If you can swing this, it makes good sense. Why? Interest on your student loan accrues daily. Just cut your monthly payment in half and make two payments per month. This way, it might be easier to juggle your finances, as opposed to doling out one big chunk every month. Also, paying more often gives you the feeling that you’re making progress – and you are because of the daily accrual. #WinWin
Use the Debt Avalanche Method
With this approach, you’re paying off your highest interest debt first. Makes sense, right? After you do this, make minimum payments on all of your other loans. If you have any extra cash left over, pay your highest interest loan. Keep at this until you’re paid in full.
Claim the Student Loan Tax Deduction
This is cool. You can write off up to $2,500 of your student loan interest. Now, the amount you can write off depends on your income because there are phaseouts and gradual reductions in place. Just use the 1098-E form (you can get this from your loan servicer) to figure out how much interest you’ve paid. Then get going.
Pay While Still in School
Talk about getting a head start.You’ll cut down on interest (a good thing) while forgoing in-school deferment, and start paying down your debt pronto.
Pay Off Private Student Loans First
Should you have public and private student loans, this is the best strategy. Here’s why: private loans don’t offer student loan forgiveness or income-driven repayment. And they have limited deferment options. You’ll be better off doing this, given all the stipulations that exist for these kinds of loans.
Use Employer Repayment Assistance Programs
This is a sweet deal. Check with your employer to see if they offer such a program. Generally, they offer reimbursement or allocate funds to help you. Don’t forget to ask!
Pay During the Grace Period
This is the six-month period after graduation. While this might not be something that’s initially appealing, think it through. It helps keep interest in check and prevents your balance from growing during your grace period. Also, starting earlier means you’ll finish earlier. Gotta love that.
Consolidate Federal Student Loans
This is a great idea for those with limited resources. You can lower your payment and extend the repayment terms. You’ll most likely pay more interest, but for a short-time solution it’s a good one.
Exceed the Minimum Payment
If you have the means to make this happen, by all means, do it. Another great way to make incredible progress is to make double payments. If you can’t pay double, at least try to pay over the required amount. It’ll help eat away at the interest and eventually, the principal.
Student loans are great while you’re in school, right? They enable you to get the education you want. And while paying them off might be overwhelming, if you use these methods, you’ll be ahead of the game and pay them off sooner than you think.
November 1, 2021 · Blog, Tip of the Month, Uncategorized
⏱ 4 min read
If the thought of paying off your student loan causes a bit of anxiety, worry no more. Here are some ways to pay it off faster. Check them out.
Sign Up for Auto-Pay
This might seem like the most obvious thing to do, and yet, some alums don’t take full advantage of it. The psychology of this works well. When you decide to put your payment on auto-draft, you never miss it. You get used to living on a certain amount of money. Better still, there are lenders who offer refinancing at lower rates, ranging from 1.8 percent to 7.84 percent. But there’s more: Some lenders offer cash-back bonuses. With that said, the catch is you give up important benefits like income-driven repayment and student loan forgiveness. However, refinancing can help you save a bunch – like thousands of dollars.
Pay Bi-Weekly
If you can swing this, it makes good sense. Why? Interest on your student loan accrues daily. Just cut your monthly payment in half and make two payments per month. This way, it might be easier to juggle your finances, as opposed to doling out one big chunk every month. Also, paying more often gives you the feeling that you’re making progress – and you are because of the daily accrual. #WinWin
Use the Debt Avalanche Method
With this approach, you’re paying off your highest interest debt first. Makes sense, right? After you do this, make minimum payments on all of your other loans. If you have any extra cash left over, pay your highest interest loan. Keep at this until you’re paid in full.
Claim the Student Loan Tax Deduction
This is cool. You can write off up to $2,500 of your student loan interest. Now, the amount you can write off depends on your income because there are phaseouts and gradual reductions in place. Just use the 1098-E form (you can get this from your loan servicer) to figure out how much interest you’ve paid. Then get going.
Pay While Still in School
Talk about getting a head start.You’ll cut down on interest (a good thing) while forgoing in-school deferment, and start paying down your debt pronto.
Pay Off Private Student Loans First
Should you have public and private student loans, this is the best strategy. Here’s why: private loans don’t offer student loan forgiveness or income-driven repayment. And they have limited deferment options. You’ll be better off doing this, given all the stipulations that exist for these kinds of loans.
Use Employer Repayment Assistance Programs
This is a sweet deal. Check with your employer to see if they offer such a program. Generally, they offer reimbursement or allocate funds to help you. Don’t forget to ask!
Pay During the Grace Period
This is the six-month period after graduation. While this might not be something that’s initially appealing, think it through. It helps keep interest in check and prevents your balance from growing during your grace period. Also, starting earlier means you’ll finish earlier. Gotta love that.
Consolidate Federal Student Loans
This is a great idea for those with limited resources. You can lower your payment and extend the repayment terms. You’ll most likely pay more interest, but for a short-time solution it’s a good one.
Exceed the Minimum Payment
If you have the means to make this happen, by all means, do it. Another great way to make incredible progress is to make double payments. If you can’t pay double, at least try to pay over the required amount. It’ll help eat away at the interest and eventually, the principal.
Student loans are great while you’re in school, right? They enable you to get the education you want. And while paying them off might be overwhelming, if you use these methods, you’ll be ahead of the game and pay them off sooner than you think.
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
To avoid the challenges mentioned above, you should automate the accounts payable process.
Accounts Payable Automation
Automation removes slow and repetitive manual tasks and lets you digitally submit and approve purchase orders and invoices.
However, when making any investment, businesses are more concerned about the return on investment (RIO). Rest assured that through automation, you can achieve ROI through reduced employment costs, fewer late fees, savings on invoice processing costs, and reduced losses caused by errors, among other non-financial benefits.
Following are the benefits achieved by streamlining the accounts payable workflow through automation:
Get a more accurate picture of your finances – using automation software gives you access to reporting capability that makes it is easy to get a quick overview of business spending.
Have a better command over cash flow – manage cash better with the help of reports that can be created and reviewed in real-time, which improves AP team visibility and forecasting. Automation will help in invoice prioritization as well.
Improve user productivity – employees do not have to waste time sorting documents. With the data centrally stored, employees only need to run a query to find the necessary invoice or purchase order.
Enable remote work – using cloud-based software makes remote access possible and enables approvals to be done remotely.
Auditing is easy – all data is stored in a central database and can be easily accessed.
Cost-effective – it enables timely payments and helps avoid unnecessary penalties and interest fees.
Reduce overhead staff costs – automation will help reduce the accounts payable team, with no need to hire more staff even when a business grows.
Dashboard and analytics tools – allow access to separate dashboards for the team and approvers, each using individual login credentials. At the same time, analytics gives a quick overview of the whole process.
No manual data entry – scan documents to capture data and avoid manual data entry.
Standardized accounts payable workflow – ensures consistency even if your business has different teams responsible for handling the invoicing data.
Payment reminders – set your system to have reminders when pay dates are near. This will help avoid late or forgotten payments.
Qualify for discounts – with a smooth workflow, the accounts payable cycle will require less time, and you may qualify for discounts from suppliers for early payments.
Conclusion
A disorganized accounts payable process can run your business down. Choosing the right AP automation software will help improve accuracy, efficiency, quality and speed for your business accounts payable function. Your business also will have a balance between a healthy cash flow and, at the same time, maintaining a good supplier relationship.
Why you should automate your accounts payables
November 1, 2021 · Blog, Uncategorized, What’s New in Technology
⏱ 4 min read
Accounts payable (AP) is a crucial function to any business, as errors in the process put a company in problems. Although many businesses still use manual methods as they find the system to work fine, it requires a lot of precision from the accounts payable team. There are better – and more efficient – ways to manage AP through automation.
Challenges of the Process
An AP team is responsible for receiving invoices, reviewing invoices, approving invoices, and paying suppliers and vendors. Some AP departments also handle other functions, depending on the nature of the business. However, AP can be a time-consuming, strenuous and paper-intensive process.
An AP team helps a business control costs, maintain a good supplier relationship and analyze spending. Various challenges might indicate that your business is using outdated practices. Such challenges might include:
Dealing with double payments
Difficulties in tracking invoices, especially when your business has many transactions
Forgotten payments
Fraud
Disappearing invoices
Missing purchase orders
Poor business reputation as suppliers lose trust in your business
Negative cash flow
Too much paperwork taking up employees’ time to sort and organize
Skipped processes
Manual processes that result in errors and delays
These challenges not only affect your business negatively, but they also affect your supplier’s business. Consider that late payments cost small businesses $3 trillion per year, which means your late payments create a domino effect. Your business will also be subjected to late payment fines.
To avoid the challenges mentioned above, you should automate the accounts payable process.
Accounts Payable Automation
Automation removes slow and repetitive manual tasks and lets you digitally submit and approve purchase orders and invoices.
However, when making any investment, businesses are more concerned about the return on investment (RIO). Rest assured that through automation, you can achieve ROI through reduced employment costs, fewer late fees, savings on invoice processing costs, and reduced losses caused by errors, among other non-financial benefits.
Following are the benefits achieved by streamlining the accounts payable workflow through automation:
Get a more accurate picture of your finances – using automation software gives you access to reporting capability that makes it is easy to get a quick overview of business spending.
Have a better command over cash flow – manage cash better with the help of reports that can be created and reviewed in real-time, which improves AP team visibility and forecasting. Automation will help in invoice prioritization as well.
Improve user productivity – employees do not have to waste time sorting documents. With the data centrally stored, employees only need to run a query to find the necessary invoice or purchase order.
Enable remote work – using cloud-based software makes remote access possible and enables approvals to be done remotely.
Auditing is easy – all data is stored in a central database and can be easily accessed.
Cost-effective – it enables timely payments and helps avoid unnecessary penalties and interest fees.
Reduce overhead staff costs – automation will help reduce the accounts payable team, with no need to hire more staff even when a business grows.
Dashboard and analytics tools – allow access to separate dashboards for the team and approvers, each using individual login credentials. At the same time, analytics gives a quick overview of the whole process.
No manual data entry – scan documents to capture data and avoid manual data entry.
Standardized accounts payable workflow – ensures consistency even if your business has different teams responsible for handling the invoicing data.
Payment reminders – set your system to have reminders when pay dates are near. This will help avoid late or forgotten payments.
Qualify for discounts – with a smooth workflow, the accounts payable cycle will require less time, and you may qualify for discounts from suppliers for early payments.
Conclusion
A disorganized accounts payable process can run your business down. Choosing the right AP automation software will help improve accuracy, efficiency, quality and speed for your business accounts payable function. Your business also will have a balance between a healthy cash flow and, at the same time, maintaining a good supplier relationship.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
While the emerging space of NFTs is full of excitement, risk and opportunity, there’s the boring tax side of the equation. Unlike most other forms of assets or income, creating, trading and investing in NFTs can trigger a tax event.
Creators
NFTs are classified as “self-created intangibles” like other works of art. The IRS allows the artist to deduct the expenses of creating the NFT immediately – even if the artwork is not sold. As a result, the creator typically has zero “basis” in their work. This means when they do sell their work, they’ll have no deductions, so a $100,000 sale means $100,000 of taxable income.
There is little formal guidance, but general principles indicate that NFTs are their creator’s inventory instead of a capital asset. This means that this income is treated as ordinary income and not capital gains – and it is subject to self-employment taxes as well.
Lastly, with certain NFTs, while the NFT itself is a unique blockchain token, the creator might retain copyright to whatever underlying artwork was used to make the NFT. Here, the creator may sell multiple NFTs based on the same original artwork as limited-edition, signed reprints. When the copyright is retained and copies are sold, the income is considered a royalty.
Traders and Investors
Trading NFTs is not as simple as trading stocks.
NFTs are purchased with cryptocurrency (most commonly Ethereum). Since the IRS treats cryptocurrency as property instead of currency, the purchase itself creates a taxable event. Swapping your Ethereum for an NFT means you’ll have to pay tax on any gain you have in your Ethereum position between its value at acquisition and the moment of using it to acquire the NFT.
Second, taxpayers will trigger a taxable event when they sell the NFT, thereby subject to capital gains taxes on the sale of the NFT at the 28 percent collectibles rate.
Conclusion
NFTs offer fantastic opportunities at tremendous risk. As a result, there will be winners and losers, but one thing is certain: the IRS should love NFTs for the taxes.
Why the IRS Should Love NFTs
October 1, 2021 · Blog, Guest Article of the Month, Uncategorized
⏱ 3 min read
Sales and trading of nonfungible tokens (NFTs) are soaring recently. With the emergence of major marketplace platforms such as Opensea, NFTs are no longer an obscure segment of the blockchain technology world. Even old guard auction houses such as Sotheby’s are getting in on the action. In early September, the auction house facilitated the sale of a set of “Bored Apes” NFTs that sold for more than $24.4 million.
While the emerging space of NFTs is full of excitement, risk and opportunity, there’s the boring tax side of the equation. Unlike most other forms of assets or income, creating, trading and investing in NFTs can trigger a tax event.
Creators
NFTs are classified as “self-created intangibles” like other works of art. The IRS allows the artist to deduct the expenses of creating the NFT immediately – even if the artwork is not sold. As a result, the creator typically has zero “basis” in their work. This means when they do sell their work, they’ll have no deductions, so a $100,000 sale means $100,000 of taxable income.
There is little formal guidance, but general principles indicate that NFTs are their creator’s inventory instead of a capital asset. This means that this income is treated as ordinary income and not capital gains – and it is subject to self-employment taxes as well.
Lastly, with certain NFTs, while the NFT itself is a unique blockchain token, the creator might retain copyright to whatever underlying artwork was used to make the NFT. Here, the creator may sell multiple NFTs based on the same original artwork as limited-edition, signed reprints. When the copyright is retained and copies are sold, the income is considered a royalty.
Traders and Investors
Trading NFTs is not as simple as trading stocks.
NFTs are purchased with cryptocurrency (most commonly Ethereum). Since the IRS treats cryptocurrency as property instead of currency, the purchase itself creates a taxable event. Swapping your Ethereum for an NFT means you’ll have to pay tax on any gain you have in your Ethereum position between its value at acquisition and the moment of using it to acquire the NFT.
Second, taxpayers will trigger a taxable event when they sell the NFT, thereby subject to capital gains taxes on the sale of the NFT at the 28 percent collectibles rate.
Conclusion
NFTs offer fantastic opportunities at tremendous risk. As a result, there will be winners and losers, but one thing is certain: the IRS should love NFTs for the taxes.
Disclaimer
These articles provide general information on tax, accounting, and financial topics for small businesses and individuals. They are educational in nature and are not specific legal, accounting, financial, tax, or other professional advice, and should not be relied upon as such. This content was prepared by Service2Client and may have been reviewed or edited by the website owner for accuracy and compliance. Look for a trust mark below for verification details. No representation is made that any approach described will achieve a particular result, and no regulatory or professional body has reviewed or endorsed this content. Because each situation is different, readers should consult a qualified professional about their specific circumstances before acting. Images accompanying these articles are protected by copyright and may not be copied or reused.
If the thought of paying off your student loan causes a bit of anxiety, worry no more. Here are some ways to pay it off faster. Check them out.
