Debt Help 101: What You Need to Know

The first thing you need to know about getting out of debt is that there’s no universal method for doing so. For every person who’s ever gotten out of debt, there’s a unique journey to match. The exact methods you implement to work toward becoming debt free depends on a host of factors, ranging from the type and amount of debt you’re carrying to your income, credit score and lifestyle.

While there’s no step-by-step model to follow on your own personal financial journey, you can start by getting an understanding of the basic methods available to you. This way, you can pursue the options best suited to your needs—and set realistic expectations for what the process will look like.

Welcome to Debt Help 101. Here’s what you need to know.

Debt Consolidation

For Americans with at least one credit card, the average number of credit cards is actually 3.7. This just goes to show how many people regularly juggle multiple balances every month—something that adds a layer of complexity to getting a handle on your debt. When you’re trying to keep track of multiple debts, each with its own APR and due date, it’s easy to inadvertently let things slip through the cracks.

One solution for people in this predicament is debt consolidation, which entails taking out a single personal loan with fixed repayment terms to pay off these other debts. This simplifies the process because consumers then only have to worry about making payments on a single loan with a lower interest rate to boot. However, this strategy does nothing to reduce the principal amount owed; you’ll still be paying your debt in full, just over a more extended period of time.

Debt Relief

Debt relief aims to reduce the amount of unsecured debt you owe. How? By initiating negotiations with creditors. Here’s how a program like Freedom Debt Relief works:

  • Build funds: Enrollees make monthly deposits into an FDIC-insured savings account they control.
  • Negotiate with creditors: When enough funds have built up, negotiators reach out to creditors on clients’ behalf, trying to settle debts for less than the original balance.
  • Settle: If a settlement is accepted, enrollees authorize and approve it.
  • Zero out balances: After settlements are paid from the dedicated account, enrollees no longer owe their creditors.

Some qualified participants are further invited to combine debt settlement with consolidation in a program like Consolidation Plus, which involves using a personal loan to reduce the amount of time it takes to settle debts.

However, consumers should note that settlement does not occur overnight; to find success in programs like these, they’ll have to commit to making monthly payments for a few years. These programs may also impact your credit—at least until after you zero out your balances so you can start rebuilding.

Do-It-Yourself Debt Repayment

Some people decide to face their debt without consolidation or settlement. The key to succeeding here is staying organized. Deciding upon a strategy and sticking to it will help you stay on course. Some people prefer to work their way upward from their smallest balance to the largest—all the while paying the minimum balance across the board to avoid racking up fees. Others tackle debts by interest rate from highest to lowest, a method known as debt avalanching.

Bankruptcy

The most drastic measure for putting your debt behind you is filing for bankruptcy. The obvious pro here is that part or all of your debt may be forgiven. But there are substantial drawbacks to consider, like the fact that this path will affect your credit score for years to come. You may also have to forfeit some of your property and assets. Plus, you’ll have to pay attorney’s fees. Explore other options before defaulting to bankruptcy.

The more you know about your options for debt elimination, the more able you’ll be to make an informed choice that works for you.

Small Business Taxes 101: Everything You Should Know

Starting a small business is an exciting venture. But when April rolls around, the term “business tax” can instill fear in even the most rigid entrepreneur. You wear many hats when operating a small business, including accountant, but keeping up with the current tax laws and codes can be a daunting task.

But doing your small business taxes isn’t something you should simply sweep under the rug and forget about. Did you know that tax evasion brought Al Capone down, not murder or organized crime? Feigning ignorance about taxes isn’t helpful in anyway. Here is what you need to know about small business taxes.

Knowing Your Legal Entity

A legal entity is an association, trust, proprietorship, or person that has legal standing in the eyes of the United States and can enter into agreements, pay and incur debts, sue or be sued, and also be held accountable for its actions.

A small business can choose a variety of legal entities to distinguish itself as, including an LLC, partnership, S corporation, and sole proprietorship. But selecting a legal entity can greatly affect your tax burden. For example, S corporations allow small business owners to pay taxes at a shareholder level, rather than having to pay expensive corporate rates. It’s important to know the different tax benefits and drawbacks of legal entities before picking one for your small company.

Deducting Small Business Expenses

As a new small business owner, you’re always seeking to get the most bang for your buck. You’ll be happy to know that there are many tax deductions associated with running a small company. From a home office and lunch meetings to qualified production activities and insurance premiums, you may be able to deduct a large number of your business expenses to minimize your tax burden while making the most of your business profits.

You can deduct expenses deemed both necessary and ordinary. Necessary expenses include expenses which are helpful but aren’t always obligatory to your company while ordinary expenses are common to your business’s specific industry.

One easy deduction you can make is your home office any anything related to that space, such as repairs, utilities, and mortgage interest payments.

Don’t forget to write off your startup expenses! The IRS actually allows small company owners to deduct a huge array of startup expenses before they open their doors, including analyzing and marketing expenses.

Keep Thorough Records

It’s vital to keep accurate and thorough records throughout the year to guarantee that your tax return is correct. If you don’t keep records, you could be putting your company, and yourself, in harm’s way. There is affordable accounting software, such as QuickBooks and Track Revenue, that you can purchase that is extremely intuitive and easy to use so you don’t have to go through the trouble of keeping your records up-to-date by hand.

Part of the record keeping process is also keeping close tabs on all business receipts. They help to establish a financial dashboard of how you spend your money during the year and many receipts can be written off.

Estimated Payments

If you’re a small business owner, you need to make quarterly estimated tax payments throughout the entire year.

You’re also responsible for paying self employment tax throughout the year too. Self employment tax is made up of Medicare and Social Security taxes and is paid by a person who isn’t subjected to employer withholding.

File Your Taxes Electronically

To ensure your taxes are received in a timely manner, you should always file your small business taxes electronically. This also saves you money on sending your taxes via snail mail.

Programs such as TurboTax and H&R Block can help you seamlessly prepare and file your taxes online. Additionally, these systems can also help you get the maximum tax refunds your small business is owed.

Seeking Legal Help

If you are a small business owner who can’t afford to pay their taxes, you may be able to get temporary relief by establishing a non-collectable tax status. In order to obtain one, you must employ a seasoned team of tax attorneys to help effortlessly guide you through the process to see if you are eligible.

Launching a small business is no easy feat. And when tax season hits, you need to be prepared.

From knowing what legal entity to declare your business as to knowing what to write off, navigating small business taxes can be tricky, but it is doable.

5 Strategies to Keep Your Small Business Organized

The key to a good organization lies in the idea of doing more by investing less effort and by spending less in order to achieve the same effect. It goes without saying that to a small business, this kind of knowledge might be completely life-saving. Therefore, you need to discover and adopt strategies that will help you make your small business as organized and optimized as possible. All in all, here are the top five suggestions worth your consideration.

1. Proper supplies management

The issue of how you govern your supplies is pivotal to the efficiency of your office, seeing as how running out of supplies during a rush hour might turn into a devastating trend. Furthermore, bad storage management may lead to undetected employee theft, which is a devastating trend on its own. There are several things you need to keep in mind. First of all, you need to do an inventory as often as possible. Second, you need to refill supplies before they run out and not after. Third, you should try to save ink and paper whenever you can by going paperless. Finally, there’s no need to invest in quality office supplies unless you can afford it and believe it brings you prestige.

2. Setting measurable goals

The next thing you should do is try setting goals on every single level of your company. Your business should have its long-term and short-term goals. Teams working on projects should have goals, while the same goes for individuals. People with goals are driven, which makes them perform better. Moreover, according to how close you are when it comes to completing them, you can figure out whether or not you’re on the right path. Nonetheless, in order for these goals to be valid, they need to be measurable. Otherwise, you have no way of knowing how you’re progressing.

3. Outsource some tasks

The greatest problem with managing your company lies in the fact that in order to micro-manage every task, you need to be incredibly efficient in all of them. This is of course never the issue, which is why you should either hire expert accountants, HR representatives, IT people, and customer service representatives. Unfortunately, not many small businesses can afford to keep all of these people on their retainer, which means that prioritizing and outsourcing seem like the only two valid solutions.

While it is possible to outsource to people and agencies that are half-a-world away, it’s always for the better to hire locally, if for no other reason than to stay within the same time-zone. In areas like finances, it’s better to look for someone familiar with local laws and tax regulations. For instance, an NSW company stands much better chances at getting what they need when hiring accountants from Sydney than when hiring an agency from Hong Kong.

4. Keep a tight schedule

Another thing worth considering is the importance of keeping a tight schedule. Most companies, internally, operate on the principle of deadlines. In order for these deadlines to be both fair and efficient, they need to be transparent. Still, unless you post them in time, transparency may not be as effective as you might have hoped for. Therefore, you might want to try scheduling in a Google Calendar or use a different platform that allows you to share the schedule with your team. Furthermore, it allows several people to collaborate on making this schedule, thus making it into more of a compromise.

5. Pay your bills online

One last thing you can do to both save money and make your business easier to run is to pay all your bills online. The way in which this works is fairly simple. You find the right platform and get to do this menial task without having to run errands. Now, an average bill takes $12 to pay, while online you can complete this task with as little as $1.50. In other words, you save more than $10 for every single bill you pay. Think about how many bills you pay on a yearly basis and it will be more than clear just how much of a difference (budget-wise) this can make.

In conclusion

The thing about the above-listed strategies is that they don’t change your current business model in any significant way. For instance, outsourcing your accounting is something that most companies already do, regardless of the industry, while paying your bills online simply changes a form of the task you perform every month, either way.

Scheduling is important, regardless of the industry or the nature of the task at hand and dealing with your supplies in the most adequate manner can play a pivotal role in your company’s day-to-day effectiveness. Either way, you decide to look at things, by working on one aspect of your organization, you’re improving all of them.