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Paying Taxes for Loans

IRS Building

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Here’s a quick overview of how loans and taxation work in the United States on a federal level. Keep in mind that every state and local municipality may have its own rules in addition to what is stipulated here.

Receiving Loans

You technically do not pay taxes when receiving a loan. Loans you receive are considered a liability, and taxes are paid on money you make, not money you owe. For example, if you receive a loan through an online cash advance lender, you do not pay taxes on the money they loan you. If you take a loan and invest it, the money you make from the investment can be taxed. If you are given a deal with the entity that provided the loan to pay less than the balance owed, you can be taxed on the amount you didn’t have to pay.

Giving Loans

If you give out a loan, you are obligated to pay federal taxes on the interest you earn from that loan. Anytime you loan anyone money, even family, you should have a promissory note or written agreement made that stipulates the conditions of the loan, including whether interest is paid or not. In some cases, the IRS may calculate an imputed interest or charge a gift tax (usually paid by the donor) on some interest free loans (usually large loans).

Generally, you will receive a tax form on anything you must pay taxes on, but if ever in doubt, especially before giving out a large loan, you can contact a tax professional, CPA, or the IRS with specific questions.

Filed Under: Business, Capital Tagged With: , ,

How To Save Money in Small Business

Small business owners are in a constant panic about saving money. Without the cash flow of a big business, the small business owner knows that they are just one bad month away from seeing their small business go down the drain. This is why savings is paramount to the health and well being of the small business. Here are a few things that you can do to ensure that your small business is saving as much as possible.

Don’t Hire

Many small businesses tend to over spend when business is going well. This often means the hiring of extra hands. While this will help with the recent influx of work, it can be costly in the long run. Unless the upturn in business looks like it’s going to be profitable for the long haul, you are better off just giving your current employees a bump in salary to take on more work.

Avoid Spending Cash

When you are faced with the need to purchase something, there are many businesses that go into a cash reserve to pay for it. You are better off taking short term loans and holding on to your emergency cash. You can pay back the loan, and it won’t cost you your savings in the process.

For the small business owner, the key to saving money is simply to spend it with foresight and careful planning. The more you spend, the more it puts your business’ future in jeopardy. Plan well, and you’ll save well.

Filed Under: Business, Capital Tagged With: , ,

How to Manage Your Credit Card Debt

NEW YORK - MAY 20: In this photo illustration...

Image by Getty Images via @daylife

Learning how to manage your credit card debt is a necessary part of personal finance. One great way to do so is by looking into Visa Prepaid credit cards. These credit cards are designed to make your life a lot easier with less stress and frustration.

It is very easy to let traditional credit cards get out of hand. With the feeling that there is money available in a seemingly endless supply, many people find that it is difficult to manage their credit card debt when it piles up. With Visa Prepaid credit cards, however, you will not have this issue. Unlike traditional credit cards, this type of credit card puts you in control.

When you get a prepaid credit card, you decide how much money to put on the card. This helps you to keep your spending in check as well as keeps you accountable for all the money that you do end up spending. You will find that there are many advantages to using a prepaid credit card.

With more and more employers turning to direct deposit for their employee paychecks, having such a card allows you to receive your paycheck right on it. You can then pay your bills and take care of your responsibilities without needing to worry about the extra step of transferring money to your credit card. You can also reload this type of card at any time when you need more money. Most people will qualify for such a card and you do not even need a bank account to get one.

Filed Under: Capital, Equity Tagged With: , ,

Great Ways to Diversify Your Portfolio

Anyone who invests in the stock market or other areas knows the importance of diversification. Unfortunately, a lot of people who should be diversifying their portfolios really don’t bother. Instead, they end up putting all (or most) of their eggs in one basket and they don’t realize how severely they can lose out if the investment that they are banking on tanks. You don’t have to end up with that kind of a problem, though. You can diversify in a lot of different ways that will help you save more money for your future and let your investment continue to grow.

One way to invest is through the use of startup capital for a new, local business. If you’re one of the investors, you’ll have a stake in the business and be able to get good profits if the business does well. Of course, you want to make sure that the business has a good plan and a lot of potential, so you aren’t taking too much risk. You can also buy into promising startups that have inexpensive stocks. That’s not quite the same as providing startup capital, but it can still net you a good profit if the company does well.

Using Portland property management to manage any rental properties that you decide to buy is another good option for diversifying your portfolio. You won’t get quite as much profit when you pay a management company, but you’ll be free of all the hassles that go along with being a property owner. Because those can be numerous, it’s much more enjoyable and relaxing to let someone else handle them. You’ll have to find the rental properties, of course, but there are so many properties out there that you shouldn’t have a lot of trouble finding some that you like and that will make good rentals to build your portfolio.

Filed Under: Capital, Financial Tagged With: , ,

The Necessity of Health Care Reform to Reduce Medicaid/Medicare’s Share of the Budget

Medicare and Medicaid are currently one of the top drains on the annual budget for the US. A large part of this is due to the rampant abuse that goes unchecked. Unscrupulous billing practices serve to inflate how much money is spent every year. True. there are crackdowns on fraud, but for every crackdown, many fly under the radar. Medicare/Medicaid pays very little for the services that are provided, which then creates the temptation to either over bill or perform many unnecessary procedures. While many want to see the overall budgets cut, no one wants to lose their healthcare after retirement. The coming influx of baby boomers reaching the age for services are going to create even more pressure on the system.

Many decry the idea of a national health service as socialized medicine. If that were truly the case, then they should want to give up their Social Security benefits, since that is another example of a socialized program. In fact, take a close look at the name of the program. It does not even try to hide the fact that it is a social program, intended for the greater good of all Americans. Health care reform strives to achieve the same benefits, only for all of the population instead of a select few. While it does have a lofty goal, it also aims to reduce overall health care costs across the board.

Reductions in spending take time, and the larger the program, the longer it will take. There is no waving of a magic wand to instantly trim the fat. Innovative programs like health care should be given a bit more leeway to do their job of reducing debts while reaching more people. The less people that are using the hospital emergency room for primary care, the less everyone has to pay for their healthcare.

Filed Under: Capital, General Tagged With: , , ,

Medicaid Pits Governors Against the Federal Government

In a time when states are severely strapped for cash, anything and everything is on the chopping block. Medicaid is a large burden on state budgets, draining them at a rapid pace. In order to stop the bleeding, some states are working on cutting their funding to their share of Medicaid. California is looking to trim 1.7 billion dollars off of their rolls. Suggested changes are to limit doctors visits to 10 a year and six prescriptions a month. Considering that Medicaid covers young children and disabled adults, that is a lot to ask for California residents to take on out of their own pocket. This demographic is sorely pressed to find employment and are reliant on benefits in order to make ends meet.

States are facing a bad situation. In order to save money, they must shed people off the rolls. Those who are taken off run the risk of seeing their quality of life suffer. People tend to vote, and will have long memories. They will not be so forgiving of the politicians who made their lives worse. And that is the problem at hand. In order for states to find ways to balance budgets, they have to make unpopular cuts. Constituents do not want to accept the fact that hard times are ahead. Unfortunately, there is no way to stall the reduction in services as time has run out.

The federal government provides the lion’s share of Medicaid funding, but some of that is soon to run out. States have their hands tied behind their backs, what with the maze of federal requirements for programs. Arizona’s governor, Jan Brewer, has written a letter asking to be excused from having to provide for one program as the state has no money. It is only a matter of time before there is a showdown between the feds and the states over Medicaid.

Filed Under: Capital, Government Spending Tagged With: , , ,

How much would you pay?

In a time when the United States is in a recession, gas prices are creeping up, and foreclosures and the unemployment rates are at an all time high we ask ourselves, what is the government doing to help with these issues? Are they hard at work finding solutions to the opportunities that the current economy faces? Let us take a look at how hard they work.

The average pay for the House and Senate members in 2010 was $174,000 per year. Mind you, in 2009 the median household income in the United States was $49,777. Is this enough for our elected officials or is it too much? For the 2011 calendar year, the Majority Leader, Eric Cantor has the House calendar marked with 24.6 weeks or 123 days in session. Let us take out the 105 Saturday and Sunday’s that are in the 2011 calendar year. This leave us with roughly 260 days of work for the average American. Our elected officials are working less then half of the working days that we have. Let us assume that, like most of the employed American’s, that they get a vacation. Since most of our officials have been in office for more then a few years we will give them 4 weeks of vacation. Out of the 260 work days in 2011, this leaves 240 days to actually work. So now, after the normal allotted vacations, our elected officials are working roughly half of what the average American works.

Let’s say that our elected officials work 25 weeks, rounded up from 24.6. Their average pay would be $6,960 for each week worked or roughly $1,414 a day. Do we pay our officials too much or too little? Thankfully, they did not vote themselves a pay raise for 2010. Let’s see if they do in 2011.

Filed Under: Capital, Financial Tagged With: , ,

Fun in the workplace

Having fun in the workplace is a great motivator for many employees.  Having some humor will not only allow you to appreciate your fellow coworkers, but your job as well.  Below are some ideas to make your workplace fun and invigorating.
Make sure to always use common sense when telling any jokes.  Take a moment before telling the joke to make sure not to offend anyone.  If the joke is something you could tell someone you look up to such as your grandmother, then it most likely would be appropriate for sharing with people at work.

Take a trip to the local toy store and brighten up your office with purchasing childish things.  Look for anything that could lighten up your meetings, staff interaction or just to put a smile on someone’s face.
Start meetings with someone telling a joke, a humorous story, playing a game, whatever you can to get everyone to relax.  Purchase noisemakers and make it a rule that before you can speak you must use your noisemaker.  Make it as fun as possible to encourage workers to attend the next meeting.
Hold fun contests. It could range anywhere from karaoke contests, to free lunches, to coffee breaks, to gift cards.  Anything to boost the moral of the employees.
Hold an employee of the month award.  Have fellow coworkers nominate the employee if they did something to contribute to the company.  For example, they went out of their way for a customer, or a fellow coworker.
Ask around the workplace and see what others do outside of work.  Try to organize a sport everyone could play, or start a fitness club.  Make sure to include everyone in the activities.
Last but not least try to open up.  Invite your fellow coworkers to get together once in a while to get to know one another.  If you know one another you will enjoy each other’s company that much more at work.
Filed Under: Capital, General Tagged With: , , ,