that loan broker just take some fee in the middle for their service of filling your applications for a bunch of real loan provider companies. Because making a web page costs nothing, a single loan broker could easily have many web pages with a bit different marketing so that they can get as many customers as possible. But of course some of the web pages can be actual scams. As soon as you provide enough information for taking out a loan, they can go to a real financial institution, take out the loan and run with the money. In most countries consumer protection laws do not apply to business-to-business transactions, so you have to be even more wary of scams than usual." } ]	[ { "id": "54216", "score": 0.5783511400222778, "text": "If they're making 100k a month in sales, why do they need your 92k so badly that they're willing to pay 200% annual interest? Going to a loanshark or the mob would be cheaper, to say nothing of all the legal options available to them. Or they could just wait three weeks for revenue to cover it. Nothing about this adds up to anything other than a scam. Your friend might be well-meaning, but someone along the line is looking for a sucker.", "topk_rank": 0 }, { "id": "553110", "score": 0.5783433318138123, "text": "\"There are situations where you can be forced to cover a position, particular when \"\"Reg SHO\"\" (\"\"regulation sho\"\") is activated. Reg SHO is intended to make naked short sellers cover their position, it is to prevent abusive failure to delivers, where someone goes short without borrowing someone else's shares. Naked shorting isn't a violation of federal securities laws but it becomes an accounting problem when multiple people have claims to the same underlying assets. (I've seen companies that had 120% of their shares sold short, too funny, FWIW the market was correct as the company was worth nothing.) You can be naked short without knowing it. So there can be times when you will be forced to cover. Other people being forced to cover can result in a short squeeze. A risk. The other downside is that you have to pay interest on your borrowings. You also have to pay the dividends to the owner of the shares, if applicable. In shorter time frames these are negligible, but in longer time frames, such as closer to a year or longer, these really add up. Let alone the costs of the market going in the opposite direction, and the commissions.\"", "topk_rank": 1 }, { "id": "197558", "score": 0.5783424377441406, "text": "You will likely have an options pricing course in your degree program. If option pricing is not part of the curriculum at all, I would transfer out. I've had a few co-workers and interviewed candidates who graduated from satellite campuses of major schools. It's surprising how many of them somehow made it through a finance degree program never learning about options and other derivatives. The guys that never learned them end up having to play catch up on the job. A good portion of them end up figuring it out, but a group of them also end up being let go or they leave because they just can't figure it out.... Options are a key and important part of Finance, make sure you understand them! They also aren't that hard to figure out.", "topk_rank": 2 }, { "id": "136283", "score": 0.5783254504203796, "text": "\"Yahoo Finance: http://finance.yahoo.com/q/pr?s=VFINX+Profile Under \"\"Management Information\"\"\"", "topk_rank": 3 }, { "id": "30322", "score": 0.5783189535140991, "text": "\"(Disclosure - PeerStreet was at FinCon, a financial blogger conference I attended last month. I had the chance to briefly meet a couple people from this company. Also, I recognize a number of the names of their financial backers. This doesn't guarantee anything, of course, except the people behind the scenes are no slackers.) The same way Prosper and Lending Club have created a market for personal loans, this is a company that offers real estate loans. The \"\"too good to be true\"\" aspect is what I'll try to address. I've disclosed in other answers that I have my Real Estate license. Earlier this year, I sold a house that was financed with a \"\"Hard Money\"\" loan. Not a bank, but a group of investors. They charged the buyer 10%. Let me state - I represented the seller, and when I found out the terms of the loan, it would have been a breach of my own moral and legal responsibility to her to do anything to kill the deal. I felt sick for days after that sale. There are many people with little credit history who are hard workers and have saved their 20% down. For PeerStreet, 25%. The same way there's a business, local to my area, that offered a 10% loan, PeerStreet is doing something similar but in a 'crowd sourced' way. It seems to me that since they show the duration as only 6-24 months, the buyer typically manages to refinance during that time. I'm guessing that these may be people who are selling their house, but have bad timing, i.e. they need to first close on the sale to qualify to buy the new home. Or simply need the time to get their regular loan approved. (As a final side note - I recalled the 10% story in a social setting, and more than one person responded they'd have been happy to invest their money at 6%. I could have saved the buyer 4% and gotten someone else nearly 6% more than they get on their cash.)\"", "topk_rank": 4 }, { "id": "39125", "score": 0.5783165693283081, "text": "\"Form W-9 (officially, the \"\"Request for Taxpayer Identification Number and Certification\"\") is used in the United States income tax system by a third party who must file an information return with the Internal Revenue Service (IRS). It requests the name, address, and taxpayer identification information of a taxpayer (in the form of a Social Security Number or Employer Identification Number). A W-9 is typically required when an individual is doing work, as a contractor or as an employee, for a company and will be paid more than $600 in a tax-year. The company is required to file a W-2 or a 1099 and so requests a W-9 to get the information necessary for those forms. I cannot say if it is incompetence on the part of the accounting department or a deliberate ploy to make the refund process more onerous, but do not comply. Politely nsist on a refund without any further information. If the company refuses, request a charge-back from the credit-card company, file a complaint with the consumer-protection department of the state where the company is located, and write a bad review on Yelp or wherever else seems appropriate.\"", "topk_rank": 5 }, { "id": "523905", "score": 0.5782930254936218, "text": "I can't. You aren't my client and I can't give specific advice over the internet without the risk of forming an attorney-client relationship, which comes with a lot of specific duties that I owe to the client and would be unable to carry out in this type of setting. Apologies.", "topk_rank": 6 }, { "id": "41383", "score": 0.578289270401001, "text": "The money is transferred through an electronic funds transfer, which is an umbrella term that encompasses wire transfers, direct debits, etc. The application form for Key Trade Bank (the only place I can find that uses that exact phrasing) lists a SWIFT number. This usually indicates that the transfer of funds is done through an international wire transfer. In the most basic sense, the process works like this: Key Trade Bank uses the SWIFT number to notify your current bank of the transfer. Your bank instructs the settlement bank, e.g. the central bank of your country, where your bank is located, to transfer funds to Key Trade. If Key Trade is in another country from your current country, your central bank will send money to the central bank where Key Trade is located, which will in turn send the money to Key Trade. Otherwise, your central bank deposits the money into the account that Key Trade also has with them, and the transfer is complete.", "topk_rank": 7 }, { "id": "477316", "score": 0.5782460570335388, "text": "The old truck is collateral for a loan. The place that made the loan expects that if you can't pay they can repossess that old truck. If you sell it they can't repossess it. The dealer needs clean title to be able to buy the truck from you, so they can fix up the truck and sell it to somebody else. I am assuming the the lender has filed paperwork with the state to show their lien on the title. Your options are three: As to option 2: If the deal still makes sense the new car dealer can send the $9,000 to the lender that you forgot about. That will of course increase the amount of money you have to borrow. You will also run into the problem that this loan that you forgot to mention on your credit application may cause them to rethink the decision to loan you the money.", "topk_rank": 8 }, { "id": "352291", "score": 0.5782085657119751, "text": "\"You need to talk to your bank. If you're unable to contact your bank until Monday, then wait until Monday. Don't fixate on the idea that the transaction may \"\"hard post\"\" on Monday. If it happens, it happens, but it's not the end of the world. Even if the transaction posts, it's not the end of the world. If the retailer is legit, they will refund your money, although it may take some time for things to get sorted out. Even if the transaction posts and the retailer is not legit, it's still not the end of the world. Your bank may help you in trying to recover the funds. That's why you need to talk to your bank. As you have realized, blindly calling the number in the email is not a good idea, because if it's fake, you're calling the scammers. Instead, what you should do is try to contact your bank through known trusted channels. That is, look on your bank's website. Do they have a phone number listed for fraud reporting or related inquiries? Is it the same number you see in the email? If so, you can call it. If it is not the same number, but the number on your bank's website is a 24-hour number, you can call them at that number and tell them the situation. Based on what you've described, my own guess would be that the retailer is legit, but that the unusual large transaction was flagged by your bank as potentially fraudulent, which is why you got the email. The fact that you happened to get the email just after canceling the order could be a coincidence. This is especially true if all this happened in a short time. Information about these transactions can't be transmitted and analyzed instantaneously, nor can emails be sent instantaneously; there may have been a delay in sending the email so it only arrived after the cancellation. As far as your worries about how \"\"enfact\"\" got your info, it is likely a fraud-detection service used by your bank. Doing a bit of googling reveals that it appears to be a legit service, but there have also been instances of phishing attacks using faked \"\"enfact\"\" emails. However, from what I see, these worked by trying to get you to click on a link, not call a phone number. Also, if a scammer is able to send you a scam email that includes your actual order details, that's not a phish, it's an outright hack. In that case the bank and/or retailer (whichever was hacked) would certainly want to know about it and would likely fall all over themselves trying to refund your money to avoid negative PR.\"", "topk_rank": 9 }, { "id": "94724", "score": 0.5781942009925842, "text": "Banks loan out money they don't have to you to get you to pay them interest. It's all just computer bits. Papier maché would require that they actually have money. If everybody told BofA that they wanted to close their accounts and to get the money in cash, it would never be able to happen.", "topk_rank": 10 }, { "id": "590102", "score": 0.5781939029693604, "text": "When a business asks me to make out a cheque to a person rather than the business name, I take that as a red flag. Frankly it usually means that the person doesn't want the money going through their business account for some reason - probably tax evasion. I'm not saying you are doing that, but it is a frequent issue. If the company makes the cheque out to a person they may run the risk of being party to fraud. Worse still they only have your word for it that you actually own the company, and aren't ripping off your employer by pocketing their payment. Even worse, when the company is audited and finds that cheque, the person who wrote it will have to justify and document why they made it out to you or risk being charged with embezzlement. It's very much in their interests to make the cheque out to the company they did business with. Given that, you should really have an account in the name of your business. It's going to make your life much simpler in the long run.", "topk_rank": 11 }, { "id": "560444", "score": 0.5781869888305664, "text": "Per their merchant agreements, Visa and MasterCard say that the signature on the back of the card is the proper way to identify the card holder. If a card is not signed, the merchant is supposed to check your ID and make you sign the card before accepting it for payment. Merchants are not allowed the require an ID for paying with a signed card. Of course, store employees rarely know all these things. Some will gladly accept an unsigned card. Some will try to make you show your ID.", "topk_rank": 12 }, { "id": "272862", "score": 0.5781280398368835, "text": "It depends greatly from place to place, but nothing beats the Internet reviews' research. If you can't find anything digging slightly deeper than the impressive home page, then you probably should be worried. As it seems that you are. Specifically, I do these: @JohnFX mentions a valid point: check for physical presence. Check that the office address is a real office and not a PO box or residential; call the number and see who answers it (if you call several times during different hours and the same person answers - that's probably a one-man operation). But that doesn't always help because short-term renting an office is not all that hard and getting a call-centre outsourced to a third-world country doesn't cost all that much. It definitely helps if you're dealing with someone local, but if you're in Sweden and checking out a suspicious operation in Cyprus - this is definitely not enough.", "topk_rank": 13 }, { "id": "11730", "score": 0.578127920627594, "text": "I've had some time to investigate this and so I will answer my own question, as it may be of help to others. One of the first things to do is examine all bank statements, as this may reveal in-goings and out-goings from a previously unknown source. Secondly, get any mail redirected. Unfortunately, mail redirection is far from perfect in the UK but at least it increases one's chances of uncovering an unknown asset. Lastly, there is Landmark FAS who will do a search for a fee of around £175.", "topk_rank": 14 }, { "id": "267318", "score": 0.5781213045120239, "text": "This is more of a general answer about your situation than a specific answer to your question. You might consider getting a SIP telephone number based in the US, or an even easier to use IP based phone number. That way you can use it through your Internet connection and make eaiser calls to US companies that you still have a business relationship with.", "topk_rank": 15 }, { "id": "462384", "score": 0.5781195163726807, "text": "No. Busts are very infrequent, and if an equity were illiquid enough to be affected, the bust cost would be enormous. For a liquid equity, the amount of busted volume is insignificant except during a flash crash or flash spike. Then it would be reasonable to redownload.", "topk_rank": 16 }, { "id": "349554", "score": 0.578091561794281, "text": "\"The address under a bank's name on a check, if there is one, is generally going to be the contact address of the bank. That will be true no matter where on the check the bank's name appears. The address of the person or business the account belongs to, if present, will appear under their name. This information block is typically near the top left corner the check, so it will be visible as the return address if the check is mailed in a \"\"window envelope\"\" designed for this purpose. The address the check is being mailed to, if it appears on the check, will generally appear low on the check and to the right, so it will be visible as the destination address when the check is mailed using a \"\"window envelope\"\" designed for this purpose. If that isn't the answer you were looking for, please clarify your question.\"", "topk_rank": 17 }, { "id": "448784", "score": 0.57807856798172, "text": "The problem is that the reason you find out may be that you are at the car dealer, picked out a car, and getting ready to sign the loan papers with your supposedly good credit, and you are denied for late payment on loans you didn't know you have. Or debt collectors start hounding you. Or you credit card interest rates go up. Or you are charged more for your insurance because you are seen as a bad credit risk. Or you can't rent an apartment. The list is almost endless. It can takes many months and hours spent on the phone to fix these things.", "topk_rank": 18 }, { "id": "35282", "score": 0.5780690312385559, "text": "\"As a person who has had several part time assistants in the past I will offer you a simple piece of advise that should apply regardless of what country the assistant is located. If you have an assistant, personal or business, virtual or otherwise, and you don't trust that person with this type of information, get a different assistant. An assistant is someone who is supposed to make your life easier by off loading work. Modifying your records before sending them every month sounds like you are creating more work for yourself not less. Either take the leap of faith to trust your assistant or go somewhere else. An assistant that you feel you have to edit crucial information from is less than useful. That being said, there is no fundamental reason to believe that an operation in the Philippines or anywhere else is any more or less trustworthy than an operation in your native country. However, what is at issue is the legal framework around your relationship and in particular your recourse if something goes wrong. If you and your virtual assistant are both located in the US you would have an easier time collecting damages should something go wrong. I suggest you evaluate your level of comfort for risk vs. cost. If you feel that the risk is too high to use an overseas service versus the savings, then find someone in the states to do this work. Depending on your needs and comfort you might want to seek out a CPA or other licensed/bonded professional. Yes the cost might be higher however you might find that it is worth it for your own piece of mind. As a side note you might even consider finding a local part-time assistant. This can often be more useful than a virtual assistant and may not cost as much as you think. If you can live without someone being bonded. (or are willing to pay for the bonding fee) yourself, depending on your market and needs you may be able to find an existing highly qualified EA or other person that wants some after hours work. If you are in a college town, finance, accounting or legal majors make great assistants. They will usually work a couple hours a week for \"\"beer money\"\", they have flexible schedules and are glad to have something pertinent to their degree to put on their resume when they graduate. Just be prepared to replace them every few years as they move on to real jobs.\"", "topk_rank": 19 } ]
464	How to deduct operational loss from my personal income tax?	[ { "id": "167494", "score": 0.7304874658584595, "text": "\"I'm not an accountant, and you should probably get the advice of one to be sure about what to do. However, if the business is a sole-proprietorship, you'd complete a Schedule C for the business, and you'd end up with a loss at the end. If the investment you made in the business is considered to be entirely or partially \"\"at risk\"\" per the IRS definition, you'd get to claim all or part of the loss as a reduction in your income. If the business was an LLC, then you're beyond my already limited knowledge. There may be some other considerations based on whether this was really a business vs a hobby, and whether or not you're going to try to continue with the business, or whether you've shut it down. I'm not sure about those parts, but they'd be worth exploring with an accountant.\"" } ]	[ { "id": "364938", "score": 0.6939234733581543, "text": "It looks like you can. Take a look at these articles: http://www.googobits.com/articles/1747-taking-an-itemized-deduction-for-job-expenses.html http://www.bankrate.com/finance/money-guides/business-expenses-that-benefit-you.aspx http://www.hrblock.com/taxes/tax_tips/tax_planning/employment.html But of course, go to the source: http://www.irs.gov/publications/p529/ar02.html#en_US_publink100026912 From publication 529: You can deduct certain expenses as miscellaneous itemized deductions on Schedule A (Form 1040 or Form 1040NR). You can claim the amount of expenses that is more than 2% of your adjusted gross income. You figure your deduction on Schedule A by subtracting 2% of your adjusted gross income from the total amount of these expenses. Your adjusted gross income is the amount on Form 1040, line 38, or Form 1040NR, line 36. I hope that helps. Happy deducting!", "topk_rank": 0 }, { "id": "494000", "score": 0.693203330039978, "text": "Yes, you will be able to claim it as an expense on your taxes, but not all in the current year. It is split into three categories: Current Expenses - Assets purchased such as inventory would be able to be claimed in the current year. Assets - Vehicles, Buildings, and equipment can be depreciated over time based on the value you purchased them for and the CCA class. Goodwill - In tax terms this is the value of the business purchase that is not eligible in 1 or 2 and is called Eligible Capital Property. This can be expensed over time. From info at CRA website: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/lf-vnts/byng/menu-eng.html", "topk_rank": 1 }, { "id": "183166", "score": 0.693158745765686, "text": "As I recall, the gain for ISOs is considered ordinary income, and capital losses can only negate up to $3000 of this each year. If you exercised and held the stock, you have ordinary income to the exercise price, and cap gain above that, if you hold the stock for two years. EDIT - as noted below, this answer works for USians who found this question, but not for the OP who is Canadian, or at least asked a question at it relates to Canada's tax code.", "topk_rank": 2 }, { "id": "254158", "score": 0.6930065155029297, "text": "The LLC will file its own business taxes which may or may not have business level income and expenses. At the end, the LLC will issue Schedule K-1 tax forms to the members, that based on their percentage ownership, will reflect the percentage share of the income/losses. From an individual standpoint, the members need only worry about the K-1 form they receive. This has quite a few pass-through categories from the LLC, but the Income/Loss may be the only used one. The individual will likely include the K-1 by filing a Schedule-E along with their 1040 form. The 1040 Schedule-E has some ability to deduct expenses as an individual. Generally it's best not to commingle expenses. Additional schedule-E expense reporting is generally for non-reimbursed, but related business expenses. If a member paid certain fees for the LLC, it is better for the LLC to reimburse him and then deduct the expense properly. Schedule-E is on a non-LLC, personal level.", "topk_rank": 3 }, { "id": "418999", "score": 0.6927225589752197, "text": "Not sure about the UK, but if it were in the US you need to realize the expenses can be claimed as much as the income. After having a mild heart attack when I did my business taxes the first time many years ago, a Small Business Administration adviser pointed it out. You are running the site from a computer? Deductible on an amortization schedule. Do you work from home? Electricity can be deducted. Do you drive at all? Did you pay yourself a wage? Any paperwork, fax communications, bank fees that you had to endure as work expenses? I am not an accountant, but chances are you legally lost quite a bit more than you made in a new web venture. Discuss it with an accountant for the details and more importantly the laws in your country. I could be off my rocker.", "topk_rank": 4 }, { "id": "153377", "score": 0.692643404006958, "text": "\"Hobby expenses are not tax deductible. Business expenses are, but only if it's a bona fide business. First they look at profitability: if you reported a net profit (i.e. paid taxes) in your first 3 years, they will believe you rant on Youtube for a living. Remember, by the time they get around to auditing you, you'll likely be well into, or through, your third year. There is an exception for farms. Other than that, if you lose money year after year, you better be able to show that you look, walk and quack like a business; and one with a reasonable business reason for delayed profitability. For instance Netflix's old business model of mailing DVDs had very high fixed infrastructure expense that took years to turn profitable, but was a very sensible model. They're fine with that. Pets.com swandived into oblivion but they earnestly tried. They're fine with that too. You can't mix all your activities. If you're an electrician specializing in IoT and smart homes, can you deduct a trip to the CES trade show, you bet. Blackhat conference, arguable. SES? No way. Now if you had a second business of a product-reco site which profited by ads and affiliate links, then SES would be fine to deduct from that business. But if this second business loses money every year, it's a hobby and not deductible at all. That person would want separate accounting books for the electrician and webmaster businesses. That's a basic \"\"duck test\"\" of a business vs. a hobby. You need to be able to show how each business gets income and pays expense separate from every other business and your personal life. It's a best-practice to give each business a separate checking account and checkbook. You don't need to risk tax penalties on a business-larva that may never pupate. You can amend your taxes up to 3 years after the proper filing date. I save my expense reciepts for each tax year, and if a business becomes justifiable, I go back and amend past years' tax forms, taking those deductions. IRS gives me a refund check, with interest!\"", "topk_rank": 5 }, { "id": "327263", "score": 0.6924909949302673, "text": "First of all, Dilip's answer explains well how the business deductions generally work. For most (big) expenses you depreciate it. However, in some cases you need to capitalize it, which is another accounting method. When you capitalize your expense, it becomes part of the basis of the product you're creating. Since you're an engineer, this might be relevant for you. Talk to your tax adviser. How exactly you deduct/depreciate/capitalize things, and what expense goes which way depends greatly on the laws and jurisdictions. Even in the US, different states have different laws, and the IRS and State laws don't have to conform (unfortunately). For example, the limitations on Sec. 179 deduction in 2010-2011 were 20 times higher on Federal level than in the State of California. This could have lead to cases where you fully deducted your expense on your Federal tax return, but need to continue and depreciate it on your State return (or vice versa). Good tax adviser is crucial to avoid or manage these cases.", "topk_rank": 6 }, { "id": "85672", "score": 0.6923480033874512, "text": "I'm also self employed. Your circumstances may be different, but my accountant told me there was no reason to pay more than 100% of last years' taxes. (Even if this years' earnings are higher.) So I divide last year by 4 and make the quarterlies. As an aside, I accidentally underpaid last year (mis-estimated), and the penalty was much smaller than I expected.", "topk_rank": 7 }, { "id": "107817", "score": 0.6921516060829163, "text": "You should look into an LLC. Its a fairly simple process, and the income simply flows through to your individual return. It will allow you to deduct supplies and other expenses from that income. It should also protect you if someone sues you for doing shoddy work (even if the work was fine), although you would need to consult a lawyer to be sure. For last year, it sounds like your taxes were done wrong. There are very, very few ways that you can end up adding more income and earning less after taxes. I'm tempted to say none, but our tax laws are so complex that I'm sure you can do it somehow.", "topk_rank": 8 }, { "id": "527776", "score": 0.6920467019081116, "text": "For tax purposes you will need to file as an employee (T4 slips and tax withheld automatically), but also as an entrepreneur. I had the same situation myself last year. Employee and self-employed is a publication from Revenue Canada that will help you. You need to fill out the statement of business activity form and keep detailed records of all your deductible expenses. Make photocopies and keep them 7 years. May I suggest you take an accountant to file your income tax form. More expensive but makes you less susceptible to receive Revenue Canada inspectors for a check-in. If you can read french, you can use this simple spreadsheet for your expenses. Your accountant will be happy.", "topk_rank": 9 }, { "id": "218460", "score": 0.6920275688171387, "text": "\"This may be closed as not quite PF, but really \"\"startup\"\" as it's a business question. In general, you should talk to a professional if you have this type of question, specifics like this regarding your tax code. I would expect that as a business, you will use a proper paper trail to show that money, say 1000 units of currency, came in and 900 went out. This is a service, no goods involved. The transaction nets you 100, and you track all of this. In the end you have the gross profit, and then business expenses. The gross amount, 1000, should not be the amount taxed, only the final profit.\"", "topk_rank": 10 }, { "id": "192516", "score": 0.6918718814849854, "text": "\"I am going to keep things very simple and explain the common-sense reason why the accountant is right: Also, my sister in law owns a small restaurant, where they claim their accountant informed them of the same thing, where a portion of their business purchases had to be counted as taxable personal income. In this case, they said their actual income for the year (through their paychecks) was around 40-50K, but because of this detail, their taxable income came out to be around 180K, causing them to owe a huge amount of tax (30K ish). Consider them and a similarly situated couple that didn't make these purchases. Your sister in law is better off in that she has the benefit of these purchases (increasing the value of her business and her expected future income), but she's worse off because she got less pay. Presumably, she thought this was a fair trade, otherwise she wouldn't have made those purchases. So why should she pay any less in taxes? There's no reason making fair trades should reduce anyone's tax burden. Now, as the items she purchased lose value, that will be a business loss called \"\"depreciation\"\". That will be deductible. But the purchases themselves are not, and the income that generated the money to make those purchases is taxable. Generally speaking, business gains are taxable, regardless of what you do with the money (whether you pay yourself, invest it, leave it in the business, or whatever). Generally speaking, only business losses or expenses are deductible. A purchase is an even exchange of income for valuable property -- even exchanges are not deductions because the gain of the thing purchased already fairly compensates you for the cost. You don't specify the exact tax status of the business, but there are really only two types of possibilities. It can be separately taxed as a corporation or it can be treated essentially as if it didn't exist. In the former case, corporate income tax would be due on the revenue that was used to pay for the purchases. There would be no personal income tax due. But it's very unlikely this situation applies as it means all profits taken out of the business are taxed twice and so small businesses are rarely organized this way. In the latter case, which is almost certainly the one that applies, business income is treated as self-employment income. In this case, the income that paid for the purchases is taxable, self-employment income. Since a purchase is not a deductible expense, there is no deduction to offset this income. So, again, the key points are: How much she paid herself doesn't matter. Business income is taxable regardless of what you do with it. When a business pays an expense, it has a loss that is deductible against profits. But when a business makes a purchase, it has neither a gain nor a loss. If a restaurant buys a new stove, it trades some money for a stove, presumably a fair trade. It has had no profit and no loss, so this transaction has no immediate effect on the taxes. (There are some exceptions, but presumably the accountant determined that those don't apply.) When the property of a business loses value, that is usually a deductible loss. So over time, a newly-purchased stove will lose value. That is a loss that is deductible. The important thing to understand is that as far as the IRS is concerned, whether you pay yourself the money or not doesn't matter, business income is taxable and only business losses or expenses are deductible. Investments or purchases of capital assets are neither losses nor expenses. There are ways you can opt to have the business taxed separately so only what you pay yourself shows up on your personal taxes. But unless the business is losing money or needs to hold large profits against future expenses, this is generally a worse deal because money you take out of the business is taxed twice -- once as business income and again as personal income. Update: Does the business eventually, over the course of the depreciation schedule, end up getting all of the original $2,000 tax burden back? Possibly. Ultimately, the entire cost of the item is deductible. That won't necessarily translate into getting the taxes back. But that's really not the right way to think about it. The tax burden was on the income earned. Upon immediate replacement, hypothetically with the exact same model, same cost, same 'value', isn't it correct that the \"\"value\"\" of the business only went up by the amount the original item had depreciated? Yes. If you dispose of or sell a capital asset, you will have a gain or loss based on the difference between your remaining basis in the asset and whatever you got for the asset. Wouldn't the tax burden then only be $400? Approximately, yes. The disposal of the original asset would cause a loss of the difference between your remaining basis in the asset and what you got for it (which might be zero). The new asset would then begin depreciating. You are making things a bit more difficult to understand though by focusing on the amount of taxes due rather than the amount of taxable gain or loss you have. They don't always correlate directly (because tax rates can vary).\"", "topk_rank": 11 }, { "id": "257303", "score": 0.6913953423500061, "text": "\"You will need to see a tax expert. Your edited question includes the line For the short term, we will be \"\"renting\"\" it to my wife's grandmother at a deep discount. According to the instructions for schedule E If you rented out a dwelling unit that you also used for personal purposes during the year, you may not be able to deduct all the expenses for the rental part. “Dwelling unit” (unit) means a house, apartment, condominium, or similar property. For each property listed on line 1a, report the number of days in the year each property was rented at fair rental value and the number of days of personal use. A day of personal use is any day, or part of a day, that the unit was used by: I have no idea how this will work for Schedule C.\"", "topk_rank": 12 }, { "id": "446553", "score": 0.6911009550094604, "text": "When your debt is forgiven, you have to consider the amount written off as an ordinary income item (with the exclusion of the debt originated from the purchase of primary home). If you're trying to write the debt off from your taxes - then it won't work. Even if you can expense the debt forgiveness, you will incur tax liability on your personal taxes side, and in addition you'll be out of cash in your business. So basically you'll end up paying it with after tax money, exactly the thing you're trying to avoid. In addition, you're dealing with related persons here, which means that the loss deduction might not be allowed (depends on the actual details of the transaction), so you might actually end up paying more taxes with this scheme that just paying off the loan directly (if your business pays taxes separately from your person). A loss on the sale or exchange of property between related persons is not deductible. This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. For the list of related persons, see Related persons next.", "topk_rank": 13 }, { "id": "72391", "score": 0.6909016966819763, "text": "As far as accounting goes, if you speak with a CPA, you may be able to reduce the business tax liability. So... the company buys the truck, deducts it, and the adjusted gross income drops, so he'd pay less tax. Or something. You said anything helps, hope you meant it!", "topk_rank": 14 }, { "id": "31117", "score": 0.6907588243484497, "text": "If you didn't receive the money in 2012 or have constructive receipt you really can't claim the income. If the company is going to give you a 1099 for the work they aren't going to give you one until next year and if you claim it this year you will have a hard time explaining the income difference. On the other hand if this isn't miscellaneous income, but rather self employment income and expenses you should be able to claim the expenses in 2012 and if you have a loss that would carry over to 2013. Note it is possible to use an accrual basis if you are running a business (which would allow you to do this), but it is more complex than the cash accounting individual tax payers use.", "topk_rank": 15 }, { "id": "467853", "score": 0.6906522512435913, "text": "I did this for the last tax year so hopefully I can help you. You should get a 1099-B (around the same time you're getting your W-2(s)) from the trustee (whichever company facilitates the ESPP) that has all the information you need to file. You'll fill out a Schedule D and (probably) a Form 8949 to describe the capital gains and/or losses from your sale(s). It's no different than if you had bought and sold stock with any brokerage.", "topk_rank": 16 }, { "id": "211485", "score": 0.6904449462890625, "text": "\"Being self-employed, your \"\"profit\"\" is calculated as all the bills you send out, minus all business-related cost that you have (you will need a receipt for everything, and there are different rules for things that last for long time, long tools, machinery). You can file your taxes yourself - the HRS website will tell you how to, and you can do it online. It's close to the same as your normal online tax return. Only thing is that you must keep receipts for all the cost that you claim. Your tax: Assuming your gross salary is £25,000 and your profits are about £10,000, you will be paying 8% for national insurance, and 20% income tax. If you go above £43,000 or thereabouts, you pay 40% income tax on any income above that threshold, instead of 20%, but your national insurance payments stop.\"", "topk_rank": 17 }, { "id": "293310", "score": 0.6904053092002869, "text": "Assuming the US, if a human assessor audited you, could you show a future profit motive or will they conclude you are expensing a hobby? If you answer yes, you are likely to only be deducting limited expenses this year, carrying forward losses to your profitable years. See the examples in pub 535: http://www.irs.gov/publications/p535/ch01.html#en_US_2014_publink1000208633", "topk_rank": 18 }, { "id": "81353", "score": 0.6903976798057556, "text": "When you sell a stock that you own, you realize gains, or losses. Short-term gains, realized within a year of buying and selling an asset, are taxed at your maximum (or marginal) tax rate. Long term-gains, realized after a year, are taxed at a lower, preferential rate. The first thing to consider is losses. Losses can be cancelled against gains, reducing your tax liability. Losses can also be carried over to the next tax year and be redeemed against those gains. When you own a bunch of the same type of stock, bought at different times and prices, you can choose which shares to sell. This allows you to decide whether you realize short- or long-term gains (or losses). This is known as lot matching (or order matching). You want to sell the shares that lost value before selling the ones that gained value. Booking losses reduces your taxes; booking gains increases them. If faced with a choice between booking short term and long term losses, I'd go with the former. Since net short-term gains are taxed at a higher rate, I'd want to minimize the short-term tax liability before moving on to long-term tax liability. If my remaining shares had gains, I'd sell the ones purchased earliest since long-term gains are taxed at a lower rate, and delaying the booking of gains converts short-term gains into long-term ones. If there's a formula for this, I'd say it's (profit - loss) x (tax bracket) = tax paid", "topk_rank": 19 } ]
465	Can my company buy my personal debt?	[ { "id": "446553", "score": 0.693520724773407, "text": "When your debt is forgiven, you have to consider the amount written off as an ordinary income item (with the exclusion of the debt originated from the purchase of primary home). If you're trying to write the debt off from your taxes - then it won't work. Even if you can expense the debt forgiveness, you will incur tax liability on your personal taxes side, and in addition you'll be out of cash in your business. So basically you'll end up paying it with after tax money, exactly the thing you're trying to avoid. In addition, you're dealing with related persons here, which means that the loss deduction might not be allowed (depends on the actual details of the transaction), so you might actually end up paying more taxes with this scheme that just paying off the loan directly (if your business pays taxes separately from your person). A loss on the sale or exchange of property between related persons is not deductible. This applies to both direct and indirect transactions, but not to distributions of property from a corporation in a complete liquidation. For the list of related persons, see Related persons next." } ]	[ { "id": "361698", "score": 0.6586127281188965, "text": "Short-term, getting a balance transfer will help. It'll reduce the interest you pay. You can also reduce the interest you pay on your cars if you are able to consolidate your debt into a personal loan. To your question about debt consolidation companies, as far as I know, that's all they do. However, long-term, there's only two ways to stay on top of debt: increase your income, or reduce your spending. Basically, if you can't or won't get a raise or a job that pays more (or a second job), you need to cut back on your spending. You might need to do something radical, like move somewhere with cheaper rent (as long as increased travel costs doesn't offset the saving). But you'll be much better off in the long run if you step back and take a look at your situation now, and make adjustments accordingly.", "topk_rank": 0 }, { "id": "253369", "score": 0.6586059927940369, "text": "\"The key phrase in your post is that the options are \"\"in a good position now\"\". They may be worthless in three months or a year. If I was you I would cash in the options and pay off the debt. Cash in enough to also cover taxes. You may want to cash them all in.\"", "topk_rank": 1 }, { "id": "62109", "score": 0.6583440899848938, "text": "I imagine the same results would occur as with any other business that is owed money. For a short period the company will try to collect their debts directly from the consumer. If unsuccessful, the company may then sell their right to the debt over to a collections agency. The collection agency will then pursue more aggressive collections tactics and/or legal action to collect.", "topk_rank": 2 }, { "id": "127461", "score": 0.65833979845047, "text": "I walked away from a house last year and don't regret it a single bit. I owed $545,000 and the bank sold it a month after moving out for $328,900. So technically I guess I can be on the hook to someone for the missing $216,100 for many years to come. Oh well. They can come after me if they want and I'll declare bankruptcy then.", "topk_rank": 3 }, { "id": "187155", "score": 0.6582552194595337, "text": "\"I'd check the terms of the student loan. It's been a long time since I had a student loan, but when I did it had restrictions that it could only be used for educational expenses, which they pretty clear spelled out meant tuition, books, lab fees, I think some provision for living expenses. If your student loan is subsidized by the government, they're not going to let you use it to start a business or go on vacation ... nor are they likely to let you invest it. Even if it is legal and within the terms of the contract, borrowing money to invest is very risky. What if you invest in the stock market, and then the stock market goes down? You may find you don't have the money to make the payments on the loan. People do this sort of thing all the time -- that's what \"\"buying on margin\"\" is all about. And some of them lose a bundle and get in real trouble.\"", "topk_rank": 4 }, { "id": "434906", "score": 0.6582024693489075, "text": "I read, however, that if the company's assets are not kept separate from our assets then if we got sued, the corporate veil would be pierced. This whole venture would be to give us additional income so my wife could watch our daughter and have an income.", "topk_rank": 5 }, { "id": "366597", "score": 0.6579311490058899, "text": "Short Answer Collections agencies and the businesses they collect for are two different animals. If you don't want this to hurt your credit I suggest you deal directly with the hospital. Pay the bill, but prior to paying it get something in writing that specifically says that this will not be reported onto your credit. That is of course if the hospital even lets you pay them directly. Usually once something is sold to a collections company it's written off. Long Answer Credit reports are kind of a nightmare to deal with. The hospital just wants their money so they will sell debt off to collections companies. The collections companies want to make money on the debt they've bought so they will do what ever it takes to get it out of you, including dinging your credit report. The credit bureaus are the biggest nightmare to deal with of all. Once something is reported on your credit history they do little to nothing to remove it. You can report it online but this is a huge mistake because when you report online you wave your rights to sue the credit bureaus if they don't investigate the matter properly. This of course leads to massive amounts of claims being under investigated. So what are your options once something hits your credit history? I know this all sounds bleak but the reason I go into such depth is that they likely have already reported it to the credit bureaus and you just don't see it reported yet. Good luck to you. Get a bottle of aspirin.", "topk_rank": 6 }, { "id": "310488", "score": 0.6577762365341187, "text": "\"Not normally, for a limited liability company anyway. In extreme circumstances a court may \"\"lift the veil\"\" of incorporation and treat shareholders as if they were partners. If you are an office bearer or a director that is found to have breached duties/responsibiities then that is another matter. Dim views can be taken of shonky arrangents for companies formed for activites not of a bona fide business nature too.\"", "topk_rank": 7 }, { "id": "130279", "score": 0.6576505899429321, "text": "If you take out a personal loan, rather than a mortgage or car loan or hire-purchase agreement or other loan that's for making a specific purchase, then you can do whatever you want with the money. Send it abroad, burn it, spend it on expensive whisky -- it's up to you. The country you want to send the money to might have rules on transferring money into the country, but there will be no impediment at the UK end.", "topk_rank": 8 }, { "id": "47044", "score": 0.6576436758041382, "text": "In general the other party will expect you to keep your promises. If you promise to do something for a fixed amount of money, you take on a risk and it is no longer their problem if you work slower than you planned. In principle it could even be the case that you take on a project and fail, after which the company may not have to pay at all. So regardless of how things should be written in your books (For example a theoretical pay above minimum wage but a loss for your private company): An important thing to note is that if you are worried about ending up below minimum wage, you are definitely asking a fee that is too low. You should keep in mind that your fee should include a fair compensation for the expected work, and a fair compensation for the risk that you have taken on.", "topk_rank": 9 }, { "id": "15633", "score": 0.6575103998184204, "text": "\"There are loans. Usually they're secured by the assets, and you also cosign them personally. Your own credit worthiness comes to play, your own assets are in jeopardy. As to what it is that you're buying - no, it is not necessary for the seller to sell you the building. You might buy the business, but not the actual space it occupies. In fact, the space may not even belong to the seller. You may find yourself taking over the lease, which is in fact a liability, not an asset. You should agree with the seller on what exactly it is that you're buying. You should ask for a full inventory list that would include all the assets and the liabilities that would be transferred to you. Lease, as mentioned, but you might also \"\"buy\"\" loans, debts, lawsuits, and god knows what else that is attached to the business.\"", "topk_rank": 10 }, { "id": "107377", "score": 0.6574051380157471, "text": "The answer to your question as asked is no. Call options, even those issued by the company, cannot create new shares unless they are employee stock options. Company-issued warrants, on the other hand, can create new shares.", "topk_rank": 11 }, { "id": "63941", "score": 0.6571856141090393, "text": "Make sure that when you have the loan you still contribute enough to get the company match. For example: An inability to maximize the match might need to be figured into the opportunity cost of the loan. Some companies will suspend your contributions for a specific number of months for a hardship withdraw. Make sure you understand where the money comes from for the loan. Can you count the money that the company matched but you are not vested with, when determining the maximum amount of the loan? If the money is in what is now a closed fund can you replenish the funds back into that fund if use it to fund the loan? Know what the repayment time period is of the loan.", "topk_rank": 12 }, { "id": "140568", "score": 0.6571544408798218, "text": "I'd not do business under these terms. A bill of sale needs a signature, right? Your signature is your word, and your word is your bond. I wouldn't participate in such a fraud, nor would I accept this sum of cash, who knows its origins?", "topk_rank": 13 }, { "id": "307315", "score": 0.6571016311645508, "text": "I can only speak for germany/europe. Inkasso companies/lawyer would write a letter with a bill, those letters have register numbers. If in doubt, one would call the company, ask who is the debtor/what is the origin of the bill. I certainly would not react on a phone call. However, if an official entity or lawyer is contacting you, you have to take action asap, at least calling them.", "topk_rank": 14 }, { "id": "79219", "score": 0.657086193561554, "text": "It would probably never make sense to do that. Why would you? You'll end up in the bankruptcy court either way, since you won't be able to pay off the loan, and you cannot maintain the monthly payments without getting into more debt. IRA is shielded from bankruptcies, in most States, so it will probably stay with you afterwards. In any case - it will provide you some income when you're old and cannot keep up working. Unfortunately, Federal student loans are also shielded, but the rest of you debt - isn't. I suggest trying to fix your budgets and see how you can improve your earnings to be able to maintain your payments. I can't understand how you could have racked up $140K student debt and have a career at which you earn $55K/year for an experienced employee.", "topk_rank": 15 }, { "id": "408724", "score": 0.6570843458175659, "text": "You can't be doing it yourself. Only your employer can do it. If the employer doesn't provide the option - switch employers. The only way for you to do it yourself is if you're the employer, i.e.: self-employed.", "topk_rank": 16 }, { "id": "231259", "score": 0.6570841670036316, "text": "Obviously, there's some due diligence and quantitative analysis. However, it's mostly just what they can secure, for how much and how quickly. For instance, if you had a bakery that was netting 200,000/yr and needed 750,000 to open a new location. The bank will give you the loan over 10 years at 1.1%. Well, it's probably a good idea to take on debt. That's 6938 a month (I think). Edit: Or issue debt yourself. However, let's say you're merging with someone in the same industry. They have a market cap of 10 billion. Your company has a market cap of 62 billion and revenue of 11.8 billion a year. It's probably a good idea to secure with equity. Especially because you believe the merger will help you expand.", "topk_rank": 17 }, { "id": "553955", "score": 0.6570640802383423, "text": "Does your business have a loan or overdraft with a bank? If so that bank will be much more likely to offer you a personal mortgage if you can show them a solid business plan and your profits for each year. Other than that make sure you have a perfect credit rating, use Experian to iron out any small things that might get in the way.", "topk_rank": 18 }, { "id": "84858", "score": 0.657031774520874, "text": "\"The answer to your question is...it depends. Depending on the state you, your friend, and the LLC are located in, it can be very easy to run afoul of state banking laws, or to somehow violate some other statute pertaining to the legal activities an LLC may undertake by doing something like a loan. It is not unusual (or illegal) for officers or employees of a business entity to be loaned money by the company they work for, so something of this nature wouldn't be an issue with regulatory agencies. Having your LLC loan money to a friend who isn't an employee or officer of your LLC just might not be kosher though. The best advice I can give is that you should call the state banking commission or similar agency in your state and ask them whether what you want to do is alright. The LAST thing you want is to end up with auditors or regulators sniffing around your business, even if you haven't done anything wrong, and you certainly don't want to run the risk of accidentally \"\"piercing the corporate veil\"\", as someone else here astutely pointed out. Good luck!\"", "topk_rank": 19 } ]
466	Need small buisness ideas with 100k $ budjet in a 3rd world country	[ { "id": "217218", "score": 0.7330975532531738, "text": "Firstly, I highly doubt anyone on this site will be able to provide you with accurate input on this matter regarding what TO DO. It's the what not to do that may be possible. That said, if you want to offer equipment for rent, which in a developing country is probably a decent idea, I'd start by asking around and doing some research on what people really need and are wanting to rent. I would suggest studying other developing/developed countries histories to see what companies were successful around a similar stage as well. I'd start small: pressure washers, generators, concrete mixers, fork lifts, hydraulic ladders, etc. Getting things that are just a bit too expensive for someone to own and something they don't need all the time. These can be great revenue generators because they're cheap to purchase, but can be rented at a premium." } ]	[ { "id": "47690", "score": 0.6952818632125854, "text": "That's awesome! You're going to want to learn how to fly a small technical one first. Once you are comfortable spend couple thousand and start with basic maneuvers, as the size of your drone has changed! Do you understand the legal responsibilities as a small business owner and have you taken any business classes? I'm a vet as well. Private message me man. I know a lot about business.", "topk_rank": 0 }, { "id": "141243", "score": 0.6885243654251099, "text": "Take pics of your happy customers and show them to potential new customers. Also have a guest book for people to sign with their reviews. ONLY let tourists sign this book. It would be obvious if you had non native english speakers try to write reviews in there.", "topk_rank": 1 }, { "id": "95322", "score": 0.6858622431755066, "text": "You could also start a business. I ran a project called the Thousand Rand Challenge a few years ago in South Africa where we supported people in starting a business for about $100 each. Some of them were surprisingly profitable. You can find a few ideas at the wiki site.", "topk_rank": 2 }, { "id": "30068", "score": 0.683621346950531, "text": "I love you guys, you’re the most honest and hard working taxi drivers I’ve ever met. People come to Siem reap two ways, by air and via the boarder from Thailand. When I was there the busses would drop you off at Poipet and you would have to hire a car to take you the rest of the way. Now the busses go direct. People via land don’t plan out much. I would have said years ago to get a contact in Poipet to hand out flyers. Now it’s different. I would work out deals with bus drivers and hotels. Another idea would be to find maybe four other drivers and start a company. I would advertise this company on trip advisor, and the other travel sites. You will have better luck as a conglomerate of people rather than one guy. The key is to get the client before anyone else snatches them up. To keep the client you should learn as much about Angkor Wat as you can and double as a tour guide. My driver just went to sleep after he dropped us off. Know the best restaurants, don’t take them to places that give you kickbacks, really look out for the client. You need to be more than just a driver. You are their tour guide. Make them feel safe and give them your knowledge.", "topk_rank": 3 }, { "id": "172656", "score": 0.6812707185745239, "text": "Having been there, honestly just be at the right places at the right times. There are a ton of TukTuk drivers, I never bothered to save any to my phone because there was always a line of them outside no matter where I was. Find the popular pick up points and setup there. Offer to take people through Ankor Wat for the day at a good price.", "topk_rank": 4 }, { "id": "65180", "score": 0.6795632839202881, "text": "You're off to a great start. Here are the steps I would take: 1.) Pay off any high-interest debt. 2.) Keep six to twelve months in a highly liquid emergency fund. If the banks aren't safe, also consider having one or two months of cash or cash-equivalents on the premises. 3.) Rent a larger apartment, if possible, until you've saved more. The cost of the land and construction will consume a very large portion of your net worth. Given the historical political instability in that region, mentioned by the previous comments, I would hesitate to put such a large percentage of your wealth in to real estate. 4.) Get a brokerage account that's insured and well known. If you're willing to take the five percent hit to move assets offshore, then consider Vanguard. I'm not sure if they'll give you an account but they're generally acknowledged as an amazing broker in the US with low fees and amazing funds. Five percent (12,500) is worth it in my opinion. As you accumulate more wealth, you can stop moving cash overseas and keep a larger mix domestically. 5.) Invest in your business and yourself even more. As far as finding new investment opportunities, I would go through the list of all the typical major asset classes and consider the pros and cons: fixed-income, stocks, currencies, real estate / REITs, own a small business, commodities etc.,", "topk_rank": 5 }, { "id": "287019", "score": 0.6751410365104675, "text": "For $100 you better just hold it in Mexico. The cost of opening an account could eat 10% or more of your capital easily, and that won't be able to buy enough shares of an ETF or similar investment to make it worthwhile.", "topk_rank": 6 }, { "id": "596798", "score": 0.6711369752883911, "text": "Does your family go to church? I know reddit hates religion but churches have been a great source of support for small shops just starting off. They are a great opportunity to network in your community. If not, look for other things, toast masters, chamber of commerce. Get something big on the truck, park it in a well lit-high traffic spot (empty). I have heard SOME decent things about location based google adwords. You may want to check out advertising. Also, make sure he comes up in the google results when people look for plumbers. Google is the not-so-new yellow pages and a lot of people just start at the top of the list and work their way down when they need someone in an emergency. Get him to network with General Contractors and maybe the HBA in your area.", "topk_rank": 7 }, { "id": "226201", "score": 0.6707084774971008, "text": "How about opening a Coffee shop section in the bookshop to generate some cash flow per month to offset some of the expenses ? Off course success of this venture will depend on where the location of shop is, how big it is and whether people are coffee enthusiast in that region. Since the rent/mortgage ( the major expense) is already taken care of all you have to do is invest in one time expenses for : Interior (hip these days - rustic expose brick walls, nostalgic filament light, chalk board menu, etc ) Seating (big communal table, lounge couch, some regular table chairs,some out door seats if weather is good) ...and the ugly licencing and approval. Throw in some social media marketing, SEO, yelp,urbanspoon, tripadvisor, etc If the bookstore is old, I am assuming it might have the old world charm & character which could attract lot of coffee enthusiast. The unique and competitive edge of this coffee shop could be its historic charm , which no other competitor can achieve. Would definitely beat the staryuks. Even if no one shows up , only recurring additional expense will be barrista wages. The interior , seating and coffee m/c costs can be minimized by savvily shopping stuff on community sites like craigslist, gumtree etc. I beleive if you are in US , everything could be set up under 6K. Later on premade food items like bananacake, raw cacao balls, toasted panini sandwich etc. can be added. If one has 3 key ingredients in food industry - Location, Vibe and taste, then there is high probability that they will succeed. At the same time one should be cognizant that 95 % of business fail in first 3 years and therefore they should have an exit plan. Unfortunately if your business does not work, then you exit cost would be just getting rid of the equipment & furniture. Just to put in perspective, some Dunkin Donut shops that I was researching in North East were clearing between 1/2 to 1 mil per year. As it is the current damage per month is 10k, if this business offsets even some of the damage it would be worth while. So the cost of keeping the pride of 91 yo dad can potentially reduce from 10k to 2-3 k. Who knows if it takes off , one day it could be a good sustainable business and might turn into a win-win situation for you and your father. I have made lot of assumption without knowing the facts like- you are located in US, you have risk appetite, bookshop is not in industrial area but some prime retail area like this : ... etc. While I am at it { giving unsolicited advise that is}.. Currently the books in the bookshop are very old books that it published by itself. Nobody is interested in reading these books. Due to his previous excitement of getting editors and publishing books, there are thousands of books that need to be kept in storerooms. They don’t move because people hardly buy any books from this bookshop. To help the old published book sales why not convert the old books to ebooks using providers like 'Blueleaf-book-scanning' and publish the books on amazon kindle,itunes & play store. The books will be available online forever and they might get exposure to tons of book enthusiast around the world. I heard at one of our client's MDS ( mass digitization system ) project , they had in-house robot scanning machine like Treventus Pardon me if none of the above gibberish applies to your situation , but hpefully SE community might have some fun reading this for kicks and giggles . Cheers and good luck. Source: I am US person in Australia, operated restaurant / bar in US , visited 100's of coffee shops, consulting for living, ...and a dreamer { :-) hard not to imagine from the short post}.", "topk_rank": 8 }, { "id": "532462", "score": 0.6699462532997131, "text": "Yep we tried that last year. The only one who was not extortionate could not clear the item through U.S customs, so our Client had to hire a broker to do this, which was a hassle. I have also been in touch with companies who offer freight, warehousing and distribution. Idea was to ship over ten units at a time in a shipping container, store in warehouse and the instruct distribution as the orders came in. After all the calculations it only worked out about $40 cheaper than sending them one by one stright to customers. With each shed costing around $800 to ship! I found that one air fright carrier did have the solution we needed, and good rates, who I am using next week. They have had a change of policy recently though and will not deliver to residential addresses going forward. So now I am back at square one...", "topk_rank": 9 }, { "id": "21488", "score": 0.6685665249824524, "text": "Take a look at Transferwise. I find them good for currency conversions and paying people in India from a US bank account.", "topk_rank": 10 }, { "id": "554087", "score": 0.6681547164916992, "text": "What could a small guy with $100 do to make himself not poor To answer the question directly, not much. Short of investing in something at the exact moment before it goes bananas, then reinvesting into a bigger stock and bigger etc, it's super high risk. A better way is to sacrifice some small things, less coffee, less smokes, less going out partying so that instead of having $100, you have $100 a week. This puts you into a situation where you can save enough to become a deposit on an appreciating asset (choose your own asset class, property in AU for me). Take out a loan for as much as you can for your $100 a week payment and make it interest only with an offset against it, distributions from shares can either be reinvested or put into the offset or in the case of property, rent can be put against the offset, pretty soon you end up with a scenario where you have cash offsetting a loan down to nothing but you still have access to the cash, invest into another place and revalue your asset, you can take out any equity that has grown and put that also into your offset. Keep pulling equity and using the money from the offset as deposits on other assets (it kind of works really well on property) and within 15 years you can build an empire with a passive income to retire on. The biggest thing the rich guys get that the poor guys don't is that debt is GOOD, use someone else's money to buy an appreciating asset then when you pay it back eventually, you own the growth. Use debt to buy more debt for exponential growth. Of course, you need to also invest your time to research what you are investing in, you need to know when you make the decision to buy that it will appreciate, it's no good just buying off a tip, you may as well drop your money on the horses if you want to play it like that. Fortunately, one thing we all have in common regardless of our money is time, we have time which we can invest.", "topk_rank": 11 }, { "id": "87629", "score": 0.6680895090103149, "text": "Also find a way to sell some products to people you drive so they spend more money with you. For example a photo of them on your TukTuk or a small toy TukTuk that's also colored yellow like yours. People will buy them for those kids and for memories", "topk_rank": 12 }, { "id": "180155", "score": 0.6674660444259644, "text": "You can get an SBA disaster loan to help cover costs. There are a few different kinds of loans. You have to live in a qualifying area to get one, which you likely do. There are physical disaster loans, which cover inventory, and that may help replace the flowers/plants. They also have EIDLs which you can use to help cover ongoing costs like fixed bills while you get back into business. Important to note these are loans, intended to be low-interest (or at least lower than a merchant cash advance or putting charges on credit cards), and do have to get paid back. There are hoops to jump through too, but they may be your best option, depending on your current financial situation. (You could also go to your local Small Business Development Center for help -- they have free resources and experts who can help you understand your options.) And when you get back up on your feet, get a business line of credit and business insurance so you have a backup plan and immediate access to capital for next time. This article is about Harvey, but same ideas apply for Irma: https://www.nav.com/blog/how-to-get-an-sba-disaster-loan-after-hurricane-harvey-22706/", "topk_rank": 13 }, { "id": "216669", "score": 0.6672804951667786, "text": "A few ideas : sell snacks for the trip, or alternatively just raise your prices and give the snacks for free. Print out a sign with some pictures of where you'll take them, tease the experience. Install curtains that can be opened or closed in case customers want more or less shade / privacy. Have a radio or some speaker to play music during the trip.", "topk_rank": 14 }, { "id": "574954", "score": 0.6665509939193726, "text": "\"The problem here can be boiled down to that fact you are attempting to obtain a loan without collateral. There are times it can be done, but you have to have a really good relationship with a banker. Your question suggests that avenue has been exhausted. You are looking for an investor, but you are offering something very speculative. Suppose an investor gives you 20K, what recourse does he have if you do not pay the terms of the loan? From what income will this be paid from? What event will trigger the capability to make a balloon payment? Now if you can find a really handy guy that really needs a place to live could you swap rent for repairs? Maybe. Perhaps you buy the materials, and he does the roof in exchange for 6 months worth of rent or whatever. If you approached me with this \"\"investment\"\", the thing that would raise a red flag is why don't you have 20K to do this yourself? If you don't how will you be able to make payments? For example of the items you mentioned: That is a weekend worth of work and some pretty inexpensive materials. Why does money need to be borrowed for this? A weekend worth of demo, and $500 worth of material and another weekend to build something serviceable for a rental. Why does money need to be borrowed for this? 2K? Why does money need to be borrowed for this? This can be expensive, but most roofing companies offer financing. Also doing some of the work yourself can save a ton of money. Demoing an old roof is typically about 1/3 of the roofing cost and is technically simple, but physically difficult. So besides the new roof, you could have a lot of your list solved for less than 3K and three weekends worth of work. You are attempting to change this into a rental, not the Taj Mahal.\"", "topk_rank": 15 }, { "id": "372051", "score": 0.6662949919700623, "text": "I assume the same criteria apply for this as your previous question. You want to physically transfer in excess of 50,000 USD multiple times a week and you want the transportation mechanism to be instant or very quick. I don't believe there is any option that won't raise serious red flags with the government entities you cross the boundaries of. Even a cheque, which a person in the comments of OP's question suggests, wouldn't be sufficient due to government regulation requiring banks to put holds on such large amounts.", "topk_rank": 16 }, { "id": "521237", "score": 0.6648475527763367, "text": "So my idea is to open small hummus place with open island kitchen. You can eat inside or take away. I also now places were i could deliver my product like a cafe/pubs. Really simple idea but i am little bit scared of telling details. you can eat different types of hummus with fresh bread and vegetables. Also in the morning i am planing to making tortillas with hummus, fresh salad and meat inside for take away. But my problem is a money for start.", "topk_rank": 17 }, { "id": "444046", "score": 0.6634755730628967, "text": "No one here seems to be suggesting a good website. Make sure the English is good on it. Take bookings on it. Have loads of happy customers talking about their experiences. Ask someone you know who speaks english to help you. Wix.com is a great place to start. You can do all this for free. Good luck", "topk_rank": 18 }, { "id": "152643", "score": 0.6630191206932068, "text": "I strongly recommend you to invest in either stocks or bonds. Both markets have very strict regulations, and usually follow international standards of governance. Plus, they are closely supervised by local governments, since they look to serve the interests of capital holders in order to attract foreign investment. Real estate investment is not all risky, but regulations tend to be very localized. There are federal, state/county laws and byelaws, the last usually being the most significant in terms of costs (city taxes) and zoning. So if they ever change, that could ruin your investment. Keeping up with them would be hard work, because of language, legal and distance issues (visiting notary's office to sign papers, for example). Another thing to consider is, specially on rural distant areas, the risk of forgers taking your land. In poorer countries you could also face the problem of land invasion, both urban and rural. Solution for that depends on a harsh (fast) or socially populist (slow) local government. Small businesses are out of question for you, frankly. The list of risks (cash stealing, accounting misleading, etc.) is such that you will lose money. Even if you ran the business in your hometown it would not be easy right?", "topk_rank": 19 } ]
468	Loan holder wants a check from the insurance company that I already cashed and used to repair my car	[ { "id": "498927", "score": 0.7821101546287537, "text": "What would happen if you was to cash a check, didn’t realize it was to you and your finance company, take it to a local business that has a money center, they cash the check without even having you sign let alone having the finance companies endorsement on it . The money cleared my account like a couple months ago and it was just brought up now .. ? The reason why the check was made out the owner and the lender is to make sure the repairs were done on the car. The lender wants to make sure that their investment is protected. For example: you get a six year loan on a new car. In the second year you get hit by another driver. The damage estimate is $1,000, and you decide it doesn't look that bad, so you decide to skip the repair and spend the money on paying off debts. What you don't know is that if they had done the repair they would have found hidden damage and the repair would have cost $3,000 and would have been covered by the other persons insurance. Jump ahead 2 years, the rust from the skipped repair causes other issues. Now it will cost $5,000 to fix. The insurance won't cover it, and now a car with an outstanding loan balance of $4,000 and a value of $10,000 if the damage didn't exist needs $5,000 to fix. The lender wants the repairs done. They would have not signed the check before seeing the proof the repairs were done to their satisfaction. But because the check was cashed without their involvement they will be looking for a detailed receipt showing that all the work was done. They may require that the repair be done at a certified repair shop with manufacturer parts. If you don't have a detailed bill ask the repair shop for a copy of the original one." }, { "id": "536760", "score": 0.7415952086448669, "text": "\"There are at least three financial institutions involved here: your insurance company's bank, the money center, and your bank. Normally, they would keep records, but given that the money center didn't even ask for your signature, \"\"normal\"\" probably doesn't apply to them. Still, you can still ask them what records they have, in addition to the other two institutions; the company's bank and your bank likely have copies of the check.\"" } ]	[ { "id": "584305", "score": 0.7195214629173279, "text": "\"You won't be able to sell the car with a lien outstanding on it, and whoever the lender is, they're almost certain to have a lien on the car. You would have to pay the car off first and obtain a clear title, then you could sell it. When you took out the loan, did you not receive a copy of the finance contract? I can't imagine you would have taken on a loan without signing paperwork and receiving your own copy at the time. If the company you're dealing with is the lender, they are obligated by law to furnish you with a copy of the finance contract (all part of \"\"truth in lending\"\" laws) upon request. It sounds to me like they know they're charging you an illegally high (called \"\"usury\"\") interest rate, and if you have a copy of the contract then you would have proof of it. They'll do everything they can to prevent you from obtaining it, unless you have some help. I would start by filing a complaint with the Better Business Bureau, because if they want to keep their reputation intact then they'll have to respond to your complaint. I would also contact the state consumer protection bureau (and/or the attorney general's office) in your state and ask them to look into the matter, and I would see if there are any local consumer watchdogs (local television stations are a good source for this) who can contact the lender on your behalf. Knowing they have so many people looking into this could bring enough pressure for them to give you what you're asking for and be more cooperative with you. As has been pointed out, keep a good, detailed written record of all your contacts with the lender and, as also pointed out, start limiting your contacts to written letters (certified, return receipt requested) so that you have documentation of your efforts. Companies like this succeed only because they prey on the fact many people either don't know their rights or are too intimidated to assert them. Don't let these guys bully you, and don't take \"\"no\"\" for an answer until you get what you're after. Another option might be to talk to a credit union or a bank (if you have decent credit) about taking out a loan with them to pay off the car so you can get this finance company out of your life.\"", "topk_rank": 0 }, { "id": "591604", "score": 0.7183761596679688, "text": "\"It doesn't matter if you give the check to the dealer or your friend. But under NO circumstances should you co-sign your friend's car loan. Since the money you are giving is a loan, I highly, highly recommend you do the following: Requiring a signed promissory note shows you are serious about getting paid back, and gives you some legal protections if you are not paid back. If you go to a random small claims court on any given day, you will witness at least a few cases where one person says, \"\"it was a gift!\"\" and the other says, \"\"it was a loan!\"\". With a promissory note, it's a loan, period. Prepare not to get paid back, even with the note. It happens all the time. Think about what you will do if your friend misses a payment to you or never repays the loan. Will you forgive or get legal and try to collect? Again, do NOT co-sign the loan.If you do, and your friend does not make car payments, you will be 100% responsible and the lender will take legal action against you to collect.\"", "topk_rank": 1 }, { "id": "346537", "score": 0.7181888818740845, "text": "Deposit check and send a personal check (resulting in tax and IRS reporting issues) That's a bad idea, unless maybe the check you're receiving is a certified bank draft. Suppose the insurance company are crooks and the check is fraudulent. It could take weeks or months for some investigation to catch up to that, long after your own personal check was cashed by the pharmacy. The bank will then put you on hook for the 20 grand by reversing the check, even though the funds had been deposited into your account. Do not put yourself into the position of a money handler; you don't have the cash base, insurance, government protection and whatever else that a bank has. And, of course, you're being a free money handler if you do that. (You're not even compensated for postage, time and whatnot). If you're handling money between two parties, you should collect a percentage, or else refuse. That percentage has to be in proportion to the risk, since cashing a check for someone carries a risk similar to (and is effectively a form of) making a loan.", "topk_rank": 2 }, { "id": "176383", "score": 0.7154562473297119, "text": "Checks are awesome things in that, even if it gets lost the money doesn't change hands until the check is cashed. I would highly recommend NOT signing a check over and putting it in the mail though. Essentially putting your signature on it is saying yes, pay to whomever. Theoretically acceptable, rarely a good idea. Call the insurance company and have them cancel current check to reissue to the correct people. Don't forget to write VOID (in huge letters) on the check before throwing away and/or tearing it up.", "topk_rank": 3 }, { "id": "536772", "score": 0.7117278575897217, "text": "You'd have to consult a lawyer in the state that the transaction took place to get a definitive answer. And also provide the details of the contract or settlement agreement. That said, if you clearly presented the check as payment (verbally or otherwise) and they accepted and cashed the check, and it cleared, you should have good legal standing to force them to finalize the payment. While they had every right to refuse the payment, and also every right to place a hold on the credit until the transaction cleared their bank, they don't have the right to simply claim the payment as a gift just because it came in a different form than they specified in the contract. Obviously this is a lesson learned on reading the fine print though. And, to be frank, it sounds like someone wants to make life difficult for you for whatever reason. And if that is the case I would refer back to my initial comment about contacting a lawyer in that state.", "topk_rank": 4 }, { "id": "267362", "score": 0.7116037607192993, "text": "Look up escheatment. Companies that have unclaimed property are supposed to send it to your State government. They should have a unclaimed property department of some sort. In short, the company is going to have to pay either you, or your State (In Your Name) so they have to pay it either way. It would be easier for them to just give you new check. Expect them to give you some grief in verifying it has not been cashed and such... but if you have the original, in hand, it shouldn't be too bad. A 'Lost' check may be harder to get replaced. Not a lawyer, don't want to be.", "topk_rank": 5 }, { "id": "160612", "score": 0.7069454193115234, "text": "\"The store owners don't know what your intentions are. All they know is they gave you good cash for a bad check. Part of this is that you're paying for the bad acts of others in the past, and these people aren't in the business of trying to understand your intentions. If you show good faith by going in and paying whatever you can, it will go a long way toward getting them to work with you on the balance. I don't know if they'd have much of a criminal case if the check you gave them was clearly marked as \"\"void\"\" and you've shown a willingness to resolve the situation. Of course you can't blame them for not wanting to accept another check from you. Good old hard cash, even if it isn't the full amount, will be a better sign of your intent to repay the debt.\"", "topk_rank": 6 }, { "id": "295355", "score": 0.7004103064537048, "text": "It is a legal issue for two reasons. In the United States if both names were on the title both people would have had to sign the paperwork in order to transfer the title. If the car was collateral for the loan, then the bank would have had to be involved in the transaction. The portion of the check need to repay the loan would have had to have been made out to the bank. If the car was sold to a dealership, then paperwork must have been forged. If the car was sold to a person then it is possible that they were too naive to know what paperwork was required, but it is likely still fraud. You need legal advice to protect your money, and your credit score. They should also be able to tell you who needs to be contacted: DMV, the police, the dealership, the bank.", "topk_rank": 7 }, { "id": "335800", "score": 0.7000606060028076, "text": "That’s what I was worried about. I just didn’t know if they would account for the fact i was married and had extra income to use to pay it back. (The reason for this loan is for an unexpected car repair )", "topk_rank": 8 }, { "id": "525851", "score": 0.6982534527778625, "text": "\"Probably she asked for some kind of registered delivery, someone asked her, \"\"what are the contents worth?\"\", in order to get a number to put into the insurance calculator, and she said \"\"$60000\"\". If that's true, meaning that if the letter goes astray, you can't get a new one issued, then yes you should insure it to the value of $60000 (or rather, since the insurance is so much, you should not post it at all. Your girlfriend could perhaps return it to her client and agree with them another way to transfer money). I'm also not sure what happens when a letter hits US customs with a declared value of $60000! However, it's probably not true. This is a check (or, if drawn on a bank here in the UK, a cheque), not a bearer bond. If it goes missing then (with some trouble and expense) she can almost certainly get another one issued. So the correct answer to \"\"what's this worth?\"\" is the cost of replacing it, not the amount of money that it instructs the bank to transfer. As for whether it'll cause a red flag for you, I'm afraid I don't know enough about US banking to say. Here in the UK there should be no problem with a cheque for that amount, unless one of the banks involved has reason to suspect money laundering or related financial crime, in which case they're required to report it. But if the cheque is from a non-US account and you're paying it into your US account, then maybe you need to make a customs declaration?\"", "topk_rank": 9 }, { "id": "248697", "score": 0.6976928114891052, "text": "Maybe there's more to this story, because as written, your sister seems, well, a little irrational. Is it possible that the bank will try to cheat you and demand that you pay a loan again that you've already paid off? Or maybe not deliberately cheat you, but make a mistake and lose track of the fact that you paid? Sure, it's POSSIBLE. But if you're going to agonize about that, what about all the other possible ways that someone could cheat you? What if you go to a store, hand over your cash for the purchase, and then the clerk insists that you never gave him any cash? What if you buy a car and it turns out to be stolen? What if you buy insurance and when you have a claim the insurance company refuses to pay? What if someone you've never met or even heard of before suddenly claims that you are the father of her baby and demands child support? Etc etc. Realistically, banks are fanatical about record-keeping. Their business is pretty much all about record-keeping. Mistakes like this are very rare. And a big business like a bank is unlikely to blatantly cheat you. They can and do make millions of dollars legally. Why should they break the law and risk paying huge fines and going to prison for a few hundred dollars? They may give you a lousy deal, like charge you outrageous overdraft fees and pay piddling interest on your deposit, but they're not going to lie about how much you owe. They just don't. I suggest that you not live your life in fear of all the might-be's. Take reasonable steps to protect yourself and get on with it. Read contracts before you sign, even if the other person gets impatient while you sit there reading. ESPECIALLY if the other person insists that you sign without reading. When you pay off a loan, you should get a piece of paper from the bank saying the loan has been paid. Stuff this piece of paper in a filing cabinet and keep it for years and years. Get a copy of your credit report periodically and make sure that there are no errors on it, like incorrect loan balances. I check mine once every year or two. Some people advise checking it every couple of months. It all depends how nervous you are and how much time you want to spend on it. Then get on with your life. Has your sister had some bad experience with loans in the past? Or has she never borrowed money and she's just confused about how it works? That's why I wonder if there's more to the story, if there's some basis for her fears.", "topk_rank": 10 }, { "id": "157496", "score": 0.6973719000816345, "text": "From your viewpoint you paying the dealer directly is better. You know that the check went to the dealer, and was used to purchase a car. If you give the check to your friend they may say I can't find the car I want this week, so I will purchase it next week but first let me by groceries and a new suit. I will replace the funds after my next paycheck. Next thing you know they are still short of funds. This might not happen, but it could. From your friends viewpoint getting a check from you allows them to potentially keep your part of the transaction out of view of the dealer/lender. In a mortgage situation the lender will take a look at your bank account to make sure there isn't a hidden loan, but I am not sure they do when they are approving a car loan. What you want to avoid is being a co-signer for the loan. As a co-signer you will be responsible for all payments; and missed payments will hurt your credit score.", "topk_rank": 11 }, { "id": "114231", "score": 0.696621835231781, "text": "\"You have to realize that you're trying to have your cake and eat it too. You want to do things \"\"unofficially\"\" by not reporting the accident (to insurance companies and/or police), but you want to do it \"\"officially\"\" in that you want to have legal recourse if they try to hit you up for more money. The only way to have it both ways is to trust the other person. From a financial perspective, ultimately you need to decide if the monetary cost of your raised insurance premiums, etc., outweighs the cost of whatever money the other party in the accident will try to squeeze out of you (factoring in the likelihood that they will do so). You also would need to factor in the likelihood that, rather than trying to scam you, they'll pursue legal action against you. In short, from a purely monetary perspective, if the legitimate cost of repairs is $700 and the cost to you of doing it by the book via insurance is $2000, you should be willing to be scammed for up to $1300, because you'll still come out ahead. Of course, there are psychological considerations, like whether someone unscrupulous enough to scam you will stop at $1300. But those numbers are the baseline for whatever outcome calculations you want to do. On the more qualitative side of things, it is possible they're trying to scam you, but also possible they're just trying to hustle you into doing everything quickly without thinking about it. They may not be trying to gouge you monetarily, they just want to pressure you so they get their money. I agree with other answerers here that the ideal way would be for them to send you an actual bill after repairs are complete. However, you could ask them to send you a written copy of the repair shop estimate, along with a written letter in which they state that they will consider payment of that amount to resolve the issue and won't pursue you further. The legal strength of that is dubious, but at least you have some documentation that you didn't just try to stiff them. If they won't give you some form of written documentation, I would read that as a red flag, bite the bullet, and contact your insurance company.\"", "topk_rank": 12 }, { "id": "325296", "score": 0.6958831548690796, "text": "\"First of all you do not \"\"co-sign a car\"\". I assume what you mean by this is that you co-signed a loan, and the money was used to buy a car. Once you signed that loan YOU OWED THE MONEY. Once a loan exists, it exists, and you will owe the money until the loan is paid. If you do not want to owe the money, then you need to pay back the money you borrowed. You may not think \"\"you\"\" borrowed the money because the car went to someone else. THE BANK AND THE COURTS DO NOT CARE. All they care about is that YOU signed the loan, so as far as they are concerned YOU owe the money and you owe ALL of the money to the bank, and the only way to change that is to pay the money back.\"", "topk_rank": 13 }, { "id": "405440", "score": 0.6954407095909119, "text": "Is this a USA bank to a USA bank transaction? If so, it will clear in one to two business days. Once cleared, the landlord cannot stop pay it. He can, however, dishonestly claim it was a fraudulent check and attempt a chargeback. If you want absolute certainty the money will not be recalled, go to the landlord's bank and cash the check as a non-customer. You will have to pay a small fee, but you will walk out with cash. I suggest you take a photocopy of the check, and staple your receipt to it as evidence that the check was cashed for any impending legal proceedings.", "topk_rank": 14 }, { "id": "399418", "score": 0.6946021318435669, "text": "\"Do not give them any money until you have a signed contract that releases your liability completely. It's imperative that this contract be drafted correctly. The contract needs proper consideration (money in exchange for release of liability), among other things. In other words, talk to a lawyer if you want to go this route. If you just cut them a check, there's nothing stopping them from taking your money and making an insurance claim anyway, or taking your money and then suing for \"\"whiplash\"\" or some other fake injury. The best way is just to go through insurance. It might cost a bit more, but you're covered in case they sue.\"", "topk_rank": 15 }, { "id": "376499", "score": 0.6943317651748657, "text": "The two banks involved may have different policies about honoring the check. It might not be written on the check. Your bank may decide that the stale check has to be treated differently and will withhold funds for a longer period of time before giving you access to the money. They will give time for the first bank to refuse to honor the check. They may be concerned about insufficient funds, the age of the check, and the fact that the original account could have been closed. If you are concerned about the age of the check. You could go to your bank in person, instead of using deposit by ATM, scanner, or smart phone. This allows you to talk to a knowledgeable person. And if they are going to treat the check differently or reject the check, they can let you know right away. The audit may not have been concerned about the fact that the check hadn't been cashed because when they did the audit the check was still considered fresh. Some companies will contact you eventually to reissue the check so you they can get the liability off their books. If the bank does refuse the check contact the company to see how you can get a replacement check issued. They may want proof the check can't be cashed so they don't have to worry about paying you twice.", "topk_rank": 16 }, { "id": "100936", "score": 0.6933314800262451, "text": "\"Concealing parts of a document in order to obtain a signature is illegal. The company committed signature forgery because they effectively modified the document after you signed it (i.e. unfolded the parts that were previously folded). I suggest that you go to your local police department to file a report, citing \"\"signature forgery\"\". Once you have the police report, call your bank's fraud department (not the general billing dispute line) and cite the police report right away, specifically calling out \"\"signature forgery\"\". I would be surprised if you don't get a favorable outcome.\"", "topk_rank": 17 }, { "id": "107224", "score": 0.6931526064872742, "text": "There's no reason for a chargeback, and you might get charged a fee for invalid chargeback or even sued by the insurance company. You need to always read the contract and see what the auto-renew policy is and what the local law on the issue is. It might be that you in fact approved that charge. In any case, since they agreed to refund, and within a reasonable period of time, your chargeback will be invalid. It is likely that by the time the chargeback is even processed by the bank, the refund will be there already.", "topk_rank": 18 }, { "id": "347242", "score": 0.6912498474121094, "text": "\"You get to keep the money if, and only if, you confirm with both parties (the loan and the mattress companies) that you received a refund twice, and both parties agree that they know that with no miscommunication, and they both agree to let you keep it. In writing. And even then it might be shifty depending on amounts. Generally speaking, you should not consider the money yours. It was refunded in error, after all. And it would have made more sense to confirm your communication before you deposited it, and you maybe shouldn't have moved it into savings, either - that looks kinda shifty, like keeping the money unavailable. Planning to keep it - or even just keep it \"\"till the shoe drops\"\" - looks an awful lot like fraud. As in, the crime. Taking or keeping money that doesn't belong to you, when you know it doesn't belong to you, is stealing. Since you know you got the payment in error, it is your responsibility to make at minimum a reasonable effort to make sure the money goes where it was intended to go - and by \"\"reasonable effort\"\" I mean roughly what kind of effort the companies should put in, in your view, if the error had worked out the other way with neither paying you back. At what point, if any, should they consider the money theirs, in the reversed situation? Depending on the amount involved, and the companies' attitudes, it is possible (not necessarily likely, but possible) that each company will hear your story, and respond (confirmed, in writing) that they have no problem letting you keep the payment from their company. In the companies' view, this might be about how much it would cost to recoup the amount (and is thus more likely for very small amounts), or else writing off the cost for customer service or PR. If both companies do this, you have the money free and clear. But I would not depend on this, companies have just as much reason to want money as you do - especially when belongs to them.\"", "topk_rank": 19 } ]
471	I started some small businesses but need help figuring out taxes. Should I hire a CPA?	[ { "id": "158122", "score": 0.7091107964515686, "text": "The only professional designations for people allowed to provide tax advice are Attorney, EA or CPA. Attorney and CPA must be licensed in the State they practice in, EA's are licensed by the Federal government. Tax preparers are not allowed to provide any tax advice, unless they hold any of these designations. They are only allowed to prepare your tax forms for you. So no, tax preparer is not a solution. Yes, you need to talk to a tax adviser (EA/CPA licensed in your State, you probably don't need a tax attorney). You should do that before you start earning money - so that you can plan properly and understand what expenses you can incur and how they're handled with regards to your future income tax payments. You might also want to consider a bookkeeping service (many EA/CPA offices offer the bookkeeping as well). But that you can also do yourself, not all that complicated if you don't have tons of transactions and accounts." }, { "id": "494625", "score": 0.7740213871002197, "text": "Certainly sounds worthwhile to get a CPA to help you with setting up the books properly and learning to maintain them, even if you do it yourself thereafter. What's your own time worth?" } ]	[ { "id": "207997", "score": 0.7043913006782532, "text": "You can ask the client to pay you through the LLC. In that case you should invoice them from the LLC and have them pay the invoice. If they pay you personally, you can always make a capital contribution to the LLC and use that money to buy equipment. The tax implications for a single person LLC providing professional services are the same for you either way: income is income whether it's from your LLC or an employer. It's different for the employer if they are giving you a W2 vs a 1099. So it doesn't matter much for you. If the LLC is buying equipment, make sure you get enough revenue through the LLC to at least offset those expenses.", "topk_rank": 0 }, { "id": "194899", "score": 0.7042182683944702, "text": "\"You can do either a 1099 or a W-2. There is no limitations to the number of W-2s one can have in reporting taxes. Problems occur, with the IRS, when one \"\"forgets\"\" to report income. Even if one holds only one job at a time, people typically have more than one W-2 if they change jobs within the year. The W-2 is the simplest way to go and you may want to consider doing this if you do not intend to work this side business into significant income. However, a 1099 gig is preferred by many in some situations. For things like travel expenses, you will probably receive the income from these on a 1099, but you can deduct them from your income using a Schedule C. Along these lines you may be able to deduct a wide variety of other things like travel to and from the client's location, equipment such as computers and office supplies, and maybe a portion of your home internet bill. Also this opens up different retirement contributions schemes such as a simplified employee pension. This does come with some drawbacks, however. First your life is more complicated as things need to be documented to become actual business expenses. You are much more likely to be audited by the IRS. Your taxes become more complicated and it is probably necessary to employee a CPA to do them. If you do this for primary full time work you will have to buy your own benefits. Most telling you will have to pay both sides of social security taxes on most profits. (Keep in mind that a good account can help you transfer profits to dividends which will allow you to be taxed at 15% and avoid social security taxes.) So it really comes down to what you see this side gig expanding into and your goals. If you want to make this a real business, then go 1099, if you are just doing this for a fes months and a few thousand dollars, go W-2.\"", "topk_rank": 1 }, { "id": "445846", "score": 0.7038590312004089, "text": "As 'anonymous' already mentioned, I think the correct answer is to go see an accountant. That said, if you are already have to fill in a tax return anyway (ie, you're already a high rate taxpayer) then I don't see why it should be an issue if you just told HMRC of your additional profit via your tax return. I never was in the situation of being employed with a side business in the UK, only either/or, but my understanding is that registering as self employed is probably more suitable for someone who doesn't PAYE already. I might be wrong on this as I haven't lived in the UK for a couple of years but an accountant would know the answer. Of course in either case, make sure that you keep each an every scrap of paper to do with your side business.", "topk_rank": 2 }, { "id": "413694", "score": 0.7034275531768799, "text": "\"The \"\"hire a pro\"\" is quite correct, if you are truly making this kind of money. That said, I believe in a certain amount of self-education so you don't follow a pro's advice blindly. First, I wrote an article that discussed Marginal Tax Rates, and it's worth understanding. It simply means that as your income rises past certain thresholds, the tax rate also will change a bit. You are on track to be in the top rate, 33%. Next, Solo 401(k). You didn't ask about retirement accounts, but the combined situations of making this sum of money and just setting it aside, leads me to suggest this. Since you are both employer and employee, the Solo 401(k) limit is a combined $66,500. Seems like a lot, but if you are really on track to make $500K this year, that's just over 10% saved. Then, whatever the pro recommends for your status, you'll still have some kind of Social Security obligation, as both employer and employee, so that's another 15% or so for the first $110K. Last, some of the answers seemed to imply that you'll settle in April. Not quite. You are required to pay your tax through the year and if you wait until April to pay the tax along with your return, you will have a very unpleasant tax bill. (I mean it will have penalties for underpayment through the year.) This is to be avoided. I offer this because often a pro will have a specialty and not go outside that focus. It's possible to find the guy that knows everything about setting you up as an LLC or Sole Proprietorship, yet doesn't have the 401(k) conversation. Good luck, please let us know here how the Pro discussion goes for you.\"", "topk_rank": 3 }, { "id": "175889", "score": 0.7031378149986267, "text": "They are already indirectly paying these expenses. They should be built into your rates. The amount per job or per hour needs to cover what would have been your salary, plus the what would have been sick, vacation, holidays, health insurance, life insurance, disability, education, overhead for office expenses, cost of accountants...and all taxes. In many companies the general rule of thumb is that they need to charge a customer 2x the employees salary to cover all this plus make a profit. If this is a side job some of these benefits will come from your main job. Some self employed get some of these benefits from their spouse. The company has said we give you money for the work you perform, but you need to cover everything else including paying all taxes. Depending on where you live you might have to send money in more often then once a year. They are also telling you that they will be reporting the money they give you to the government so they can claim it as a business expense. So you better make sure you report it as income.", "topk_rank": 4 }, { "id": "222726", "score": 0.7031077146530151, "text": "\"What is the right way to handle this? Did you check the forms? Did the form state $0 tax due on the FTB LLC/Corp form (I'm guessing you operate as LLC/Corp, since you're dealing with the Franchise Tax)? The responsibility is ultimately yours. You should cross check all the numbers and verify that they're correct. That said, if the CPA filled the forms incorrectly based on your correct data - then she made a mistake and can be held liable. CPA filing forms from a jurisdiction on the other end of the country without proper research and knowledge may be held negligent if she made a grave mistake. You can file a law suit against the CPA (which will probably trigger her E&O insurance carrier who'll try to settle if there's a good chance for your lawsuit to not be thrown away outright), or complain to the State regulatory agency overseeing CPAs in the State of her license. Or both. Am I wrong for expecting the CPA should have properly filled out and filed my taxes? No, but it doesn't shift the responsibility from you. How can I find out if the CPA has missed anything else? Same as with doctors and lawyers - get a second opinion. Preferably from a CPA licensed in California. You and only you are responsible for your taxes. You may try to pin the penalties and interest on the CPA if she really made a mistake. California is notorious for very high LLC/Corp franchise tax (cost of registering to do business in the State). It's $800 a year. You should have read the forms and the instructions carefully, it is very prominent. It is also very well discussed all over the Internet, any search engine would pop it up for you with a simple \"\"California Franchise Tax for LLC/Corp\"\" search. CA FTB is also very aggressive in assessing and collecting the fee, and the rules of establishing nexus in CA are very broad. From your description it sounds like you were liable for the Franchise tax in CA, since you had a storage facility in CA. You may also be liable for sales taxes for that period.\"", "topk_rank": 5 }, { "id": "347723", "score": 0.7030200362205505, "text": "\"I don't see why you would need an \"\"international tax specialist\"\". You need a tax specialist to give you a consultation and training on your situation, but it doesn't seem too complicated to me. You invoice your client and get paid - you're a 1099 contractor. They should issue you a 1099 at the end of the year on everything they paid you. Once you become full-time employee - you become a W2 employee and will get a W2 at the end of the year on the amounts paid as such. From your perspective there's nothing international here, regular business. You have to pay your own taxes on the 1099 income (including SE taxes), they have to withhold taxes from your W2 income (including FICA). Since they're foreign employers, they might not do that latter part, and you'll have to deal with that on your tax return, any decent EA/CPA will be able to accommodate you with that. For the employer there's an issue of international taxation. They might have to register as a foreign business in your state, they might be liable for some payroll taxes and State taxes, etc etc. They might not be aware of all that. They might also be liable (or exempt) for Federal taxes, depending on the treaty provisions. But that's their problem. Your only concern is whether they're going to issue you a proper W2 and do all the withholdings or not when the time comes.\"", "topk_rank": 6 }, { "id": "408112", "score": 0.7029380798339844, "text": "\"Thinking about the business overall, your \"\"profit\"\" would be: Since this is a sole proprietorship, the taxes are going to depend on your marginal tax rate. If you file jointly, your income will determine what your marginal tax rate is. If you file separately, there likely wouldn't be any tax on that income since it's less than the standard deduction, but you lose benefits of filing jointly (combined exemptions, etc.) So think about how much she would charge, what expenses are involved (before taxes), what the taxes would be on that profit, and what the \"\"opportunity costs\"\" are - is it worth time away from the kids/hobbies/etc. for that hobby? How much should a hobby business make to make it worth the effort of charging for such services? That would fall in the \"\"expense\"\" section. Are you talking about the actual costs (tax prep, etc.) or just the hassle of collecting, accounting, etc. Certainly those are a consideration but it's harder to quantify that. If you can come up with some sort of cost then certainly it would fit in the overall value equation. I'm not sure using additional Social Security benefits as a gauge is helpful, since you wouldn't see those benefits until you're of retirement age (according to SS) and a lot can happen between now and then.\"", "topk_rank": 7 }, { "id": "141511", "score": 0.702599048614502, "text": "Largely it comes down to the complexity of your return (likely relatively simple if it's your first time filing) and your comfort level with using software. More complex returns would include filing business claims, handling stocks and investments, special return forms, etc. One benefit to most of the software options out there such as TurboTax, HR Block, and Tax Slayer, are that they are free to use and you only pay when you're ready to file. You could give them a shot to see how easy/difficult they are and if you feel overwhelmed, then contact a CPA (whose time won't be free). Also remember that those HR Block seasonal places that open up are not CPA's, but are temps hired and trained to use the software that you would find online. You didn't indicate they were an option, but I like to point that out to those who might not know otherwise. My opinion would be to use one of the online options because of cost and their ease of use. They also allow you to take your time and save your progress, so you can start using it and go ask questions/do research on your own time.", "topk_rank": 8 }, { "id": "254151", "score": 0.7023176550865173, "text": "\"If you receive a 1099-MISC from YouTube, that tells you what they stated to the IRS and leads into most tax preparation software guided interviews or wizards as a topic for you to enter. Whether or not you have a 1099-MISC, this discussion from the IRS is pertinent to your question. You could probably elect to report the income as a royalty on your copyrighted work of art on Schedule E, but see this note: \"\"In most cases you report royalties in Part I of Schedule E (Form 1040). However, if you ... are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040).\"\" Whether reporting on Schedule E or C is more correct or better for your specific circumstances is beyond the advice you should take from strangers on the internet based on a general question - however, know that there are potentially several paths for you. Note that this is revenue from a business, so if you paid for equipment or services that are 100% dedicated to your YouTubing (PC, webcam, upgraded broadband, video editing software, vehicle miles to a shoot, props, etc.) then these are a combination of depreciable capital investments and expenses you can report against the income, reducing the taxes you may owe. If the equipment/services are used for business and personal use, there are further guidelines from the IRS as to estimating the split. These apply whether you report on Sch. E, Sch. C, or Sch C-EZ. Quote: \"\"Self-Employment Income It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income. All income earned through the taxpayer’s business, as an independent contractor or from informal side jobs is self-employment income, which is fully taxable and must be reported on Form 1040. Use Form 1040, Schedule C, Profit or Loss from Business, or Form 1040, Schedule C-EZ, Net Profit from Business (Sole Proprietorship) to report income and expenses. Taxpayers will also need to prepare Form 1040 Schedule SE for self-employment taxes if the net profit exceeds $400 for a year. Do not report this income on Form 1040 Line 21 as Other Income. Independent contractors must report all income as taxable, even if it is less than $600. Even if the client does not issue a Form 1099-MISC, the income, whatever the amount, is still reportable by the taxpayer. Fees received for babysitting, housecleaning and lawn cutting are all examples of taxable income, even if each client paid less than $600 for the year. Someone who repairs computers in his or her spare time needs to report all monies earned as self-employment income even if no one person paid more than $600 for repairs.\"\"\"", "topk_rank": 9 }, { "id": "177074", "score": 0.7016905546188354, "text": "\"If you use \"\"a room or other separately identifiable space\"\" within your apartment exclusively for your business, then you might be able to recoup a fraction of your rent for that. Check the rules for home office at the IRS and adopt a consistent and well-documented approach. (I would pay your full rent out of your personal account, and then do an \"\"expense report\"\" for the portion that's legitimately business related, but that's not a unique approach.) Other than that, I agree with the answer by litteadv - You cannot reduce your tax by the full amount of your rent just by having the S Corp pay, and trying to do so is probably playing with fire. Generally speaking, don't comingle business and personal expenses like that.\"", "topk_rank": 10 }, { "id": "218460", "score": 0.7012803554534912, "text": "\"This may be closed as not quite PF, but really \"\"startup\"\" as it's a business question. In general, you should talk to a professional if you have this type of question, specifics like this regarding your tax code. I would expect that as a business, you will use a proper paper trail to show that money, say 1000 units of currency, came in and 900 went out. This is a service, no goods involved. The transaction nets you 100, and you track all of this. In the end you have the gross profit, and then business expenses. The gross amount, 1000, should not be the amount taxed, only the final profit.\"", "topk_rank": 11 }, { "id": "185626", "score": 0.7008641958236694, "text": "If thinking about it like a business you normally only pay taxes on Net income, not gross. So Gross being all the money that comes in. People giving you cash, checks, whatever get deposited into your account. You then pay that out to other people for services, advertisement. At the end of the day what is left would be your 'profit' and you would be expected to pay income tax on that. If you are just an individual and don't have an LLC set up or any business structure you would usually just have an extra page to fill out on your taxes with this info. I think it's a schedule C but not 100%", "topk_rank": 12 }, { "id": "283396", "score": 0.7005608081817627, "text": "Enrolled Agents typically specialize only in tax matters. Their status allows them to represent clients before the IRS (which a CPA can also do) See the IRS site regarding Enrolled Agents Their focus is much narrower than a CPA and you would only hire them for advice or representation with tax related matters. (e.g. you'd not hire an enrolled agent to do an external audit) A CPA is a much broader certification, covering accounting in general, of which taxes are only a portion. A CPA may or may not specialize in tax matters, so if you have a tax related issue, especially an audit, review or appeal, you may want to query a prospective CPA as to their experience with tax matters and representing clients, appeals, etc. You would likely be better off with an EA than a CPA who eschews tax work and specializes in other things such as financial auditsOn the other hand if you have need of advice that is more generalized to accounting, audits, etc then you'd want to talk with a CPA as opposed to an EA", "topk_rank": 13 }, { "id": "267158", "score": 0.7002612352371216, "text": "\"The issues are larger than taxes. If one of you receives the check, then breaks off 25% of it for themselves and sends three checks out to each of you that will be indicated on that person's taxes. You three will then all recognize your portion of the income on your taxes and it's all settled. It's no big deal, it's a bit rag-tag but it'll get the job done. I've done little ad-hoc partnership work with people this way and it's not a problem. This is why you should really be more formal. What if this entity contracting you guys sues you? Who has the liability, if only one of you was paid? What if the money is sent to one of you and that person dies before paying you? What if you all get another client? What if this contracting entity has another project? The partnership needs to have the liability. The partnership needs to receive the money. The partnership needs to be named on whatever contract you all sign. The partnership can be a straight partnership, or maybe the four of you take a 25% stake in an LLC or Inc arrangement. Minimally, you should sit down with your partners so everyone knows everyone else's responsibilities, and you should write it all down. It probably sounds like overkill, and I'm sure your partners are you buddies and \"\"we're tight and nothing bad could come between us.\"\" I've done some partnership work with more than one friend, we've always been fine. Some ventures are successful, some aren't; I'm still very good friends with all of them. Writing things down manages expectations and when money starts moving around, everyone is happier when everyone has a solid expectation of who gets what.\"", "topk_rank": 14 }, { "id": "192726", "score": 0.6999994516372681, "text": "\"Basically, yes. Don't use your business account for personal spending because it may invalidate your limited liability protection. Transfer a chunk of money to your personal account, write it down in your books as \"\"distribution\"\" (or something similar), and use it in whatever way you want from your personal account. The IRS doesn't care per se, but mixing personal and business expenses will cause troubles if you're audited because you'll have problems distinguishing one from another. You should be using some accounting software to make sure you track your expenses and distributions correctly. It will make it easier for you to prepare reports for yourself and your tax preparer, and also track distributions and expenses. I suggest GnuCash, I find it highly effective for a small business with not so many transactions (if you have a lot of transactions, then maybe QuickBooks would be more appropriate).\"", "topk_rank": 15 }, { "id": "75195", "score": 0.6999984979629517, "text": "I have a very similar situation doing side IT projects. I set up an LLC for the business, created a separate bank account, and track things separately. I then pay myself from the LLC bank account based on my hours for the consulting job. (I keep a percentage in the LLC account to pay for expenses.) I used to do my taxes myself, but when I created this arrangement, I started having an accountant do them. An LLC will not affect your tax status, but it will protect you from liability and make things more accountable come tax time.", "topk_rank": 16 }, { "id": "2020", "score": 0.699611485004425, "text": "\"The founders almost certainly owe tax on the \"\"income\"\" represented by the rent they aren't being charged. It isn't clear whether the corporation also owes income tax on the rent it is not receiving back from them. You definitely want advice from a paid tax accountant, not least because that helps protect everyone should this arrangement be challenged.\"", "topk_rank": 17 }, { "id": "429785", "score": 0.6991605758666992, "text": "Hey there...You asked me earlier to take a look at this.I will send you later, when I get home a small plan that helped me a lot when I opened my bar, with a lot of nice things that you should be careful...And tbh I don't think a degree is that important.They will teach you how to manage a business in general, you will only use just a small percent from that knowledge...You can learn a lot of things strictly for managing a bar/restaurant by yourself, from books and internet...For me experience was very important (I was a bartender for 4 years, my brother was a waiter)...In 4 years we learned almost everything that we needed.The taxes should be made by an accountant (Here in Europe every company needs an accountant, this is the law.) Where do you live and what age are you ?", "topk_rank": 18 }, { "id": "107817", "score": 0.6991593241691589, "text": "You should look into an LLC. Its a fairly simple process, and the income simply flows through to your individual return. It will allow you to deduct supplies and other expenses from that income. It should also protect you if someone sues you for doing shoddy work (even if the work was fine), although you would need to consult a lawyer to be sure. For last year, it sounds like your taxes were done wrong. There are very, very few ways that you can end up adding more income and earning less after taxes. I'm tempted to say none, but our tax laws are so complex that I'm sure you can do it somehow.", "topk_rank": 19 } ]
472	Is Mint allowed to share user data with other Intuit entities?	[ { "id": "337071", "score": 0.8234263062477112, "text": "I wound up asking Mint over email so I'll share the answer I received: Thank you for contacting Mint.com. From my understand you want to know if Mint can transfer data to other Intuit products and vice versa. Let me address your concern based from what I can see on my tools. Upon confirming, while Mint and other Intuit products are under the same company, Mint.com is not yet integrated to other Intuit products. We’d like to thank you though for giving the idea to us. With this, we would know which future enhancements will our customers appreciate. We have forwarded your request/suggestion to our Product and Development team for their review. At this time though, we can't make any guarantee that your request/suggestion will get implemented as we must balance customer demand with resources and business objectives. Oops..." } ]	[ { "id": "430605", "score": 0.7540388107299805, "text": "Mint is only an organizer of information that is actually aggregated by different services. Currently data aggregation for mint is being done by Yodlee and also by Intuit's own aggregation service.", "topk_rank": 0 }, { "id": "173649", "score": 0.676240861415863, "text": "So could someone working at your bank directly. Of at your HR department at work. Most of the wait staff at the restaurant I ate at technically had access to my credit card and could steal money. While you are at work, someone could break into your house and steal your stuff too. The point is, Mint and everything else is a matter of the evaluating the risk. Since you already understand the vulnerability (they have your accounts) and you know the risk (they could steal your money) what are the chances it happens? 1.) Mint will make lots more money if it doesn't happen, so it benefits Intuit to pay their employees well and put in safeguards to prevent theft. Mint.com is on your side even if a specific employee isn't. 2.) You have statements and such, so you can independently evaluate mint. I do not just trust mint with my stuff, I check info in Quicken and at the bank sites themselves. I don't do them all equally, but I will catch problems. 3.) Laws mean that if theft happens, you will have the opportunity to be made whole. If you are worried about theft, don't trust other people or generally get a bad feeling, don't do it. If you check your accounts online with the same computer you log into Facebook with, them I would suggest it doesn't bother you. You might have legal or business reasons to be more adverse to risk then me. However, just because somebody could steal your money, I personally don't consider it an acceptable risk compared to the reward. I will also be one of the first people to be robbed, I am not unrealistic.", "topk_rank": 1 }, { "id": "169008", "score": 0.6743669509887695, "text": "Yodlee's Moneycenter is the system that powered Mint.com before Intuit bought them. It works great for managing accounts in a similar fashion to Mint. They have a development platform that might be worth checking out.", "topk_rank": 2 }, { "id": "345242", "score": 0.6697889566421509, "text": "There is a possibility of misuse. Hence it should be shared judiciously. Sharing it with large / trusted organization reduces the risk as there would be right process / controls in place. Broadly these days PAN and other details are shared for quite a few transactions, say applying for a Credit Card, Opening Bank Account, Taking a Phone connection etc. In most of the cases the application is filled out and processed by 3rd party rather than the service provider directly. Creating Fake Employee records is a possibility so is the misuse to create a fake Bank account in your name and transact in that account. Since one cannot totally avoid sharing PAN details to multiple parties... It helps to stay vigilant by monitoring the Form 26AS from the Govt website. Any large cash transactions / additional salary / or other noteworthy transactions are shown here. It would also help to monitor your CIBIL reports that show all the Credit Card and other details under your name.", "topk_rank": 3 }, { "id": "425738", "score": 0.666846752166748, "text": "\"We use mint for just that. We have a \"\"shared\"\" account. We each have the mobile app and share the same pin for the application (not our phones -- you can set a pin in the settings on the application). Thus we each share a login to the site, where we have setup all of our accounts. In the \"\"Your Profile\"\" link at the top of the page, you may select the Email & Alerts option. From here you may add a second e-mail account. This way if you go over a budget or have a bill upcoming each of you will get a notification. We have setup budgeting through the web site, and either of us can modify the budget via logging in.\"", "topk_rank": 4 }, { "id": "195584", "score": 0.6668350100517273, "text": "The reason people like Mint is because it allows you to see all of your financial details in one place. When you create an account, you’re able to link all of your bank accounts, credit cards, and investment accounts. This linking enables Mint to update your transactions automatically. The catch is that you have to provide the username and password you use for each one, which can certainly make you feel jittery if you’re worried about a security breach. Mint is designed to be a read-only service, which means you can’t transfer money back and forth between accounts. If someone were to get their hands on your Mint login, all they’d be able to do is view your balances and transactions. Your full account numbers aren’t displayed, nor are your bank account or credit card usernames and passwords. The only thing that would be visible would be your email address. If a hacker was interested in taking things a step further, there’s always the possibility that they could physically steal the information from Mint’s secure servers – but that’s really a long shot. That would require knowing where the servers are located, bypassing the physical security measures that are in place, and cracking the code on how the data is encrypted. If that were to happen, then your personal information might be at risk, but so far, there’s no record of it being attempted. I was very skeptical of Mint and how secure it truly was. I did my fair share of research. Try looking at:", "topk_rank": 5 }, { "id": "480924", "score": 0.6481472849845886, "text": "There isn't one. I haven't been very happy with anything I've tried, commercial or open source. I've used Quicken for a while and been fairly happy with the user experience, but I hate the idea of their sunset policy (forced upgrades) and using proprietary format for the data files. Note that I wouldn't mind using proprietary and/or commercial software if it used a format that allowed me to easily migrate to another application. And no, QIF/OFX/CSV doesn't count. What I've found works well for me is to use Mint.com for pulling transactions from my accounts and categorizing them. I then export the transaction history as a CSV file and convert it to QIF/OFX using csv2ofx, and then import the resulting file into GNUCash. The hardest part is using categories (Mint.com) and accounts (GnuCash) properly. Not perfect by any means, but certainly better than manually exporting transactions from each account.", "topk_rank": 6 }, { "id": "584450", "score": 0.6470969915390015, "text": "\"On mint, you can create your own tags for transactions. So, you could create a tag called \"\"reviewed\"\" and tag each transaction as reviewed once you review it. I've done something similar to this called \"\"reimbursable expense\"\" to tag which purchases I made on behalf of someone else who is going to pay me back.\"", "topk_rank": 7 }, { "id": "162159", "score": 0.6436517834663391, "text": "\"I use the (gratis, libre) command-line program ledger for my personal accounts. It handles funds across accounts gracefully, through a feature called \"\"Virtual Accounts\"\". A transaction can add or subtract money from a virtual account, which need not balance with all the other entries in the transaction. Then it's just a matter of setting up reports to include or exclude these accounts.\"", "topk_rank": 8 }, { "id": "282456", "score": 0.6431622505187988, "text": "\"Some banks allow mint.com read-only access via a separate \"\"access code\"\" that a customer can create. This would still allow an attacker to find out how much money you have and transaction details, and may have knowledge of some other information (your account number perhaps, your address, etc). The problem with even this read-only access is that many banks also allow users at other banks to set up a direct debit authorization which allows withdrawals. And to set the direct debit link up, the main hurdle is to be able to correctly identify the dates and amounts of two small test deposit transactions, which could be done with just read-only access. Most banks only support a single full access password per account, and there you have a bigger potential risk of actual fraudulent activity. But if you discover such activity and report it in a timely manner, you should be refunded. Make sure to check your account frequently. Also make sure to change your passwords once in a while.\"", "topk_rank": 9 }, { "id": "540619", "score": 0.6412481665611267, "text": "With Mint you are without a doubt telling a third party your username and password. If mint gets compromised, or hires a bad actor, technically there isn't anything to stop shenanigans. You simply must be vigilant and be aware of your rights and the legal protections you have against fraud. For all the technical expertise and careful security they put in place, we the customers have to know that there is not, nor will there ever be, a perfectly secure system. The trade off is what you can do for the increased risk. And when taken into the picture of all the Other* ways you banking information is exposed, and how little you can do about it, mint.com is only a minor increase in risk in my opinion. *See paypal, a check's routing numbers, any e-commerce site you shop at, every bank that has an online facing system, your HR dept's direct deposit and every time you swipe your debit / credit card somewhere. These are all technically risks, some of which are beyond your control to change. Short of keeping your money in your mattress you can't avoid risk. (And then your mattress catches fire.)", "topk_rank": 10 }, { "id": "151185", "score": 0.6401723623275757, "text": "http://www.mint.com attaches to all your accounts and lists all your transactions. I love it.", "topk_rank": 11 }, { "id": "177946", "score": 0.6399441361427307, "text": "\"I think the \"\"right\"\" way to approach this is for your personal books and your business's books to be completely separate. You would need to really think of them as separate things, such that rather than being disappointed that there's no \"\"cross transactions\"\" between files, you think of it as \"\"In my personal account I invested in a new business like any other investment\"\" with a transfer from your personal account to a Stock or other investment account in your company, and \"\"This business received some additional capital\"\" which one handles with a transfer (probably from Equity) to its checking account or the like. Yes, you don't get the built-in checks that you entered the same dollar amount in each, but (1) you need to reconcile your books against reality anyway occasionally, so errors should get caught, and (2) the transactions really are separate things from each entity's perspective. The main way to \"\"hack it\"\" would be to have separate top-level placeholder accounts for the business's Equity, Income, Expenses, and Assets/Liabilities. That is, your top-level accounts would be \"\"Personal Equity\"\", \"\"Business Equity\"\", \"\"Personal Income\"\", \"\"Business Income\"\", and so on. You can combine Assets and Liabilities within a single top-level account if you want, which may help you with that \"\"outlook of my business value\"\" you're looking for. (In fact, in my personal books, I have in the \"\"Current Assets\"\" account both normal things like my Checking account, but also my credit cards, because once I spend the money on my credit card I want to think of the money as being gone, since it is. Obviously this isn't \"\"standard accounting\"\" in any way, but it works well for what I use it for.) You could also just have within each \"\"normal\"\" top-level placeholder account, a placeholder account for both \"\"Personal\"\" and \"\"My Business\"\", to at least have a consistent structure. Depending on how your business is getting taxed in your jurisdiction, this may even be closer to how your taxing authorities treat things (if, for instance, the business income all goes on your personal tax return, but on a separate form). Regardless of how you set up the accounts, you can then create reports and filter them to include just that set of business accounts. I can see how just looking at the account list and transaction registers can be useful for many things, but the reporting does let you look at everything you need and handles much better when you want to look through a filter to just part of your financial picture. Once you set up the reporting (and you can report on lists of account balances, as well as transaction lists, and lots of other things), you can save them as Custom Reports, and then open them up whenever you want. You can even just leave a report tab (or several) open, and switch to it (refreshing it if needed) just like you might switch to the main Account List tab. I suspect once you got it set up and tried it for a while you'd find it quite satisfactory.\"", "topk_rank": 12 }, { "id": "350344", "score": 0.6363489031791687, "text": "Whether or not I trust them depends entirely on the personal finance application. In the cases of Mint and Quicken, I would trust both. Always make sure to do plenty of research before submitting any personal information to any source.", "topk_rank": 13 }, { "id": "220972", "score": 0.6362065076828003, "text": "You might check out Thrive. They're almost a carbon copy of Mint from the last I checked, but with some additional and (I think) more useful metrics. For instance, they seemed to help more to plan for future expenses in addition to keeping tabs on individual budgets the way Mint does. Everything is automated in the same way as Mint, though I'm not sure their breadth is as far-reaching now since Mint was bought out by Intuit. Nevertheless, whenever I've had a question on Thrive, I shoot it to the devs and I get a very personal and courteous response within the day. So it depends on what you're looking for: Mint can almost guarantee any US bank will be accessible through their site, however Thrive will work much harder to gain your favor.", "topk_rank": 14 }, { "id": "442591", "score": 0.6356365084648132, "text": "You can use www.mint.com for most of your requirements. It works great for me, it's free and I'd say is secure. Hosting that kind of service just for your will be time-consuming and not necessarily more secure than most of the stuff that is readily available out there. Good luck.", "topk_rank": 15 }, { "id": "400532", "score": 0.6352815628051758, "text": "\"Generally not. Since authorized user cards are the same account and the difference between the two (the original and the AU card) are minimal. Note, there's nothing technically stopping banks from offering this as a feature, two cards do have identifiers that indicate they're separate cards, but the banks concern for your needs stops at how much they can bleed from you, and \"\"helping you control your spending\"\" is not part of that.\"", "topk_rank": 16 }, { "id": "559333", "score": 0.6347681879997253, "text": "Yodlee is the back-end which communicates with the banks, and Mint just provide a pretty layer on top. You can sign up for an account with Yodlee directly, which may give you the flexibility you need.", "topk_rank": 17 }, { "id": "529790", "score": 0.6344530582427979, "text": "Buxfer is a personal-finance web app which you might like. It's not open-source. But at least none of your complaints about financeworks.intuit.com apply to Buxfer. Buxfer offers a piece of software you can download to your own PC, called Firebux. This macro-recording software provides automation that helps you download statements and upload them to Buxfer. So you never have to give Buxfer any of your bank or brokerage usernames or passwords. Buxfer and Firebux are both free of charge. Wesabe, another personal-finance web app, also used to offer data-uploader software, but Wesabe has now gone out of business.", "topk_rank": 18 }, { "id": "428978", "score": 0.6332670450210571, "text": "They have recently launched an iphone app 'Billguard' in UK which does accounts aggregation which is similiar to mint.com. You can also use try 'Ontrees' iphone app which is another account aggregation software. I am using Yodlee Money center Website for past 4 years which support lot of bank internationally including all major UK banks and creditcards.", "topk_rank": 19 } ]
473	Financially Shielded Entity Separating Individuals Behind It From Risks	[ { "id": "466037", "score": 0.7464879155158997, "text": "You are describing a corporation. You can set up a corporation to perform business, but if you were using the money for any personal reasons the courts could Pierce the corporate veil and hold you personally liable. Also, setting up a corporation for purely personal reasons is fraud." } ]	[ { "id": "191326", "score": 0.7034497857093811, "text": "I wonder if there are times (like when BofA bought Merrill) when it might be alright to not disclose everything right away. Particularly if what needs to be disclosed are losses and the government has told you that they'd cover them.", "topk_rank": 0 }, { "id": "112987", "score": 0.7009406685829163, "text": "I strongly doubt that being executor will make the assets of the estate vulnerable to a suit against him personally. The estate is it's own separate legal entity with its own TIN. Only creditors against the estate itself can make claims against it and after all creditors are paid, then the balance is distributed in accordance with the terms of the will. Unless he has commingled assets and treated estate assets as his own, the legal separation should be quite strong. Whether his personal assets are at risk, remember that the opposition will likely overstate their case to try to scare him into settling. If the business was organized as an LLP or LLC, his personal assets should be pretty safe. If it was a sole proprietorship, he has occasion to worry.", "topk_rank": 1 }, { "id": "440061", "score": 0.6996579170227051, "text": "It appears to me that the tax code gives significant advantages to being a corporation as opposed to being a person due to the relative ease of legal tax avoidance. As an individual, avoiding taxes is much harder than it is for a corporation. I mean, why can't I claim my deficit last year as an operating loss and use it to offset my taxes? I mean suppose I had to borrow money to afford food, that's pretty vital to my business (staying alive) operations. Why can't I offset my income with my borrowing like a corporation can?", "topk_rank": 2 }, { "id": "500419", "score": 0.6986081600189209, "text": "A service provider that prevents competition by making it illegal to compete. Every other insurance program allows you to opt out. And i wouldnt consider it protection when they stick there dick into everyone elses business. Every gang or mafia claims to protect those it shakes down. Edit.. Just because you wear a brown shirt doesnt make you a righteous person.", "topk_rank": 3 }, { "id": "508734", "score": 0.6968044638633728, "text": "\"This doesn't answer your question, but as an aside, it's important to understand that your second and third bullet points are completely incorrect; while it used to be true that Swiss bank accounts often came with \"\"guarantees\"\" of neutrality and privacy, in recent years even the Swiss banks have been caving to political pressure from many sides (especially US/Obama), with regards to the most extreme cases of criminals. That is to say, if you're a terrorist or a child molester or in possession of Nazi warcrime assets, Swiss banks won't provide the protection you're interested in. You might say \"\"But I'm not a terrorist or a pervert or profiteering of war crimes!\"\" but if you're trying so hard to hide your personal assets, it's worth wondering how much longer until Swiss banks make further concessions to start providing information on PEOPLE_DOING_WHAT_YOU_ARE_DOING. Not to discourage you, this is just food for thought. The \"\"bulletproof\"\" protection these accounts used to provide has been compromised. I work with online advertising companies, and a number of people I know in the industry get sued on a regular basis for copyright or trademark infringement or spamming; most of these people still trust Swiss bank accounts, because it's still the best protection available for their assets, and because Swiss banks haven't given up details on someone for spamming... yet.\"", "topk_rank": 4 }, { "id": "100655", "score": 0.6964206099510193, "text": "\"If your meaning of \"\"asset protection\"\" is buying gold and canned food in the name of a Nevada LLC because some radio guy said so, bad idea. For a person, if you have assets, buy appropriate liability limits with your homeowner/renter insurance policy or purchase an \"\"umbrella\"\" liability policy. This type of insurance is cheap. If you don't have assets, it may not be worth the cost of insuring yourself beyond the default limits on your renter's or homeowner's policy. If you have a business, you need to talk to your insurance agent about what coverage is appropriate for the business as a whole vs. you personally. You also need to talk to your attorney about how to conduct yourself so that your business interests are separated from your personal interests.\"", "topk_rank": 5 }, { "id": "390015", "score": 0.6926652193069458, "text": "I'd have a good look at how much anonymity an LLC offers in your state - as far as I'm aware this varies from state to state. Out here in NV an LLC owner's privacy is supposedly fairly well protected, but in other states, not quite as much. Also keep in mind that while the LLC offers some protection (and I'm a big advocate of this sort of structure if you're taking larger risks that might have a big impact on your overall personal finances), this might not apply to financing. A lot of banks tend to require an LLC's owner to guarantee loans to an LLC once they go over a certain amount or even in general. Do some research in this area because the LLC would be worth less as a protective shield to you if you're on the hook for the full amount of the loans anyway.", "topk_rank": 6 }, { "id": "551315", "score": 0.6911448240280151, "text": "If the business is legally separated and not commingled - they probably cannot. What they can do is put a lien on it (so that you cannot sell the business) and garnish your income. If the corporate veil is pierced (and its not that hard to have it pierced if you're not careful) - then they can treat it as if it is your personal asset. Verify this with a lawyer licensed in your state, I'm not a lawyer or a tax professional.", "topk_rank": 7 }, { "id": "282512", "score": 0.6909141540527344, "text": "That is not an effective strategy for hiding assets. If you own any stake in those corporations, the attorney can target that ownership interest. If you don't have any ownership interest in those companies, then you're just like any other American dealing with other companies - no one expects to get a judgment against their adversary's apartment complex.", "topk_rank": 8 }, { "id": "382400", "score": 0.6908101439476013, "text": "Operate a business which can incur its own liabilities and pay its own debts. If the corporate entity is used recklessly, incurring debits you know it cannot pay, using it for fraudulent purposes, co-mingling company funds with your own, etc., then creditors can come after your personal assets", "topk_rank": 9 }, { "id": "551756", "score": 0.6900116205215454, "text": "This probably would not stand up in court, but seeing as businesses do not have the same collection protection rights as consumers, it could be a very costly mess to disentangle yourself from. Operations like this are like whack-a-mole, they're ridiculously easy for someone to set up and very hard to take down.", "topk_rank": 10 }, { "id": "309395", "score": 0.689581573009491, "text": "Insurance isn't a product designed to protect against financial loss. The product is designed to allow people to pay a small fee (the premium) for peace of mind. This allows the insured to feel as if their purchase was worthy (they see the potential of loss as a concern and the premiums small enough to allow them to not worry about having a loss). Insurance companies will then seek out insurable risks where the perceived losses far out weight the actual losses (risk assessment). So, you answer is that your friends are paying for peace of mind.", "topk_rank": 11 }, { "id": "591495", "score": 0.68644118309021, "text": "\"Your 401K (and IRA) is a legally distinct entity from yourself. In fact, it is a \"\"trust,\"\" and your Administrator is a \"\"trustee,\"\" while you are both creator and benefactor. This fact, and the 10% early withdrawal penalty, makes it immune from most judgments. The IRS can \"\"levy\"\" your 401K or IRA for back taxes, but must waive the 10% penalty (under the 1997 Tax Reform law). That gives them the power to do what most others can't. A \"\"tricky\"\" banker may persuade you to take money out of your 401K to pay the bank. If you do, s/he has won. But s/he can't go after your 401k.\"", "topk_rank": 12 }, { "id": "407437", "score": 0.6860895752906799, "text": "\"There are (at least) two problems with the argument suggested in the OP. First, the ability to cover the cost, doesn't mean willingness, ease, or no major side effects of doing so. Second is the mitigation of \"\"upside risk\"\". It might be true that the most usual loss is small and manageable, but 10% of incidents could be considerably larger and 1% may be very much larger - without limit. Your own attitude to risk and loss will determine how much these are seen as unlikely+ignore, or worst case situation+avoid.\"", "topk_rank": 13 }, { "id": "276631", "score": 0.6849979162216187, "text": "I think you leave out the major problem of your partners in crime there. Chances are one of them will eventually slip up later in life, and at some point snitch on you in order to get out of trouble. This is particularly true if you would manage to acquire amounts in the 100k range per participant. The inside man would pose the greatest risk there.", "topk_rank": 14 }, { "id": "339955", "score": 0.6846367120742798, "text": "I don't know of any financial account that offers that kind of protection. I'm going to echo @Brick and say that if you need that level of restrictions on the money, you should talk to a lawyer. Your only option may be to setup a trust. If you are willing to go with a lower level of restrictions on the account, a 529 plan could do the job. A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It will be in your daughters name, and has the benefit of being tax advantaged, unless its used for non educational expenses. Since your daughter is a minor, there would have to be a custodian for the account that manages it on her behalf. The penalty for using it for non educational expenses might suffice to keep the custodian from draining the account, and I believe the custodian has a fiduciary duty to the account holder, which would open them up to lawsuits if the custodian did act in a way that was detrimental to your child.", "topk_rank": 15 }, { "id": "473835", "score": 0.6845049858093262, "text": "\"You don't mention what kind of insurance you're talking about, but I'll just address one angle on the question. For some kinds of insurance, such as health insurance (in the US), auto insurance, and homeowner's insurance, you may be insuring against an event that you would not be able to pay for without the insurance. For instance, if you are at fault in a car accident and injure someone, they could sue you for $100,000. A lot of people don't have $100,000. So it's not even a matter of \"\"I'll take the risk of having to pay it when the time comes\"\"; if the time comes, you could lose virtually everything you own and still have to pay more from future earnings. You're not just paying $X to offset a potential loss of $Y; you're paying $X to offset a potential derailment of your entire life. It is plausible that you could assign a reasonable monetary value to that potential \"\"cost\"\" that would mean you actually come out ahead in the insurance equation. It is with smaller expenses (such as insuring a new cellphone against breakage) that insurance becomes harder to justify. When the potential nonfinancial \"\"collateral damage\"\" of a bad event are less, you must justify the insurance expenses on the financial consequences only, which, as you say, is often difficult.\"", "topk_rank": 16 }, { "id": "457513", "score": 0.6844223737716675, "text": "So, there's no way to do both? I look out for my family, but I also try to be honest, live up to my word, and admit my mistakes rather than trying to find a villain or excuse for them. Looking out for myself and my family includes being careful with my money, especially large sums that I don't want to lose.", "topk_rank": 17 }, { "id": "121145", "score": 0.683987557888031, "text": "Here's a good rule of thumb. In any situation where you are required to purchase insurance (Auto Liability, Property Mortgage Insurance, etc.) you can safely assume that you aren't the primary beneficiary. You are being required to buy that insurance to protect someone else's investment.", "topk_rank": 18 }, { "id": "527090", "score": 0.6832688450813293, "text": "\"When one says that \"\"corporations are people\"\", in a legal sense, they are saying that they have the ability to enter into binding legal agreements in a manner similar to people. This allows corporations to do things like own a building or a car, or enter into a contract. This is so that an individual does not have to do so. This keeps individuals from being liable for the activities of the corporation (it also keeps the individual from running off the the corporation's car or selling the corporation's building). If they are using it in any sense other than the legal sense, it's either hyperbole, ignorance, or pandering. Now, if you set yourself up as LettersFromTheSky, Inc, then you would very well be able to get all the same tax deductions and benefits as a corporation. But you would also be liable for everything that a corporation is liable for (namely, a higher standard of reporting and different accounting methods).\"", "topk_rank": 19 } ]
474	Forgot to renew Fictitious Name application within the county. What is the penalty for late filing?	[ { "id": "430901", "score": 0.7322193384170532, "text": "I checked this myself and there is no monetary penalty for late filing. However, since I am late I have to do all publication over again which costs me extra $50." } ]	[ { "id": "332858", "score": 0.6746774315834045, "text": "Your county wants the fee to record your newly owned house into the public record. Congratulations on the new wave of junk mail you are going to get =)", "topk_rank": 0 }, { "id": "532656", "score": 0.6710745692253113, "text": "File a 2nd amended return that corrects the mistake I made on the 1st amended return This. Pay the $500 before April 27th and try to get it back later This.", "topk_rank": 1 }, { "id": "505405", "score": 0.665934681892395, "text": "It would seem to be in your best interest to file, and that probably means that you should do all you can to get your documents back. If you are in fact owed a refund then there is apparently no penalty to filing late. If you instead owe taxes, you better file in any case since the fees stack up pretty fast: 5% per month after the due date up to 25% of the taxes owed.", "topk_rank": 2 }, { "id": "361415", "score": 0.645938515663147, "text": "\"The FTB, as any government agency, is understaffed and underpaid. Even if someone took a glance and it wasn't just an automated letter - consider the situation: you filed as a LLC and then amended to file as a partnership. Unless someone really pays attention - the obvious assumption would be that you had a limited partnership. Yes, you'll need to call them and work with them on fixing this. They do have all the statements you've attached. However, there's a lot of automation and very little attention to details when it comes to matching errors, so don't get surprised if no-one even looked at these statements. Next time your elected government officials talk about \"\"small government\"\" and \"\"cutting government expenses\"\" - you can remind yourself how it looks in action with this experience.\"", "topk_rank": 3 }, { "id": "142433", "score": 0.6453503370285034, "text": "I think you should consult a professional with experience in 83(b) election and dealing with the problems associated with that. The cost of the mistake can be huge, and you better make sure everything is done properly. For starters, I would look at the copy of the letter you sent to verify that you didn't write the year wrong. I know you checked it twice, but check again. Tax advisers can call a dedicated IRS help line for practitioners where someone may be able to provide more information (with your power of attorney on file), and they can also request the copy of the original letter you've sent to verify it is correct. In any case, you must attach the copy of the letter you sent to your 2014 tax return (as this is a requirement for the election to be valid).", "topk_rank": 4 }, { "id": "151699", "score": 0.6440991163253784, "text": "Assuming US/IRS: If you filed on time and paid what you believed was the correct amount, they might be kind and let it go. But don't assume they will. If you can't file on time, you are supposed to file estimated taxes before the deadline, and to make that payment large enough to cover what you are likely to owe them. If there is excess, you get it back when you file the actual forms. If there is a shortfall, you may be charged fees, essentially interest on the money you still owe them calculated from the submission due date. If you fail to file anything before the due date, then the fees/interest surcharge is calculated on the entire amount still due; effectively the same as if you had filled an estimated return erroneously claiming you owed nothing. Note that since the penalty scales with the amount still due, large errors do cost you more than small ones. And before anyone asks: no, the IRS doesn't pay interest if you submit the forms early and they owe you money. I've sometimes wondered whether they're missing a bet there, and if it would be worth rewarding people to file earlier in order to spread out the work a bit better, but until someone sells them on that idea...", "topk_rank": 5 }, { "id": "46767", "score": 0.6415907144546509, "text": "I just got hit with the late payment penalty due to a bug in the H&R Block tax program. The underpayment was only $2 and the penalty was a whopping 1 cent. The letter that informed me of the error also said that they did not consider the $2.01 worth collecting, the amount owed had been zeroed.", "topk_rank": 6 }, { "id": "372036", "score": 0.6369609236717224, "text": "Years ago I mailed my personal tax return one day after the due date, and my check was deposited as normal, and I never heard anything about it. As an employer, I once sent in my employee's withheld federal taxes one day after the due date, and I later received a letter stating my penalty for being late worked out to be around $600. The letter stated that since this was my first time being late they would waive the fee. In both cases, they could have charged me a late fee if they wanted to.", "topk_rank": 7 }, { "id": "595121", "score": 0.636612594127655, "text": "There are penalties for failure to file and penalties for failure to pay tax. The penalties for both are based on the amount of tax due. So you would owe % penalties of zero, otherwise meaning no penalties at all. The IRS on late 1040 penalties: Here are eight important points about penalties for filing or paying late. A failure-to-file penalty may apply if you did not file by the tax filing deadline. A failure-to-pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline. The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should explore other payment options such as getting a loan or making an installment agreement to make payments. The IRS will work with you. The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date. If you timely requested an extension of time to file your individual income tax return and paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty. However, you must pay any remaining balance by the extended due date. If both the 5 percent failure-to-file penalty and the ½ percent failure-to-pay penalties apply in any month, the maximum penalty that you’ll pay for both is 5 percent. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax. You will not have to pay a late-filing or late-payment penalty if you can show reasonable cause for not filing or paying on time. If the IRS owes you a refund, April 15 isn't much of a deadline. I suppose the real deadline is April 15, three years later - that's when the IRS keeps your refund and it becomes property of the Treasury. Of course, there's little reason to wait that long. Don't let the Treasury get all your interest.", "topk_rank": 8 }, { "id": "590234", "score": 0.6354310512542725, "text": "In how much trouble can I get exactly if the IRS finds out? I understand that there's a 6 year statute of limitations on criminal charges and no limitation at all on fraud. Is this considered fraud? I'm assuming not. There's no statute of limitations for fraud (which is a criminal charge). The statute of limitations is for failure to report income which is not fraud. In your case, since you willingly decided to not report it knowingly that you should, it can most definitely account for fraud, so I wouldn't count on statute of limitations in this case. I should amend my taxes for those years That would be the easiest way to go. would the IRS go all the way and file criminal charges considering the amount of money I owe They have the legal right to, and if you do get caught - likely they will. Easy money for them, since you obviously have income and can pay all the fines and penalties. Practically speaking, what's the worst case scenario? Theoretically - can be jail as well. Being charged in a criminal court, even if the eventual punishment is just a penalty, is a punishment of its own. You'll have troubles finding jobs, passing security checks, getting loans approved, etc. For $3200, when you're in 25% bracket as an individual for years, I'd say not worth it.", "topk_rank": 9 }, { "id": "416268", "score": 0.6351278424263, "text": "\"Did it show just your address, or was your name on it as well? You didn't share how long you've lived at the address either, so it makes me wonder whether a former tenant is the one who filed that paperwork. It's also possible that someone used your address when making a filing. Whether that was deliberate or accidental is hard to discern, as is their intent if it was intentional. It could be accidental -- someone picked \"\"CA\"\" for California when they meant to pick \"\"CO\"\" for Colorado or \"\"CT\"\" for Connecticut...These things do happen. It can't make you feel any better about the situation though. You should be able to go online to the California Secretary of State's website (here) and look up everything filed by the LLC with the state. That will show who the founders were and everything else that is a matter of public record on the LLC. At the very least, you can obtain the registered agent's name and address for the LLC, which you can then use to contact them and ask why your address is listed as the LLC's business address. Once you have that info, you can then contact the Secretary of State and tell them it isn't you so they can do whatever is necessary to correct this. This doesn't sound like a difficult matter to clear up, but it's important to do your homework first and gather as much information as you can before you call the state. Answering \"\"I don't know\"\" won't get you very far with them compared to having the best answers you can about where the mistake started. I hope this helps. Good luck!\"", "topk_rank": 10 }, { "id": "371094", "score": 0.6331316828727722, "text": "This is a common occurrence, I know people who moved and then only remember the next spring during tax season that they never filed a new state version of a W-4. Which means for 3 or 4 months in the new year money is sent to the wrong state capital, and way too much was sent the previous year. In the spring of 2016 you should have filed a non-resident tax form with Michigan. On that form you would specify your total income numbers, your Michigan income numbers, and your other-state income numbers; with Michigan + other equal to total. That should have resulted in getting all the state taxes that were sent to Michigan returned. It is possible that the online software is unable to complete the non-resident tax form. Not all forms and situations can be addressed by the software. So you may need to fill out paper forms. You should be able to find what you need on the state of Michigan website for 2015 Taxes. A quick read shows that you will probably need the Michigan 1040, schedule 1 and Schedule NR You may run into an issue if your license, car registration, voter registration, and other documentation point to you being a resident for the part of the year you earned that income. That means you will have to submit Form 3799 Statement to Determine State of Domicile You want to do this soon because there are deadlines that limit how far back you can files taxes. The state may also get tax information from the IRS and could decide that all your income from 2015 should have applied to them, so they will be sending you a tax bill plus penalties for failure to file.", "topk_rank": 11 }, { "id": "61258", "score": 0.6321085691452026, "text": "It matters because that is the requirement for the 83(b) selection to be valid. Since the context is 83(b) election, I assume you got stocks/options as compensation and didn't pay for them the FMV, thus it should have been included in your income for that year. If you didn't include the election letter - I can only guess that you also didn't include the income. Hence - you lost your election. If you did include the income and paid the tax accordingly, or if no tax was due (you actually paid the FMV), you may try amending the return and attaching the letter, but I'd suggest talking to a professional before doing it on your own. Make sure to keep a proof (USPS certified mailing receipt) of mailing the letter within the 30 days window.", "topk_rank": 12 }, { "id": "296750", "score": 0.6312016248703003, "text": "\"Buried on the IRS web site is the \"\"Fillable Forms Error Search Tool\"\". Rather than including an explanation of errors in the rejection email itself, you're expected to copy and paste the error email into this form, which gives more details about what's wrong. (Don't blame me; I didn't design it.) If I copy your error message in, here's the response I get: There is an error with the “primary taxpayer’s Date of Birth” in Step 2 Section 4. The date of birth that was entered does not match IRS records. Make sure you enter the correct birth date, in the correct format, in the correct space. Scroll down, and enter the current date (“Today’s date”). Today’s date is the day you intend to e-file the return again. Also, if you are making an electronic payment you must re-date that section. E-File your return. You say that you've already checked your birthday, so I don't know as this is particularly helpful. If you're confident that it's correct and in the right place, I think your next step needs to be contacting the IRS directly. They have a link at the bottom of the error lookup response on how to contact them specifically about their solution not working, or you could try contacting your local IRS office or giving them a call.\"", "topk_rank": 13 }, { "id": "334887", "score": 0.6310693621635437, "text": "\"Following up on this, here is what I did. First, I called my benefits provider. They had documentation of my election over the phone, which then allowed them to retroactively fix the problem. Had they not had this documentation, I would have been out of luck. Second, the next step for \"\"fixing\"\" occurred when I received my W-2 for this position. This W-2 mistakenly showed the amount for my medical FSA in box-10 of my W-2 as the same dependent care FSA. This requires calling/emailing my benefits and payroll department to get an updated W-2...\"", "topk_rank": 14 }, { "id": "445770", "score": 0.6288229823112488, "text": "If the correction results in you owing them money, you typically just need to pay them the appropriate amount. I believe they charge back-dated interest on the amount if it was supposed to have been paid in the past, but if it's for this year's taxes then payment isn't due until the end of April and so interest would not apply. In some circumstances, they may apply fines or press charges for tax evasion, but only if they have reason to believe you intentionally/knowingly attempted to misrepresent your tax return in order to avoid paying taxes. You can challenge their decision to fine you, but you are considered guilty until proven innocent. Obviously that's the opposite for any criminal charges. The good news is, lots of people accidentally enter the wrong numbers and the CRA is aware of this and rarely takes action against them, other than making them pay what they owe. They have ways to look for suspicious behavior and differentiate that from innocent mistakes. So don't worry, you should be fine, not fined.", "topk_rank": 15 }, { "id": "331836", "score": 0.6285625100135803, "text": "The IRS allows filers to attach a statement explaining the reason for late filing. I have had clients do this in the past, and there has never been an issue (not that that guarantees anything, but is still good to know). Generally, the IRS is much more lenient when a taxpayer voluntarily complies with a filing requirement, even if it's late, than if they figure it out themselves and send a notice.", "topk_rank": 16 }, { "id": "117877", "score": 0.62656569480896, "text": "Ultimately, you are the one that is responsible for your tax filings and your payments (It's all linked to your SSN, after all). If this fee/interest is the result of a filing error, and you went through a preparing company which assumes liability for their own errors, then you should speak to them. They will likely correct this and pay the fees. On the other hand, if this is the result of not making quarterly payments, then you are responsible for it. (Source: Comptroller of Maryland Site) If you [...] do not have Maryland income taxes withheld by an employer, you can make quarterly estimated tax payments as part of a pay-as-you-go plan. If your employer does withhold Maryland taxes from your pay, you may still be required to make quarterly estimated income tax payments if you develop a tax liability that exceeds the amount withheld by your employer by more than $500. From this watered-down public-facing resource, it seems like you'll get hit with fees for not making quarterly payments if your tax liability exceeds $500 beyond what is withheld (currently: $0).", "topk_rank": 17 }, { "id": "515502", "score": 0.6236594915390015, "text": "They specifically state on their website this waiver does not apply to this incident. It only applies to the use of their credit monitoring product. [link to website](https://www.equifaxsecurity2017.com/). So basically you can't have identify fraud then blame it on their credit monitoring tool. In this case, Equifax is guilty of several things, not related to this product, so they can't just sneak in a clause like this.", "topk_rank": 18 }, { "id": "220559", "score": 0.622199535369873, "text": "Something like this sort of thing happened to me but with Chase bank. The county made a mistake on our taxes and forgot to give us the right deductions and we got a whopping high property tax bill. Since we did have an escrow account the bank just paid the taxes and raised our mortgage by a nearly unaffordable 60% or so even though we called the bank and told them not to pay the tax bill as it was being disputed. By the time we got the tax issues sorted out Chase refused to adjust the mortgage. The only way we were able to get out of it was to refinance with another bank and opt out of the escrow account and handle taxes on our own, which fixed the whole problem. It seemed an awful lot like an attempt to force us into a foreclosure. If we didn't have the money to refinance we would have barely been able to afford the mortgage payment. Why they would want to do that I have no idea. It really sucked though.", "topk_rank": 19 } ]
478	Help: Being charged interest on a loan for which I received no statements telling me of this debt for the past 15 years. Surprise!	[ { "id": "306280", "score": 0.6981005072593689, "text": "\"There is a ten year statue of limitations on debt collection, bankruptcy, etc. The problem is, if you start paying, even say, $1, you \"\"acknowledge\"\" the debt and the clock starts again. Debt claims fall under the \"\"he said, she said,\"\" rubric. In debt restructuring situations, the debtor is taught to write all their creditors DENYING debts. Some percentage of those creditors won't have the paperwork to back up their claims. Others will, and can press their claims. Then a court decides. But in any event, a debt more than tens years old is a \"\"stale,\"\" debt. A court is likely to rule in your favor. Unless you \"\"acknowledge\"\" the debt.\"" }, { "id": "525967", "score": 0.7638646364212036, "text": "Investigate the statute of limitations in your area. 15 years sounds like in most places it is past the allowable time a debt collector can legally collect or report it on your credit report. The statute of limitations means you still owe the debt, but they collector can no longer use the court system to collect it from you. They can file a lawsuit, they will just lose. Please read up on how to handle yourself with a debt that is past the SoL, so that you don't accidentally reset the clock. What I don't know for sure is how that applies to a business, and I cannot remember ever hearing a difference between personal vs business debt, but it is best to consult a lawyer regarding it. References:" }, { "id": "574948", "score": 0.729012131690979, "text": "This sounds like a shady trick. I would consult with a consumer debt lawyer in your area. Most county bar associations in the US have a referral service, where they recommend a local lawyer and there is a reduced fee for the initial visit. I think the statute of limitations is 10 years in most cases, but it depends on where you live. From these bare details,I think they don;t have much of a case. Go see a lawyer and don't let them harrass you." } ]	[ { "id": "351044", "score": 0.6930773258209229, "text": "I would strongly encourage you to either find specifically where in your written contract the handling of early/over payments are defined and post it for us to help you, or that you go and visit a licensed real estate attorney. Even at a ridiculously high price of 850 pounds per hour for a top UK law firm (and I suspect you can find a competent lawyer for 10-20% of that amount), it would cost you less than a year of prepayment penalty to get professional advice on what to do with your mortgage. A certified public accountant (CPA) might be able to advise you, as well, if that's any easier for you to find. I have the sneaking suspicion that the company representatives are not being entirely forthcoming with you, thus the need for outside advice. Generally speaking, loans are given an interest rate per period (such as yearly APR), and you pay a percentage (the interest) of the total amount of money you owe (the principle). So if you owe 100,000 at 5% APR, you accrue 5,000 in interest that year. If you pay only the interest each year, you'll pay 50,000 in interest over 10 years - but if you pay everything off in year 8, at a minimum you'd have paid 10,000 less in interest (assuming no prepayment penalties, which you have some of those). So paying off early does not change your APR or your principle amount paid, but it should drastically reduce the interest you pay. Amortization schedules don't change that - they just keep the payments even over the scheduled full life of the loan. Even with prepayment penalties, these are customarily billed at less than 6 months of interest (at the rate you would have payed if you kept the loan), so if you are supposedly on the hook for more than that again I highly suspect something fishy is going on - in which case you'd probably want legal representation to help you put a stop to it. In short, something is definitely and most certainly wrong if paying off a loan years in advance - even after taking into account pre-payment penalties - costs you the same or more than paying the loan off over the full term, on schedule. This is highly abnormal, and frankly even in the US I'd consider it scandalous if it were the case. So please, do look deeper into this - something isn't right!", "topk_rank": 0 }, { "id": "117429", "score": 0.6923068165779114, "text": "I'm going to give the succinct, plain language version of the answers: 1. Your oldest active credit agreement is not very old You don't have much experience or history for me to base my analysis on -- how do I know I can trust you to pay back the money? 2. You have no active credit card accounts Other people haven't trusted you with credit or you haven't trusted yourself with credit and there's no active good behavior of paying credit cards on time -- you want me to be the first one to go out on a limb and loan you money? How do I know I can trust you to pay back the money?", "topk_rank": 1 }, { "id": "304179", "score": 0.6922541260719299, "text": "You signed a contract to pay the loan. You owe the money. Stories of people being arrested over defaulted student loans are usually based in contempt of court warrants when the person failed to appear in court when the collection agency filed suit against them. Explore student loan forgiveness program. Research collections and bankruptcy and how to deal with collection agencies. There are pitfalls in communicating with them which restart the clock on bad debt aging off the credit report, and which can be used to say that you agreed to pay a debt. For instance, if you make any sort of payment on any debt, a case can be made that you have assumed the debt. Once you are aware of the pitfalls, contact the collection agency (in writing) and dispute the debt. Force them to prove that it is your debt. Force them to prove that they have the right to collect it. Force them to prove the amount. Dispute the fairness of the amount. Doubling your principal in 6 years is a bit flagrant. So, work with the collectors, establish that the debt is valid and negotiate a settlement. Or let it stay in default. Your credit report in the US is shot. It will be a long time before the default ages off your report. This is important if you try to open a bank account, rent an apartment, or get a job in the US. These activities do not always require a credit report, but they often do. You will not be able to borrow money or establish a credit card in the US. Here's a decent informational site regarding what they can do to collect the loan. Pay special attention to Administrative Wage Garnishment. They can likely hit you with that one. You might be unreachable for a court summons, but AWG only requires that the collectors be able to confirm that you work for a company that is subject to US laws. Update: I am informed that federally funded student loans are not available to international students. AWG is only possible for debts to the federal government. Private companies must go through the courts to force settlement of debt. OP is safe from AWG.", "topk_rank": 2 }, { "id": "26051", "score": 0.6920226216316223, "text": "Our mortgage provider actually took the initiative to send us a refinance package with no closing costs to us and nothing added to the note; took us from a 30-year-fixed ~6.5% note to a 15-year-fixed ~5% note, and dropped the monthly payment in the process. You might talk to your existing lender to see if they would do something like that for you; it gives them a chance to keep your business, and it cuts your costs.", "topk_rank": 3 }, { "id": "40714", "score": 0.6920086741447449, "text": "\"The one thing that I saw in here that raised a big red flag is that you said you \"\"overpaid\"\" on your interest. ALWAYS make sure you tell them that any extra money should be applied to principal only, not to interest. You accrue interest based on your outstanding principal amount, so getting that lower reduces the overall amount of interest you end up paying. Paying the interest ahead saves you nothing. However, make sure you pay the current interest owed that month. They can capitalize past due interest - in affect, change that to be considered an addition to the loan principal amount and you end up paying interest on the interest.\"", "topk_rank": 4 }, { "id": "227533", "score": 0.6915746331214905, "text": "You still owe the money because there is a high probability that some other organization bough the account and assets of the failed creditor. That means they will have bought your debt. I have to assume there is language in your note that explains that they might sell your debt. But what should one do if they don't know who bought the entity? You can't pay a non-existent entity, but if you don't have an address, how can you pay the new owner of the debt? First step, is to assume there will be a new owner. A government, a company, an individual; somebody will buy that debt. Read the news and see if you can't figure out what other entity owns your note. You might have to contact them to enquire about where to send payment. Keep records of any such contact. If you put in an honest effort, but just cannot figure out who owns your note, I'd suggest continuing to make regular on-time payments. But put your payments into a new bank account that you open just for this purpose. So when the new owner of the debt does come calling, you'll have reasonable proof you were attempting to pay. You simply settle up from the special account. Any reasonable company will just take the money, and if anybody gets unreasonable and you have to appear in court, you have a paper trail indicating your attempts to honour the debt. You'd have to consult a lawyer if nobody comes asking for the money. There are probably statutes of limitation, but I wouldn't count on that ever happening.", "topk_rank": 5 }, { "id": "176830", "score": 0.6908952593803406, "text": "This is why we tell people not to co-sign unless they are able and willing to risk that money becoming a gift... or are able and willing to treat it as business rather than family. Unfortunately that advice is a bit late now to help you. When you cosigned, you promised the bank that you would make any payments he didn't. The bank doesn't care why he didn't, they just want their money on time. Getting him to repay you for covering this is strictly between the two of you, and unless you signed paperwork at the time establishing a contract other than the promise to cover his loan this becomes Extremely Messy. First step is to make the payments so the loan doesn't continue acquiring fees and hurting your credit rating, and keep it from falling behind again. Then you have to convince him to repay the money you have effectively given him. Depending on your relationship, and financial situations, you may decide to carry him for a while and trust that he'll pay you back when he can, or sic a lawyer on him. You need to make that decision, recognizing that it may be a matter of how much family drama you are willing to tolerate.", "topk_rank": 6 }, { "id": "482932", "score": 0.6907429695129395, "text": "K, welcome to Money.SE. You knew enough to add good tags to the question. Now, you should search on the dozens of questions with those tags to understand (in less than an hour) far more than that banker knows about credit and credit scores. My advice is first, never miss a payment. Ever. The advice your father passed on to you is nonsense, plain and simple. I'm just a few chapters shy of being able to write a book about the incorrect advice I'd heard bank people give their customers. The second bit of advice is that you don't need to pay interest to have credit cards show good payment history. i.e. if you choose to use credit cards, use them for the convenience, cash/rebates, tracking, and guarantees they can offer. Pay in full each bill. Last - use a free service, first, AnnualCreditReport.com to get a copy of your credit report, and then a service like Credit Karma for a simulated FICO score and advice on how to improve it. As member @Agop has commented, Discover (not just for cardholders) offers a look at your actual score, as do a number of other credit cards for members. (By the way, I wouldn't be inclined to discuss this with dad. Most people take offense that you'd believe strangers more than them. Most of the answers here are well documented with links to IRS, etc, and if not, quickly peer-reviewed. When I make a mistake, a top-rated member will correct me within a day, if not just minutes)", "topk_rank": 7 }, { "id": "268490", "score": 0.6907290816307068, "text": "If you pay your statement balance in full before the due date you will never pay a cent in interest no matter what your interest rate is.* In fact, I don't even know what my interest rates are. Credit card companies offer this sort of thing in the hopes you will spend more than you can afford to pay completely in those first 15 months. * Unless you use a cash advance, with those you will accrue interest immediately upon receiving the cash sometimes with an additional fee on top.", "topk_rank": 8 }, { "id": "59352", "score": 0.6906713843345642, "text": "This shows the impact of the inquiries. It's from Credit Karma, and reflects my inquiries over the past two years. In my case, I refinanced 2 properties and the hit is after this fact, so my score at 766 is lower than when approved. You can go to Credit Karma and see how your score was impacted. If in fact the first inquiry did this, you have cause for action. In court, you get more attention by having sufficient specific data to support your claim, including your exact damages.", "topk_rank": 9 }, { "id": "438148", "score": 0.6902567744255066, "text": "If I recall correctly, the pay schedule is such that you initially pay mostly interest. As James Roth suggests, look at the terms of the loan, specifically the payment schedule. It should detail how much is being applied to interest and how much to the actual balance.", "topk_rank": 10 }, { "id": "597291", "score": 0.689944863319397, "text": "I think you have to dispute with the Credit Union provider that the funds have not reached the account. Ask them for the details, even if electronic, they will have reference numbers. Also provide the Credit union your copy of the current loan account ... it would not reflect the credit. Keep following up", "topk_rank": 11 }, { "id": "79633", "score": 0.6886356472969055, "text": "\"A day or so later I get an email from the mattress company where the rep informs me that they will need to issue me a paper check for the full amount and that I would have to contact Affirm to stop charging me. To which I rapidly answered \"\"Please confirm that with Affirm prior to mailing anything out. On my end the loan was cancelled.\"\" To which the rep replied \"\"confirmed. It has been cancelled.\"\" I think your communication could have been more explicit mentioning that not only was the loan cancelled, you got your initial payments. You have not paid for the mattress. The refund if any should go to Affirm. The Rep has only confirmed that loan has been cancelled. at what point, if any, am i free to use this money? I was planning to just let it sit there until the shoe drops and just returning. But for how long is too long? Sooner or later the error would get realized and you would have to pay this back.\"", "topk_rank": 12 }, { "id": "57211", "score": 0.6884744167327881, "text": "\"I am not sure how anyone is answering this unless they know what the loan was for. For instance if it is for a house you can put a lien on the house. If it is for the car in most states you can take over ownership of it. Point being is that you need to go after the asset. If there is no asset you need to go after you \"\"friend\"\". Again we need more specifics to determine the best course of action which could range from you suing and garnishing wages from your friend to going to small claims court. Part of this process is also getting a hold of the lending institution. By letting them know what is going on they may be able to help you - they are good at tracking people down for free. Also the lender may be able to give you options. For example if it is for a car a bank may help you clear this out if you get the car back plus penalty. If a car is not in the red on the loan and it is in good condition the bank turns a profit on the default. If they can recover it for free they will be willing to work with you. I worked in repo when younger and on more than a few occasions we had the cosigner helping. It went down like this... Co-signer gets pissed like you and calls bank, bank works out a plan and tells cosigner to default, cosigner defaults, banks gives cosigner rights to repo vehicle, cosigner helps or actually repos vehicle, bank gets car back, bank inspects car, bank asks cosigner for X amount (sometimes nothing but not usually), cosigner pays X, bank does not hit cosigners credit, bank releases loan and sells car. I am writing this like it is easy but it really requires that asset is still in good condition, that cosigner can get to the asset, and that the \"\"friend\"\" still is around and trusts cosigner. I have seen more than a few cosigners promise to deliver and come up short and couple conspiring with the \"\"friend\"\". I basically think most of the advice you have gotten so far is crap and you haven't provided enough info to give perfect advice. Seeking a lawyer is a joke. Going after a fleeing party could eat up 40-50 billable hours. It isn't like you are suing a business or something. The lawyer could cost as much as repaying the loan - and most lawyers will act like it is a snap of their fingers until they have bled you dry - just really unsound advice. For the most part I would suggest talking to the bank and defaulting but again need 100% of the details. The other part is cosigning the loan. Why the hell would you cosign a loan for a friend? Most parents won't cosign a loan for their own kids. And if you are cosigning a loan, you write up a simple contract and make the non-payment penalties extremely costly for your friend. I have seen simple contracts that include 30% interests rates that were upheld by courts.\"", "topk_rank": 13 }, { "id": "14745", "score": 0.6883319616317749, "text": "My assumption here is that you paid nearly 32K, but also financed about 2500 in taxes/fees. At 13.5% the numbers come out pretty close. Close enough for discussion. On the positive side, you see the foolishness of your decision however you probably signed a paper that stated the true cost of the car loan. The truth in lending documents clearly state, in bold numbers, that you would pay nearly 15K in interest. If you pay the loan back early, or make larger principle payments that number can be greatly reduced. On top of the interest charge you will also suffer depreciation of the car. If someone offered you 31K for the car, you be pretty lucky to get it. If you keep it for 4 years you will probably lose about 40% of the value, about 13K. This is why it is foolish for most people to purchase a new vehicle. Not many have enough wealth to absorb a loss of this size. In the book A Millionaire Next Door the author debunks the assumption that most millionaires drive new cars. They tend to drive cars that are pretty standard and a couple of years old. They pay cash for their cars. The bottom line is you singed documents indicating that you knew exactly what you were getting into. Failing any other circumstances the car is yours. Talking to a lawyer would probably confirm this. You can attempt to sell it and minimize your losses, or you can pay off the loan early so you are not suffering from finance charges.", "topk_rank": 14 }, { "id": "460357", "score": 0.6879609227180481, "text": "\"Tell them you will not loan them any more money until their existing debts are paid off. This is closer to how the real world works and it won't come across as vengeful or like your changing your initial \"\"contract\"\". If they protest, lovingly tell them that your money is not their money, and that an interest free loan from their father is a privilege, not a right. As far as charging interest on your loans, go for it! Charge them 5% or something small. Just don't do it on the existing loans or that will come across as changing your initial \"\"contract\"\" again, and perhaps once they've proven themselves to be reliable borrowers they can once again earn the privilege to have an interest free loan. The book \"\"The Millionaire Next Door\"\" has really good thoughts on this in its section on Economic Outpatient Care.\"", "topk_rank": 15 }, { "id": "394842", "score": 0.6879488229751587, "text": "This sounds like my dad in so many ways. Rather than ask questions and listen to vagueness (or lies) from your dad, I suggest you ask to see financial, tax, and legal documentation. Maybe speak to the accountant, lawyer, bank official - whomever - to see where checks were written, transfers, etc. I'm really sorry you are in this situation, but there needs to be a major family meeting immediately. Good Luck.", "topk_rank": 16 }, { "id": "214082", "score": 0.6879141926765442, "text": "It's very, very unlikely that you received a phone call at work with an incorrect birth date from an actual lending company that thinks it loaned you any money. It's much more likely that you received a phone call at work from a collections agency that would have bought some loan from the aforementioned agency for pennies on the dollar. They would have been hunting around trying to find someone with your name who was born thirteen years earlier. It's even more likely that this is some sort of phishing scam. If you're worried, you can check your credit rating, but it is likely that you can safely ignore the situation. If they call back, ask for thorough details about the credit card. If they're a real collections agency and for some reason they won't leave you alone, IIRC the most surefire course of action is to hire a lawyer to send them a cease-and-desist letter.", "topk_rank": 17 }, { "id": "219613", "score": 0.6877846121788025, "text": "\"This is not really the focus of your question, but it's worth noting that if you live in the United States (which your profile says you do), there are tax implications for you (but not for your children), depending on whether or not you charge your children (enough) interest. If you charge less interest than the appropriate Applicable Federal Rate (for May 2016, at least 0.67%), you must pay taxes on the interest payments you would have received from the debtor if you had charged the AFR, provided that the loan is for $10,001 or more (p. 7). This is referred to as \"\"imputed\"\" income.\"", "topk_rank": 18 }, { "id": "371095", "score": 0.6876906752586365, "text": "He wasn't wrong that a mortgage would help your credit score, assuming that this was a perfect world and everyone held up their end of the bargain. However, now that he hasn't, you are still legally obligated to pay the loan amount (including his portion of it). As for a lawsuit, it would be hard to prove what he said verbally, however, it doesn't hurt to call a lawyer for a free consultation.", "topk_rank": 19 } ]

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