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Broadway will remain closed for at least another two months, industry leaders said Wednesday, as they formally acknowledged what has been widely known: that their initial target of reopening in mid-April has become impossible because of the ongoing coronavirus pandemic.

The Broadway League, a trade association representing producers and theater owners, said the 41 Broadway houses would remain shuttered at least through June 7. But industry leaders widely expect the theaters to remain closed longer — many say that a best-case scenario is reopening following the July 4 weekend, and that it is possible that the industry will not reopen until after Labor Day.

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With the coronavirus, a new Supreme Court case and a blistering election debate, the Affordable Care Act is facing challenges as never before. We looked at how it’s held up to its promise.

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Here’s what you need to know at the end of the day.

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Finding the right savings account can get you an extra $200 for free this year.

Depending on your balance, it could make you a lot more money.

Let’s say you have $10,000 to put into an online savings account.

How much would that turn into at a big bank savings account? Most big banks have an APY (annual percentage yield) of 0.15% or less. After a year, your account would be worth $10,015. Not much of a gain there.

I love getting money for nothing, but even I have a hard time getting excited over an extra $15.

Now let’s say you take that same $10,000 and put it into an online high-yield savings account with an APY of 2.25%.

After a year, you’ll have $10,225.

That’s $225 for doing absolutely nothing. Everyone needs some extra cash on hand for an emergency fund anyway. Why not get as much as you can while it sits there? All it takes is opening the right savings account.

The best online savings accounts

These accounts have the highest APYs right now. While I don’t personally choose accounts solely on the APY, start with these if you want the highest APY possible:

We’re going to do a deep dive into what to look for, which accounts are best, how to get the highest APY, and tricks for optimizing your savings accounts.

If you want to skip all that and open an account right now, all of these savings accounts are among the best:

• Discover Online Savings Account
• Ally savings account
• Marcus by Goldman Sachs
• American Express savings account
• Barclays savings account
• Synchrony savings account

You’ll be happy with any of them. My personal favorite is Ally.

What matters when picking an online savings account

Here’s how we evaluate the best savings accounts.

User experience

Good online and mobile apps make a huge difference these days.

While I do appreciate a great user experience, I do have to say that it doesn’t matter as much with a savings account.

It needs to be good enough but not great.

Why?

Because we rarely log into savings accounts. Savings accounts usually have limits of being able to withdraw from them up to 6 times per month. By definition, they’re not meant to be used regularly.

With one of my accounts — my emergency fund that I never touch — I log into it maybe once a year during tax season to grab the annual tax form. Otherwise, I never log in at all.

So the user experience should be good enough that it’s not infuriating, but it doesn’t need to be cutting edge. That adds a lot more value for checking accounts, which we do access all the time.

Fees

For online savings accounts, it’s absolutely essential that you get an account without any maintenance fees. Monthly maintenance fees used to be common. Thankfully, just about all the online savings accounts have done away with them.

On any good savings account, you’ll rarely run into fees during normal usage. But even on the best accounts, it is possible to trigger fees for certain events:

• Returned deposit items
• Overdraft items paid or returns
• Excessive transaction fee (like going over 6 withdrawals per month)
• Expedited delivery
• Outgoing domestic wires
• Account research fees

We’ve made sure not to include any banks in our list that have maintenance fees. But you should be aware of some of these other fee items that do exist on every account.

Convenience

What we consider to be “convenient” with savings accounts falls into two buckets depending on where you are in your own personal finance journey.

When you’re building savings for the first time, it’s essential to get a savings account with no minimum balance. A $5 required balance or something like that is fine, you just don’t want to have to worry about a higher one.

Don’t put up with any account that requires a sizable minimum balance. There are so many options that don’t have any balance requirements at all. This is the last thing you should be worried about in the early days, especially if an emergency comes up and you need to withdraw cash.

Later on, what you consider to be convenient typically changes.

Once you’ve built enough of a cash buffer for yourself, you’ll care a lot less about minimum balances. Instead, your accounts, cards, and banks have all gotten complicated enough that simplicity matters a lot more than it used to. At this stage, some folks will opt for a lower APY in order to consolidate their accounts and make everything more manageable.

Is this the optimum strategy to get every ounce of growth from your cash? No, it isn’t. But the extra piece of mind can be well worth the cost. If this sounds appealing to you, check to see if the savings account at your main bank has a good enough APY without any maintenance fees. If it does, it could be your best option.

FDIC insured

Don’t ever consider an online savings account that’s not FDIC insured. This means that the account is guaranteed by the federal government up to $250,000 per depositor. If something horrible should happen to the bank, the federal government guarantees you’ll still get access to your balance, up to $250,000. This is per depositor, so the $250,000 includes the combined balance of all your savings accounts at the same bank.

Just about every savings account is FDIC insured. It’s been a standard practice for a long time. But keep a close eye on this any time you’re considering an innovative or unique approach to storing your cash.

For example, some folks will store their cash in a money market account, which operates a lot like a savings account. Money market accounts are usually FDIC insured. But money market funds, which you place cash into from a brokerage account, are not FDIC insured. A subtle yet critical difference during tenuous times.

Another example: Robinhood attempted to roll out a checking account that promised a 3% APY. That’s a checking account paying higher interest than any savings account that was available at the time, by almost 1%. Sounds amazing right?

It came with a number of catches, one of which was that it wasn’t FDIC insured. Without the FDIC insurance, we don’t consider the higher APY worth the risk.

Our stance is that every dollar of our savings should be covered by the FDIC, even if the balance is high enough that we have to split it up between multiple savings accounts.

All of the savings accounts that we review below are FDIC insured. Just keep an eye out for this if you’re exploring an atypical approach to storing your cash.

APY rates

APY rates — the annual percentage yield — are the main difference between savings accounts. The higher your APY rate, the more money that you get automatically every month.

APY rates across saving accounts generally fall into 3 tiers.

Big bank savings account APYs

For the vast majority of big bank savings accounts, the APY is terrible. Big banks assume that you want a savings account along with your checking account, so they don’t do anything to entice you for the savings account itself. Even when plenty of online high-yield savings accounts are offering an APY of 2%, big banks might only offer a 0.15% APY. On a savings balance of $10,000, that’s a difference between making $200 a year versus $20 a year.

This doesn’t apply to ALL big banks, but most of them do fall into this category. So keep an eye out for these. Unless you really want to maximize convenience by consolidating accounts and taking a lower APY, it’s worth finding a savings account with a higher APY.

High yield savings account APYs

High yield savings accounts have become extremely popular. These banks don’t have branches, they’re 100% online. Since save a lot from not having physical locations, they pass the savings onto you with a higher APY.

Ally and American Express are two of the most popular banks in this category.

The APY also stays updated over time. Back during the financial crisis, the Federal Reserve dropped interest rates to 0% and most high yield savings accounts had APYs of 0.5-0.7%. As the Federal Reserve increased interest rates, these same accounts also increased their APY. Whenever interest rates increase, you’ll get those increases automatically from these accounts. No need to constantly switch between accounts and chase the best rate.

Cutting edge APYs

At any given moment, there are a few banks that are pushing the APYs higher than anyone else. They’re doing this as a promotional strategy to attract more customers. Some of these banks keep pace with changing interest rates, some of them don’t.

While we don’t consider it worth the effort to chase an extra 0.1% on our APY, these banks are an option if you’re looking to maximize the APY on your savings.

Online savings account reviews

Here’s the lowdown on the most popular online savings accounts.

Axos savings account

• FDIC insured: Yes
• Minimum balance: None
• Maintenance fees: None
• APY:  1.30%

The APY is much lower than other high-yield savings accounts — it’s average at best. There’s no reason to open an Axos account unless you’ve already maxed the FDIC limits on every other high-yield savings account and have to get a lower APY to horde all your cash.

I recommend picking one of the other accounts from this list.

Discover online savings account

• FDIC insured: Yes
• Minimum balance: None
• Maintenance fees: None
• APY: 1.60%

Discover’s APY is pretty strong. Not quite the top, but it’s really close.

And if you happen to have a Discover card or checking account, keeping your accounts in one place makes everything a lot simpler.

If you have another Discover account, definitely get a Discover savings account.

HSBC

HSBC has a few different savings accounts.

HSBC Premier Savings

• FDIC insured: Yes
• Minimum balance: $100,000 across your deposit accounts and investment balances. If you go below this balance, there’s a $50 monthly fee.
• Maintenance fees: None
• APY: 0.15%

The HSBC Premier accounts are for clients who have large deposits at HSBC. Unfortunately, the APY is awful. An APY that low with a minimum balance of $100,000 is kind of insulting.

This is a good example of a classic big bank savings account. A bunch of constraints with a terrible APY. Skip these accounts entirely.

HSBC Direct Savings

• FDIC insured: Yes
• Minimum balance: $1
• Maintenance fees: None
• APY: 1.85%

HSBC does have a high-yield savings account with a competitive APY. Normally, I’d recommend this account as a main contender.

But HSBC is just a terrible bank. Every interaction with them is more difficult than it has to be. The only reason I’d ever consider opening an HSBC account if I needed a giant, international bank for some reason.

Even though this account looks great on paper, you’ll regret it if your experience is anything like ours.

Ally savings account

• FDIC insured: Yes
• Minimum balance: None
• Maintenance fees: None
• APY: 1.6%

We’re huge fans of Ally. They’ve become one of the leading high-yield savings accounts.

Yes, Ally doesn’t technically have the highest APY, but it’s darn close. And they update their APY often. So if interest rates continue to rise, you’ll get a higher APY without having to do anything.

Their account UI is pretty slick too, and it’s always improving.

I have an Ally account myself.

Feel free to stop reading here and open an Ally account right now. You won’t regret it.

Capital One 360 Savings

• FDIC insured: Yes
• Minimum balance: None
• Maintenance fees: None
• APY: 1.7%

Capital One used to have an APY that lagged the rest of the market, making it a sub-standard choice. You’d have to use another bank or their Capital One 360 Money Market account to get a competitive APY.

Now they have an APY that’s just as good as most banks. It’s one of the top contenders.

Especially if you have Capital One credit cards, it’s really nice to keep everything at one bank.

Marcus by Goldman Sachs

• FDIC insured: Yes
• Minimum balance: None, but there is a deposit limit of $1,000,000 for all your savings account and CDs
• Maintenance fees: None
• APY: 1.7%

Goldman Sachs jumped into the high-yield savings account space with one of the highest APYs.

They do limit deposits to a total of $1,000,000, but that’s not a major concern. You’ll want to split up your cash balances across multiple banks to get it all FDIC insured anyway.

If you’re looking for your first high-yield savings account, this is a fantastic option.

American Express savings account

• FDIC insured: Yes
• Minimum balance: None
• Maintenance fees: None
• APY: 1.7%

American Express was one of the first to introduce a high-yield savings account, and it’s been around for awhile now.

These days, the APY is slightly lower than some of the competitors. While American Express does update their yields frequently, they’re always 0.10-0.20% off the highest rates. While it’s still a great option, I’d choose one of the other accounts for this reason alone.

One other caveat: the American Express savings account isn’t integrated into the same login account as the American Express credit cards. Even if you have both, it feels like having two different banks. There’s no extra simplicity from trying to consolidate.

Barclays savings account

• FDIC insured: Yes
• Minimum balance: None
• Maintenance fees: None
• APY: 1.7%

Another great option. Great APY, no maintenance fees or minimum balances — you can’t go wrong with a Barclays online savings account.

Synchrony savings account

• FDIC insured: Yes
• Minimum balance: None
• Maintenance fees: None
• APY: 1.7%

Synchrony is also a great option. The APY is one of the highest and has no minimums or maintenance fees.

The 4-step process to picking the best online savings account

1. Check the banks that you currently have accounts with and see if they have a competitive savings account. If the APY is comparable to the accounts we listed above, stick with your current bank.
2. Otherwise, pick an account from this list:
   1. Discover Online Savings Account
   2. Ally savings account
   3. Marcus by Goldman Sachs
   4. American Express savings account
   5. Barclays savings account
   6. Synchrony savings account
3. Try to pick an account from a bank that you foresee doing other business with. For example, Ally has car loans and Discover has their credit cards.
4. If you’re still not sure, go with Ally.

What about sub-savings accounts?

One of our favorite savings account tricks is to open “sub-accounts.” This allows us to easily budget for bigger purchases by saving a little bit each month. We can also track everything by separating all the accounts.

For example, I have these categories in my own savings account:

• Emergency fund
• House downpayment
• Mini-retirement
• Christmas gifts
• Annual vacation

Each month, money goes into each of these separate accounts with the automatic transfers that I set up. And I can easily see how much I’ve saved towards my goals.

Ramit’s savings accounts used to look like this back before ING Direct was bought by Capital One:

Here’s a more current example in Ally:

Some savings accounts will call these “sub-accounts,” and everything will be part of the same savings account. This is a rare feature to find though.

For everyone else, simply open up multiple savings account under the same bank login. You can easily have 5-10 savings accounts at the same bank. Then treat each account for whatever saving category that you like.

This means you can get “sub-accounts” at any bank, even if they don’t have a “sub-account” feature.

Don’t chase yields

Look, there’s always a bank that has a slightly higher APY. Banks use it as a promotion strategy to get more accounts, so it’s always changing.

Regularly researching new APY rates, looking for that extra 0.05% APY, opening accounts, and transferring money all over the place wastes more time than it’s worth.

Don’t be a rate chaser.

Remember IWT’s philosophy of big wins. Focus on the major wins that really move the needle and forget about the small stuff. Chasing higher APYs on savings accounts definitely falls into the “small stuff” category.

Pick a savings account that has a competitive APY from a bank that you trust for the long term. Then stick to that decision and work on improving other areas of your life.

Money market accounts vs savings accounts

The difference between money market accounts and savings accounts can be pretty confusing.

That’s because there’s no practical difference.

Here are the similarities:

• The APY tends to be the same between both types of accounts.
• You can withdraw up to 6 times per month.
• Some have ATM cards, some don’t.
• Some have minimums, some don’t.
• Both are FDIC insured.

Basically they’re the same account. If your bank happens to offer a money market account with no maintenance fees, no minimum, and a competitive APY, feel free to use it.

Now for the confusing part: money market funds are completely different. They’re part of brokerage accounts and allow you to place cash while you wait to invest it. Since money market funds are not FDIC insured, so it’s not a good habit to store lots of cash in them.

When to get savings accounts from multiple banks

If you ask high net worth folks which savings accounts they have, sometimes they’ll list off half a dozen different banks.

At first, this makes no sense. Why all the extra complexity and different accounts?

There’s one reason: FDIC insurance limits.

Most people are limited to $250,000 worth of insurance at any given bank. Joint accounts and accounts across different categories (like retirement accounts) can increase this limit, but that only goes so far. If you have a substantial amount of cash, the only way to keep it insured is to open up savings accounts across several banks.

That’s why folks will start opening up savings accounts across multiple banks.

If you have multiple savings accounts to manage, Max will automatically move balances around your accounts to optimize for the highest APY while keeping all your cash insured. They do charge a 0.08% annual fee for the service.

As for which accounts to open, we recommend starting with these:

• Ally savings accounts
• Barclays savings account
• American Express savings account
• Marcus by Goldman Sachs

Any combination of accounts that have strong APYs will work.

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The best online savings accounts of 2020 is a post from: I Will Teach You To Be Rich.

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Understanding the Estate Tax and How It Works

The estate tax tends to get a lot of press – especially in an election year. Some folks call it the “death tax.”

But it’s a tax that impacts a very, very small segment of the population.

That doesn’t mean you can forget about it completely. It’s smart to look at it when you’re planning the rest of your estate. Even if you’re never on the hook for the federal estate tax, you might need to pay them to the state.

Here’s what you need to know.

What is the estate tax?

When someone passes away, the federal and some state governments impose an estate tax on the value of their estate, i.e., all the real estate, insurance, stock, business interests, cash, and other assets the deceased person owned at the time of their death.

Only the wealthy pay the federal estate tax because in 2020, it only impacts estates valued at more than $11.58 million per person ($23.16 million per married couple).

Those threshold amounts are known as the federal estate tax exemption, and they change from year to year. Twenty years ago, the exemption was a comparatively modest $675,000 per person, or $1,350,000 per married couple. But in 2010, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act increased the exemption to $5 million per person, and gradually increased along with inflation for several years. The Tax Cuts and Jobs Act of 2017 gave it another boost, doubling the exemption from $5,490,000 to $11,180,000 per person in 2018.

So how does the estate tax work?

When someone passes away with an estate worth more than the exemption amount, their executor is required to file a federal estate tax return within nine months of their death. This tax return reports the value of all assets owned by the estate and takes a deduction for any transfers to a surviving spouse or minor child, any debts, funeral expenses, legal and administrative fees, charitable bequests, and estate taxes paid to states. After those deductions, the remaining value of the estate, minus the exemption amount, is considered the taxable estate and is taxed at the top estate tax rate of 40%.

Federal estate tax vs. state estate tax

The federal estate tax impacts less than one percent of estates in the U.S., but don’t breathe a sigh of relief just yet. Each state can impose its own estate or inheritance tax – and the exemption is much lower in some of them.

That brings up a new question: What is the difference between an estate tax and an inheritance tax? The main difference comes down to who pays the tax.

• An estate tax is charged against the estate, regardless of who inherits what. The executor of the estate files one estate tax return and pays the tax out of the estate’s funds before distributing any assets to beneficiaries.
• In states with an inheritance tax, the beneficiary (i.e., the person who inherits money or property from the deceased person) pays the tax. Each recipient is responsible for calculating and paying their own tax.

Sixteen states plus the District of Columbia have an estate or inheritance tax, and one state has both. Here’s a breakdown of the states, the type of tax each levy, and the exemptions and rates that apply.

All six states with an inheritance tax allow an exemption for transfers to spouses, and some allow full or partial exemptions for immediate relatives.

How to save on the estate tax

Some wealthy individuals and families have teams of lawyers and accountants to help them avoid estate and inheritance taxes so they can pass on large portions of their estates tax-free. There are several completely legitimate ways to reduce the size of your estate and lower your estate tax exposure.

Here’s an overview of some of those strategies.

Grantor retained annuity trusts (GRATs)

Estate owners put assets with the potential to increase in value into a trust, but the owner retains the right to receive an annuity over the trust’s term – typically two to five years. At the end of the term, the assets are distributed to the beneficiaries – usually the grantor’s children. If the asset (typically stock) increases in value, the gain goes to the heirs, tax-free. If not, the value still goes back to the estate.

Establish a family limited partnership

If a big chunk of your net worth involves a family-owned business or rental properties, you can set up a family limited partnership and make your children or other heirs limited partners. As the general partner, you retain control of all business decisions. But any limited partners you bring in will have a financial stake in the company, so the size of your estate will be smaller.

Gifts

Another strategy wealthy people employ is to gift portions of their wealth to family members. The IRS allows individuals to gift up to $15,000 per person per year without having to file a gift tax return. A married couple can give $15,000 per spouse, for a total of $30,000 per gift. The annual exclusion is per recipient, so a couple could give $30,000 to their adult daughter, $30,000 to her spouse, $30,000 to each of their three children, and so on all in the same year without having to file a gift tax return. The person receiving the gift generally doesn’t need to report the gift as income, either. There’s no limit to the number of gifts you can give each year, so the annual gift exclusion allows people to gradually pass on their assets to loved ones until the value of their estate is less than the exemption amount.

If you make gifts over the annual exemption limit, you won’t necessarily have to pay taxes on those gifts. But you do have to report them to the IRS on a gift tax return, and those gifts count toward your lifetime exemption limit. For example, if you gifted $3,000,000 to your daughter in 2019, then you no longer have $5.79 million worth of exemption – you have $2.79 million worth.

Qualified personal residence trust (QPRT)

If a home or vacation property is a substantial part of your net worth, a QPRT removes the home from your estate for a period of time – usually 10 to 15 years. You continue to live there during this time. When the trust term is up, ownership of the home transfers to your beneficiaries. If you wish to stay there longer, you can make arrangements to pay rent. However, if you pass away before the trust term ends, the home will still be included in the value of your estate.

Irrevocable life insurance trust.

Many people purchase life insurance to protect family members after they pass away. Life insurance proceeds typically aren’t taxable, but they can be included in the value of your estate and push you over the estate tax exemption amount. To avoid this outcome, you can create an irrevocable life insurance trust (ILIT). With an ILIT, the trust owns the insurance policy, not you, so it’s not included in your estate. Keep in mind that if you pass away within three years of transferring a policy to an ILIT, the insurance proceeds will still be considered part of your estate.

Charitable remainder trust (CRT)

With a CRT, you can transfer stock or other appreciating assets to an irrevocable trust. This removes the asset from your estate and gives you an immediate tax break for the charitable contribution. Throughout your lifetime, you receive income from the trust. When you pass away, the remaining trust assets go to the charity of your choice.

These are just a few of the options available to people interested in shielding their assets from the estate tax, and the best options for you will depend on your unique financial circumstances. Be sure to talk to an estate planning attorney or financial planner for help in determining the best way to save on estate taxes.

Other things to know about estate taxes

If you have an estate plan in place but haven’t looked at it in a while, it might be time to give it another look. Some estate planning strategies that made sense a few years ago aren’t as solid in light of recent tax reform.

Estate planning is never a “set it and forget it” activity. As your family and finances change or laws change, strategies for reducing your estate tax exposure change as well. It’s a good idea to dust off your plans and review them with your attorney or tax advisors every few years to make sure they still make sense.

Understanding Estate Tax and How it Works is a post from: I Will Teach You To Be Rich.

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I’ve worked remotely my entire career. It’s amazing.

I get to pet my dog all day, work in sweatpants, do errands in the middle of the day, and avoid heinous commutes.

Also, I get a nice tax break every year.

Since I have a home office, I can use the home office deduction on my taxes. This saves me several hundreds of dollars a year.

If you have a home office and self-employed, I strongly recommend that you take advantage of this.

What is the home office deduction?

The home office deduction provides a tax break for taxpayers who use a part of their home for business. It isn’t limited to homeowners – it’s also available to renters and people who live in apartments, condos, and any other type of home.

There are three basic requirements for claiming the home office deduction:

1. You must be self-employed. Before the Tax Cuts and Jobs Act of 2017 (TCJA), the home office deduction was available to self-employed workers and people who had a home office for the convenience of their employer. But the TCJA eliminated most miscellaneous itemized deductions, including unreimbursed job expenses such as (you guessed it) the home office deduction. For now, only self-employed people can claim the home office deduction.
2. You must use your home office regularly and exclusively. You must use your home office exclusively for conducting business. For example, if you work from your dining room table and also use that room for family meals, you can’t claim a home office deduction for your dining room. The good news is, your home office doesn’t have to occupy an entire room. It can be a corner of your bedroom or living room. As long as you use that space regularly and exclusively for business, it qualifies for the deduction.
3. Your home office must be your principal place of business. If you typically conduct business at a location away from home but occasionally work from a home office, you can’t claim the home office deduction. Your home must be your principal place of business. That doesn’t mean you can’t occasionally work elsewhere.

What expenses can I deduct?

Here are some examples of the types of costs that you can use to claim the home office deduction:

• Interest on your home mortgage
• Rent
• Mortgage insurance premiums
• Utility bills
• Homeowner’s insurance
• Homeowners association fees
• Repairs and maintenance
• Security
• Property taxes
• Internet service
• Pest control
• Cleaning services
• Depreciation

There are also a few costs of maintaining your home that don’t apply:

• Lawn maintenance. Cost for landscaping and lawn care generally aren’t deductible unless you regularly meet with clients in your home office.
• Pool cleaning and maintenance. The IRS considers the cost of maintaining a swimming pool to be unrelated to either the office or the home, so you cannot deduct these costs.
• Telephone expenses. The cost of the first landline phone in your home is considered to be a personal expense, so you can’t include it in your home office deduction calculation. However, if the phone company charges you for long-distance calls, you can deduct those charges (assuming they were made for your business) as a business expense. If you have a second phone line that you use just for business, you can deduct the cost of that line as a direct expense.

How to claim the home office deduction

You have two options for calculating the home office deduction:

1. The Regular Method

The regular method involves adding up the total expenses of maintaining your home for the year and multiplying them by the percentage of your home used for business.

For example, say your home is 1,200 square feet in total, and you use 100 square feet (8%) for your home office. You would calculate your home office deduction by multiplying the indirect costs of maintaining your home by 8%.

Using the regular method, you can also deduct 100% of the direct costs of your home office. Direct costs are expenses that directly relate to the home office. For example, if you repaint the exterior of your home, that’s an indirect cost, and you can claim a portion of it for the home office deduction. On the other hand, if you installed bookshelves in your home office, that’s a direct cost.

If you use the regular method, you’ll calculate your home office deduction on IRS Form 8829. Your total deduction calculated on this form carries to Line 30 of Schedule C (for sole proprietors and single-member LLCs) or Part II of Schedule E (for partnerships and multi-member LLCs). If your business is structured as a corporation, unfortunately you can’t take advantage of the home office deduction, as the IRS considers shareholders to be employees of the company.

2. The Simplified Method

If tracking the various expenses for maintaining your home seems like too great a chore, the IRS offers a simplified method for calculating the home office deduction.

This method allows a deduction of $5 per square foot used for business, up to a maximum of 300 square feet. So, with a 100 square foot office, your deduction would be $500 (100 square feet x $50).

You can choose to use either the regular method or the simplified method for calculating your home office deduction each year. You can even switch off between the two methods from year to year, depending on which one gives you a higher deduction.

If you use the simplified method to calculate your home office deduction, you don’t need to complete Form 8829. Just enter the total square footage of your home, the square footage of your office, and your calculated deduction on Line 30 of Schedule C.

Special rules for claiming the home office deduction

Like most tax breaks, the home office deduction comes with a variety of special rules, regulations, and exceptions. Here are a few you need to know.

Separate structures

If you use a separate, free-standing structure for business, such as a studio, barn, workshop, or garage, you don’t need to pass the “principal place of business” rule.

IRS Publication 587 provides an example of a floral shop owner who grows the plants for his shop in a greenhouse behind his home. Because the greenhouse is a separate, free-standing structure used exclusively and regularly for business, the owner qualifies for the home office deduction, even though the greenhouse isn’t the principal place of business.

Daycare facilities

If you provide daycare for children, the elderly, or disabled individuals in your home, you don’t have to meet the “exclusive use” test to claim the home office deduction.

For example, say you provide in-home daycare in your living room from 7 a.m. to 6 p.m. each day, then use that room for family time or personal activities on evenings and weekends. You would still qualify for the home office deduction. However, the IRS specifies that your business must meet any applicable state and local licensing requirements to qualify.

Inventory

The “exclusive use” test also doesn’t apply if you use part of your home to store product samples or inventory.

For example, say you run an online clothing boutique and regularly use half of your basement to store inventory. If you occasionally use that part of the basement to store personal items, you won’t lose out on your home office deduction. However, the IRS specifies that your home must be the only fixed location of your business to take advantage of this exception.

The deduction can’t create a loss

You must have income from your business to claim the home office deduction, and the deduction can’t create a loss that offsets other income.

For example, say you had a tough year in business, and your net income (after deducting regular business expenses) was just $1,000, while your calculated home office deduction for the year was $1,200. You won’t be able to claim the full home office deduction because it would create a loss of $200.

However, if you use the regular method to calculate your home office deduction, some of the unused deductions can be carried forward to the next year.

Depreciating your home office

If you own your home and use the regular method to calculate your home office deduction, you’re required to deduct depreciation. Depreciation is a mechanism for deducting the cost of wear and tear on the part of your home used for business.

Calculating depreciation is a little complicated. You need to know:

• The month and year you started using the home for business
• What you paid for the house (but not the land), or the fair market value at the time you started using it for business
• The cost of any improvements made before and after you started using it for business
• The percentage of your home used for business

If this is the first year you used your home for business, you can use Table 2 in IRS Publication 587 to calculate your depreciation deduction. But most reputable tax software will handle the calculation for you.

Ignore the Rumors, Take the Deduction

I used to hear rumors that the home office deduction was a red flag that increased your chances of an IRS audit. While that may have been true in the past when home offices were rare, technology and the rising number of people who make a living online has made them much more common.

Don’t worry about increasing your chances of being audited.

Just be sure you meet the requirements and keep excellent records to support your deduction. There’s no need to fear an IRS audit if you’re following the rules.

Home Office Tax Deductions for 2020 is a post from: I Will Teach You To Be Rich.

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Renting a car is usually expensive, finding a great deal gets confusing.

The last time I rented a car, one of the car rental companies tried to charge me $1,800 for 4 days. While another company only charged me $700 for a similar car.

By doing my homework, I saved myself over $1,000 on a single trip.

Fortunately for you, I compiled a list of tips and tricks that will help you find the cheapest rental.

Let’s jump right into it.

1. Ask Yourself: Do I Really Need One?

The golden rule while saving money is only to spend when required. It seems simple, but we often end up buying stuff that we don’t really need.

The best way to know if you should get a car rental is to calculate how much and where you would be commuting. If public transportation or booking local cabs are cheaper and more efficient, then you don’t really need to rent a car.

This is why I typically book hotels in the center of the city. Are they a bit more expensive? Yes. Do I save a boatload of cash by being able to walk everywhere? Definitely. If I can walk 90% of the time, an Uber easily covers the rest at a fraction of the cost for a rental.

Also, check if BlaBlaCar, ZipCar, and CarShare can be useful to you.

2. Avoid Renting at Airports

Think about how EVERYTHING is CRAZY expensive at airports. You are charged a premium because you are in a confined space with no alternatives. The same is true for renting a car from an airport. It can cost you around 30% more.

Before renting a car from the airport, call up the rental agency and ask for the nearest pickup point from the airport. Calculate how much a cab or public transport will cost you to get there and only then decide if it still makes sense to rent a car from the airport.

Check a few different pickup and dropoff points when looking at rentals online to see if you get a different quote.

3. Use Aggregators

Checking every rental car company can become a real pain. Car rental aggregators speed things up a lot. They also give you a good range of what to expect, then you’ll know when you find a good deal or not.

I use Expedia, Kayak, and Hotwire.

4. Check Prices Directly on Car Rental Websites

Aggregator websites are superb for a comparison and getting ballpark estimates. Once I know the cheapest options, I go to those company’s websites directly and check the rental prices on it.

I have often found that the rental company’s website has a lower quote because of an in-house promotion or coupon code.

Pro Tip: Honey is a free chrome extension that searches for coupon codes. Once you have selected the cheapest car rental, Honey will look for all applicable coupon codes and allow you to use them at checkout.

5. Consider Smaller Companies

I always recommend looking beyond the big-name car rental companies like Enterprise, Avis, Budget, and Hertz. Some smaller companies might not have a big brand name, fancy websites, and extensive coverage. But that’s why they don’t charge you a premium, making them great places to hunt for discounts.

CarRentals.com is a useful aggregator of smaller car rental websites. You should know that a smaller brand doesn’t always mean a better deal. But checking them out wouldn’t take more than a minute, and it can help you save hundreds of dollars.

6. Say Hello to The Sharing Economy

Companies like Turo and Getaround are like the Airbnb of car rentals. I love them as renting from them can result in up to 35% savings. With them, you rent a car directly from the owner. I have felt like I am borrowing a car from a friend every time I have used peer to peer car rentals like Turo.

You can pick up the car yourself from the owner or have it delivered to you at a fee. Similarly, you can drop it off at the owner’s place or a remote location.

Pro Tip: Look closely at the fees of peer to peer car rental companies as they may charge you for all kinds of stuff.

7. Bundle Discounts

If you are using websites like Expedia, Kayak, or Booking.com to book your flight tickets and hotels, you can book a car rental at the same time. It often opens up exclusive offers and discounts.

I have saved more than $100 per week by booking everything together. If you have forgotten to book a car rental at the time you booked a flight or hotel, keep an eye out on for an email from the booking company that offers bundle discounts. You can also call them up and check if they can give you a special offer for car rentals.

Additionally, check the difference between the daily and weekly charges. At times, you can get a sweet deal if you go for the weekly option.

8. Use Statement Credits or Points

Some travel credit cards give you travel statement credits which include car rentals. This gives you a refund for part of your rental.

If cash is tight and you have a bunch of credit cards banked up, you could use the points to book a rental. Check the travel portal for your credit card rewards program. I wouldn’t expect this to be the best use of your points though, you’ll typically get more value from international flights.

9. Employee Discount

A lot of companies offer discounts on various stuff to their employees. Simply call someone at your company’s HR and ask them about the perks and discounts available to you. They might have a tie-up with a car rental company, which will significantly lower your rental cost.

Being a government employee and veteran can also give you significant discounts.

Pro Tip: CorporateShopping.com is a handy tool to get an idea of all the discounts you are eligible for through your employer.

10. Leverage Memberships

You should always know all the benefits you get by being a member of different organizations.

For example, a Costco membership will almost always give you a better deal than the one you find on aggregator websites. An AAA membership can reduce your rental price by around 20%. The American Airlines AAdvantage program gives a 35% discount off Avis and Budget. The only catch here is that you have to book them from an airport (check the real-time quotes as sometimes you can get a great deal from an airport with AA).

You can also leverage your AARP and USAA memberships and Frequent Flyer and Hotel Loyalty programs to get discounts on car rentals. Some airline programs also give status at rental car programs, giving you free upgrades and perks.

11. Say No to Rental Car Insurance

The rental company salesperson will try to hard-sell rental insurance to you. As long as you have the right credit card, you don’t need it. Check your credit card perks. Once you have a card with that perk, always use that card when booking a car rental.

And you will already be covered through your car insurance. Just call your insurance company once to confirm.

12. Use the Pay Now Option

30% of people who book a car don’t pick it up. They can afford a no-show because they haven’t paid upfront. To overcome this problem, car rentals incentivize paying upfront. Avis offers a 30% discount while Budget gives a 35% discount if you pay when you book instead of paying while you pick up the car.

The only drawback of the Pay Now option is that it is non-refundable in most cases.

13. Register for One Driver Only

A lot of rental companies will charge you an additional fee per day for having a second driver.

There are two ways to get past it. First, some companies waive the additional driver fee for your partner if you have the same address on the driving license.

Second, the fee could also be waived off if you are a member of AAA, USAA, AARP, or Costco.

Be careful with having a second driver without paying the fee. Coverage from credit cards is usually void if a second driver hasn’t been officially added. In an attempt to dodge the fee, you could be liable for any damage.

14. Pay for Gas Yourself

Gas can be the most expensive part of renting a car. You will also have the option of prepaying for gas. In most cases, that’s a bad idea. Prepaid gas only makes sense when you are crunched for time.

Refilling the tank before you return the car will almost always be a better deal. I’d only agree to one of the prepaid gas options at the rental company if I was extremely tight on time and wouldn’t have the chance to refill the tank.

Pay for gas at the car rental company to save time, don’t do it to save money.

15. Upgrades Are Your Enemies

The car rental company’s salesperson will try to upsell a lot of fancy stuff. You don’t need any of it. Some stuff may not seem expensive, but it can quickly add up to a more significant amount.

Say NO to all the following:

• GPS: You can use your smartphone’s GPS. It will be cheaper, and the navigation app on it will be prettier.
• Flyer Miles: Getting flyer miles may seem like a great deal. But you’re almost always charged $1 or $2 per day to get them.
• Satellite Radio: Once again, use your smartphone. You can even carry your Bluetooth speakers or AUX cable to play music out loud.

16. Economy Cars

Unless I have a strong reason to go for ‘fancier’ cars, I always select the ‘Economy’ option. It solves my purpose of going from one place to the other.

I have gotten a free upgrade a lot of times because economy cars were not available. Even if I don’t get an upgrade, I know I am saving a lot of money by not spending on an unnecessary luxury that I don’t really need.

Spend 10 Minutes to Save Hundreds

Just 10 minutes of research can help you save hundreds of dollars on a car rental. The best way to find the lowest price is by knowing what you want and paying for exactly that and nothing more.

By checking a few car rental companies, I saved $1,000 the last time I got a car rental. And I always expect to save a few hundred dollars by using the tips above.

16 Tips to Find a Cheap Car Rental is a post from: I Will Teach You To Be Rich.

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Most financial decisions you make can be summarized into a three-digit number.

That one number can cost, or save, you hundreds of thousands of dollars over your life.

Lenders not only decide whether to give you a loan based on this number, it also determines how good your interest rate is. Lower interest rates means you can pay off loans a lot faster.

When buying a home, this has a huge impact on how much you ultimately pay.

This critical number is called your credit score.

Improving it is one of the big wins of personal finance.

So what’s a good score anyway? And how do they work?

How Credit Scores Work

A credit score takes personal data and uses the information to determine a number ranging from 300 to 850. It’s a summary of how likely you are to pay your loans back. Credit reporting agencies use an algorithm to analyze all the information they have on you ad give you a credit score.

Credit scores are broken down into several levels:

• Very Poor = 300-580
• Fair = 580-670
• Good = 670-740
• Very Good = 740-800
• Exceptional = 800 and above

Every time you make a payment, miss a payment, take out a new loan, or even have your credit report checked, that information gets added to your credit report. From there, your score gets calculated.

Credit scores tend to increase slowly over time. You’ll need a long history of flawless payments on several different types of loans in order to get an amazing score. That doesn’t happen overnight.

But your score can drop pretty quickly. All it takes is one missed payment and you’ll get hit. And a default on a loan is even worse, that will immediately tank your score and won’t get dropped from your credit report for years.

In college, I had to see a bunch of doctors for a herniated disk of mine. I was also moving around a lot at the time and one of the bills never made it to me. It went to collections and I paid it as soon as the collections agency got a hold of me. But it had already been added to my credit report and took 7 years for it to get dropped. My score took a huge hit during that period. Luckily I wasn’t trying to get a mortgage at the time.

Who Decides Your Credit Score

Your credit score is the result of an algorithm created by the Fair Isaac Corporation (now called FICO). While FICO is not the only credit scoring tool, it is the most popular. The exact math formula used to determine an individual’s credit score is kept under extreme secrecy.

What many people don’t realize is that FICO has multiple versions of your credit score which is why you might get two different results when applying for a store card verses a mortgage loan. Additionally, some lenders prefer to get your credit score from Vantage, Community Empower, Experian, Equifax or TransUnion.

Depending on who your lender uses to pull your score, it might be slightly different. The differences between the scores are trivial, it’s not worth spending time learning how they each work. You’ll use the same methods to improve them all.

Factors That Impact a Credit Score

Your credit score focused primarily on:

• Payment history
• Amount owed
• Credit age
• New credit
• Type of credit used

Payment History

Your payment history makes up 35% of your total credit score. That means late payments or non-payment will have the largest impact on your credit score. This factor looks at whether you make your payments on time if you have any bankruptcies or accounts with a collection agency. And how long it’s been since you’ve had credit issues.

Amount owed

This factor makes up roughly 30% of your total credit score. The amount of money you owe is primarily concerned with the amount of money you owe debtors relative to your income and the amount of credit you have available. For example, if someone has a credit card with a $5,000 limit and they have a balance of $2,500, they’re total utilization score is 50%. Lenders like to see a total utilization score of less than 30%. Your credit utilization score includes all of your debt including credit cards, student loans, auto loans, home loans, and personal loans.

Credit Age

Your credit age makes up 15% of your credit score. This number just refers to how long you’ve had credit accounts open. The longer your credit history, the higher your score. This is why you’ll see advice to keep your oldest credit card open. That lengthens your credit age and improves your credit score a bit.

New Credit

This portion of your score looks at how many new lines of credit you’ve obtained in recent months as well as how many times you’ve applied for loans or lines of credit. This section makes up 10% of your credit score. The one time you want to worry about this is when you’re applying for a major loan like a mortgage. Don’t apply for any new credit cards or other loans in the months before you apply for the mortgage.

Type of Credit

Your mix of credit types comprises the last 10 percent of your credit score. A mix of credit types (revolving, installment, and open) looks better on your credit score than a focus on one type of loan. Revolving credit includes credit cards that have a balance limit. This just means that you have continuous access to the line of credit as you pay off your total owed. Installment debt refers to loans or lines of credit that have a single balance you pay off. Open debt refers to open lines of credit that you can access indefinitely.

FICO vs. VantageScore

The FICO credit score is the most popular choice for most lenders, but it’s not the only score that lenders can access.

Fair Isaac (now FICO) launched the FICO credit score in the 1980s. The design of this score was to help lenders identify potentially risky borrowers. FICO held the market on the credit scoring industry for more than 20 years. In March of 2006, Equifax, Experian, and TransUnion worked together to launch VantageScore.

Both VantageScore and FICO provide the same service to lenders, but there are some differences between the two companies.

The biggest difference that consumers will notice is the credit score range and percentage that each component of the credit score considers. The FICO score ranges from 300 to 850, as mentioned above. VantageScore 3.0  recently adopted the 300 to 850 credit score range, but earlier versions used a 500-990 range.

Another major difference that affects the ending credit score is the factors that the credit scoring company considers. As mentioned above, FICO looks at five major components: payment history, amount of debt, credit history age, type of credit and new credit.

VantageScore looks at six different categories: payment history, age and type of credit, percent of credit used, total debt, recent credit behavior, and available credit. It’s also important to note that VantageScore weighs payment history heavier (40%) than FICO. Recent credit behavior and inquiries only make up 5% of the total credit score for VantageScore compared to the 10% FICO factors.

Neither score is better and I wouldn’t stress these details. Getting a few types of loans and paying them off flawlessly over a long period of time is going to be the best way to improve both scores.

Why Credit Scores Matter

Credit scores are important for several reasons. While many people think the credit score only matters if you’re applying for a home loan or car loan, your score can actually affect other areas of your finances.

A few other common uses of your credit score:

• Getting a cell phone
• Renting an apartment
• Purchasing insurance
• Applying for a job
• Opening a utility account
• Getting an auto loan
• Getting a home loan
• Applying for public assistance

Not only does it determine if you get a loan in the first place, your credit score also affects how much you have to pay in interest.

If you have a higher credit score you can get better interest rates on loans and credit cards. You may also get better terms on your insurance and phone bill. Having a low credit score could result in a higher down payment for a rental property or utility account.

Credit scores impact you the most when you apply for a mortgage. If you don’t have a good score, you might not be able to get a mortgage at all. And a great credit score can get you a much lower interest rate. You’ll save tens of thousands of dollars easily.

When you start saving for a down payment for a home, also check your credit score and do anything you can to start improving it. It’s definitely worth the effort.

Improving Your Credit Score

Time is a major player when it comes to raising your credit score. It takes time for your current lenders to report payments to the credit bureaus, so your score may not change for weeks or even a few months after you’ve made significant changes.

A few things you can do to help improve your credit score include:

Get current on your payments

If you’re behind on credit card bills or loan payments, make it a priority to get your payments back on track. Make your payment on time, every month, for every bill. If all you can afford is the minimum payment, pay that every month. If you’re struggling with paying your bills, you can call your lenders and ask for a reduced payment plan or consider consolidating your debt into one payment.

On-time payments make the biggest impact on your credit score, so this should be a top priority if your goal is to increase your score.

Pay off debt

Reduce the amount of money you owe and your score will go up. If you have any bills in collections, pay them quickly and ask the collection agency to note that they were paid in full on your credit report.

Aim to keep the balances on your credit cards lower than 30% of the total available balance to reduce negative effects on your credit score. If you have an account with a good payment history you could ask your lender to increase your credit line. Since your amount of available credit will go up, your credit utilization could decrease, helping you add a few points to your score. To really optimize your score, call your credit card companies every 6 months and ask for a higher limit. Even if it’s small, it’ll add up over time giving you a really low credit utilization.

Don’t close old accounts

Keeping old accounts open (even those you don’t use) is more beneficial than closing them. When you close a credit card account you reduce your available credit (which raises your credit utilization score) and you reduce your average credit age.

Even if you want to close a few accounts to simplify your life, try to keep the oldest account open.

Limit credit applications

Don’t apply for new lines of credit unless you need them. When you apply for a lot of credit cards or loans, each lender checks your credit. Hard pulls (when a lender has your permission to pull your credit information) can ding your score by a few points.

Apply for new loans when you need them but definitely avoid applying for anything before a major loan like a mortgage or a car loan.

Apply for a credit boost

Some companies, like Experian, offer a credit boosting service. This service allows you to add a bank account so that you can report positive payment history on most bills (like utilities, rent, and phone bills) to your account. These on-time payments will help give your score a bump within days instead of weeks.

What is a Good Credit Score? is a post from: I Will Teach You To Be Rich.

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I love watching Shark Tank more than I should.

And I’d never go on it myself in order to raise money for my business. The terms are usually terrible.

Instead of having Kevin O’Leary eviscerate my plan on national TV, I’d rather go the more traditional route and get a business loan. In an era of TV fundraising, startups, and VC funding, small business loans don’t get the attention that they deserve.

There’s multiple options for getting a business loan, I’d explore these first before considering other types of capital.

Different Types of Business Loans

Multiple types of business loans are available for small businesses:

• Accounts Receivable: If you have proof of upcoming invoice payments, but you need some money now, you may be able to use these accounts receivable to obtain a loan. 
• Cash Advance: With this type of loan, the lender will give the business money to make an inventory purchase or to hire additional personnel. You’ll borrow the cash advance in anticipation of generating revenue in the future. Instead of using this type of loan, you may have a vendor that will give you a line of credit to purchase your inventory.
• Commercial Real Estate: You can use a commercial real estate loan to purchase or renovate your building or land. You can use the real estate as the collateral for the loan.
• Crowdfunding: A crowdfunding loan is one where other investors or backers pool their resources and award loans to business in exchange for interest payments. These loans may be better for newer small businesses, who may not qualify for traditional bank loans.
• Equipment: If you have a specific piece of equipment you want to purchase, but you don’t have other types of collateral, an equipment loan can help with this. The new equipment serves as the collateral.
• Installment: The installment loan gives you a lump sum at the start, and you’ll then repay it over time with interest.
• Line of Credit: A business line of credit is an amount of money a bank provides that you can borrow from as needed up to the credit limit. There aren’t specific repayment terms, although you almost certainly will have to pay a certain amount each month, based on the amount outstanding.
• SBA: A loan through the Small Business Administration is versatile, as you can use it for a variety of purposes. However, it typically requires an established business profile. The SBA does not make the loan directly. Instead, it works through lending partners, giving them a guarantee of a portion of the repayment amount.
• Working Capital: For small businesses that have fluctuating receipts because of seasonality, a working capital loan helps them through the slow times. It’s a short term loan.

If you don’t qualify for any of these types of business loans, you can look into obtaining a personal loan that you’ll use for business purposes. A lender will base the personal loan qualification on your personal credit history, rather than the credit history of the business.

Types of Loan Providers

Just like the types of loans vary, the types of providers vary too. The primary types of loan providers include:

Banks

Use a bank when you have collateral and good credit. Having a local lender may appeal to you, so a local bank works nicely.

Banks will take longer to make a decision than other types of lenders, though.

Many banks have access to the U.S. Small Business Administration for loans through the 7(a) loan program.

Microlenders

With a microlender, you’ll be seeking a short term loan with a small loan amount. This is a good option for small startups that don’t have a lot of financial history.

You will have to pay a higher interest rate than at a bank, but you may not have as many restrictions as a bank loan requires.

Multiple online lenders specifically work as microlenders. Some microlenders are peer-to-peer institutions or crowdfunders.

Online Bank

An online bank often gives you a bit more flexibility than other types of lenders. You may not need as much collateral or a spotless credit history to have success with an online lender versus a local bank.

An online bank typically makes a decision faster than other options too. But you will likely end up paying a higher interest rate.

Business Credit Cards Vs. Loans

In some instances, using a business credit card may serve you better than obtaining a business loan. If you only need a small amount and only need the money for a short time, charging the money to a credit card can work.

An advantage of a business credit card is that you can have access to this money immediately. You don’t have to go through the process of applying for a loan and waiting for an answer. Some business owners treat a business credit card like a line of credit.

What you don’t want to do is start carrying a balance on the business credit card. You’ll begin paying a significant interest on the card balance every month. And you really don’t want to start relying on the business credit card to cover day to day expenses, causing you to increase the balance.

7 Steps to Getting a Business Loan

When you’ve done your homework and know what is available, you’re ready to get your business loan. Go through the following steps.

1. Clean-up Your Online Profile

Lenders will be checking out your business’ public persona. If things are a mess in your social media presence or on your web site, lenders may not want to trust you with their money.

2. Determine How Much Money You Need

Do you need the money to expand the business? Are you looking to purchase new equipment? Do you need to consolidate some other loans?

It’s good to have a specific plan of how you will be using the loan proceeds, including the exact amount you need. In fact, some lenders may require that you have a plan in place.

3. Understand Your Credit Worthiness

A lender is not going to just hand you the money you’re requesting. The lender needs to determine your credit worthiness. If the lender doesn’t think you can repay the loan, the risk of giving you the money will be too great. Some factors the lender will consider include:

• Credit Report: Beyond looking at the credit history of the business, the lender likely will consider your personal credit history too. Lenders will look at whether you’re making timely payments.
• Other Loans: If your business has other outstanding loans, the lender may worry about your total obligations. If you do have other loans, make sure you’re repaying them on time, or you’ll almost certainly receive a rejection for your new loan application.
• Cash Flow: You will need to have appropriate cash flow occurring to meet your loan obligations. The lender will need to see proof of your cash flow.
• Investors: If you have strong investors in your business, a lender will consider that as a favorable situation. It indicates the business is stable.

4. Collect the Required Documents

Before going to a lender, it can be helpful to have the correct documents in place. Appearing prepared when you meet with the lender can help your chances of receiving the loan.

Certain business documents are common for any type of business loan, so it’s good to have these documents ready to go. Some documents you likely will need to provide include:

• Legal structure of the business
• Business tax returns
• Personal tax returns
• Profit/loss statement for the business
• Bank statements
• Budget for the business
• Accounts receivable
• Accounts payable
• Financial projections
• Debt repayment schedule
• Proof of ownership of collateral
• Business plan, including how you will spend the loan proceeds

Your documents will receive a greater consideration from the lender if a CPA has audited or reviewed them. Having these basic documents ready also speeds up the process of receiving your loan. Understand that you may need to produce other documents for the loan.

5. Figure Out What You Have for Collateral

You may use whatever assets you have in your business as collateral for your loan. The more physical assets you have, the better chance you’ll have of receiving the loan. Collateral may include:

• Land
• Buildings
• Equipment
• Inventory
• Cash holdings
• Unpaid invoices for your work or accounts receivable

If your business doesn’t have a lot of collateral yet, you may need to put up some of your personal holdings as collateral. You will want to carefully consider whether to do this. You may not want to risk your personal assets in the business.

6. Shop Around for the Best Terms

The terms for the business loan will depend on the type of loan you’re receiving. Here are some common terms to focus on:

• Interest Rate: What is the rate on the loan, and does it vary over time? Does the interest accumulate weekly, monthly, or annually?
• Loan Fees: Some loans have origination fees, processing fees, and other upfront fees. You also may face a fee if you repay the loan earlier than the terms specify.
• Penalties: No one plans to miss a payment. But if the unexpected occurs and you do miss a payment, you should pay attention to the penalties you may face.
• Limitations: Some loans require that your business must carry a minimum amount of cash or must have a certain level of sales to maintain the terms of the loan.
• Collateral Requirements: Understand the circumstances under which the lender can claim your collateral. For example, if you miss a payment or dip below certain financial thresholds, could you lose your collateral?

7. Submit Your Application

When it’s time to apply for your loan, you probably will want to start with an online application. This allows you to save time in the application process, as you can submit the basic information through this process.

Then the basics will be out of the way when the lender is ready to contact you and you can focus on the specific items required for this particular loan.

Depending on the lender, you may need to have a face to face meeting. Other times, you can complete everything on the Internet or through a phone call.

Once you’ve submitted your application and added any other information the lender requests, you will have to wait for an answer. Some lenders may be ready to give you an answer in a few hours or a day or two. For more complex situations, it could take a week, a month, or even longer to receive an answer.

Putting Your Business Loan to Work

Once you have your loan proceeds in hand, it’s time to go to work. Regardless of why you wanted the loan, now that you have it, you need to make the most of this money and let it help your business.

If you’ve done the work upfront, this will be easy.

Take the budget you put together during the loan application and follow it. Be really careful with changing directions. When I’m flush with cash, it’s easy for me to rationalize why I should spend money more speculatively in my business. If I go that route, I won’t have the increased cash flow to support the debt payments. Staying focused my original plan ensures I’m being conservative enough with my spending.

How to Get a Business Loan is a post from: I Will Teach You To Be Rich.

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