And even if you are operating the business from your home’s garage, chances are you will at some point, borrow money to effectively launch or run your business, which in essence goes down to having a good business credit rating. It calls for the need to improve your business credit rating. Unfortunately for many small business owners, building business creditworthiness is not similar to a race car where you can rev the engine and get an almost instant result....

But exactly how earnings are calculated can be a somewhat complicated matter in the world of business. Here’s what you need to know about earnings and how they impact a business. What Are Earnings? The earnings definition is simple, but the concept of earnings has many uses. The earnings of an individual are money that person receives for work or business ownership. The earnings of a business are the same as its net income or profit....

This article discusses the two ways to deduct business driving expenses, and limits and restrictions on these deductions. Who Can Deduct Business Driving Expenses? Your small business can deduct all business driving expenses for all types of vehicles driven by business owners and employees. If your business owns the vehicle, you can also deduct depreciation expenses, but only if you use the vehicle more than 50% of the time for business purposes....

If you later have second thoughts after putting money into and maybe even having set up the account, you can’t cancel or reverse the UTMA or take your money back. Still, there are certain things you can do to change the nature of your gift and the way the child can access it when they reach the legal age. In some states, you may also be able to delay the age at which the minor can access the money....

Rehabilitation Prior to Bankruptcy Prior to an insurance company bankruptcy, the insurance company will go through a process called rehabilitation dictated by the laws of the state, whereby the state insurance commission will make every attempt to help the company regain its financial footing. If it is determined that the company cannot be rehabilitated, then the company is declared insolvent or bankrupt, and the court orders the liquidation of the company....

Alternate name: Simplified Employee PensionAcronyms: SEP, SEP IRA For example, let’s say you run a freelance writing business as a sole proprietor. You decide to open a SEP IRA through an online brokerage, which requires completing a simple online form. Once your 408(k) plan is open, you can contribute money up to the IRS annual contribution limits to fund your retirement. How a 408(k) Plan Works Businesses of any size can establish a Simplified Employee Pension or 408(k), though they may appeal more to smaller businesses for two reasons....

Combined Ratio = Loss Ratio + Expense Ratio If a company has a combined ratio of 90%, 90% of its premiums go to paying for insured losses and expenses. That means 10% of the premiums are profit. This ratio shows if the insurer earned a profit from underwriting, or if it’s spending more in expenses than it’s receiving in premiums. It is a number that can tell you quickly whether or not an insurance company is making money on underwriting....

If you’re buying a car 100% in cash, your credit score will likely never even come up in conversation. However, if you’re like most Americans, you probably can’t afford to make such a large purchase in cash—and that’s where your credit score comes into play. If you’re worried that your credit score is too low to enable you to buy a car with financing, I’ve got some good news and some bad news....

The best letter reads like a lawyer’s pleading. It establishes facts in such a way as to convince your mortgage lender to grant a short sale or a loan modification instead of foreclosing. What Constitutes Hardship? Although an underwater mortgage is one of the qualifications for a short sale, a bank is under no obligation to agree with you when you assert your home is worth less than the mortgage balance on it....

Acronym: LTV ratio For example, if you buy a home that appraises for $200,000 and make a down payment of $20,000, you are borrowing $180,000 from the bank. The loan-to-value ratio on your mortgage would then be 90%. The ratio is used for several types of loans, including home and auto loans, and for both purchases and refinances. LTVs are part of a bigger picture that includes: Your credit score Your income available to make monthly paymentsThe condition and quality of the asset you’re buying...

Your payment might be returned unpaid by your bank to your credit card lender for a few reasons. Insufficient funds, account closure, or cancellation of the check are a few situations that could explain why your payment was returned. The payment won’t process correctly if you accidentally enter your payment information incorrectly when you pay online or by phone, and you could be charged a returned check fee for this mishap as well....

Learn more about how third-party mortgage origination works and how it affects the industry and your mortgage. Definition and Examples of Third-Party Mortgage Originators Third-party mortgage originators are entities that work collaboratively with traditional banks and new types of non-bank mortgage lenders to streamline the mortgage lending process. They often use technological solutions to, for example, make it possible to apply for a loan online. Some third-party originators make it easier to market mortgage loans to customers, or they may originate and fund the mortgage loans themselves without the involvement of a bank....

Let’s take a look at use and occupancy clauses, how they work, and whether it’s worth using for you. Definition and Examples of Use and Occupancy Clauses Use and occupancy clauses can be used by either the buyer or the seller in a real estate transaction. The use and occupancy clause gives the intended party the right to move into or remain on the property. Alternate names: occupancy agreement, interim occupancy agreement, seller possession after closing agreement, lease back, seller rent-back...

One particular type of debit card is a warm card, or deposit-only card, which employees can only use to make deposits of cash or checks into business bank accounts at branch or ATM locations. This activity is similar to writing “for deposit only” on a check, which means the funds on that check should only be deposited, not withdrawn. When something is marked “for deposit only,” it’s called a restrictive endorsement, which limits how financial instruments like checks and debit cards can be used....

Learn more about what wrap fees are, what they cost, and what services they cover. Definition and Example of a Wrap Fee To better understand what a wrap fee is, it can help to have more context around what a wrap account is. A wrap fee is attached to a wrap account, which is a type of investment account. The term “wrap” comes from the fact that this one fee covers investment advice, brokerage services, administrative expenses, and any other necessary fees or expenses....

Alternate name: row house, cluster home, patio home Do I Need a Zero-Lot-Line House? There are plenty of things to consider when moving to a new home. Space, location, and size are all important, especially when you have a family. Let’s say that you, your spouse, and your two children are searching for somewhere new to live. You already live in a large city, but your growing family needs more room to spread out....

Learn what E-Minis are, how they work, and what their pros and cons are. Definition and Example of an E-Mini An E-Mini is a futures contract that is 20% of the size of a typical futures contract. The “E” in the name stands for electronic, meaning they are primarily traded electronically. Among the most popular is the S&P 500 E-Mini, which is based on the S&P 500 index. These contracts are agreements between buyers and sellers to exchange money based on the value of the S&P 500 stock index....

Learn more about the exclusion ratio, how it works, and what it means for your investment. Definition and Example of an Exclusion Ratio An exclusion ratio represents the percentage of an annuity payment that doesn’t count as gross income, hence that amount is not subject to taxation. This ratio is calculated by dividing the investment in the contract by the expected return. Any amount above the exclusion ratio is subject to taxation....

You may have to pay an origination fee upfront when you close on your loan. Alternatively, the fee may be deducted from your loan proceeds or rolled into the total loan amount so you can repay it over time. Not all origination fees are created equal. The type of loan you take out, your credit history, and the lender you choose may affect the amount of your origination fee. For example, one lender may charge an 8% fee, while another lender might charge 3%....

Consider this example. Let’s say Henry purchases a car under his name. Under a common-law property system, Henry is the sole owner of that car. However, if the car title included both Henry and his spouse, Julia, then both spouses share ownership. How Does Common-Law Property Work? The majority of states in the U.S. have adopted the common-law property system. Only nine states—Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin—use the community-property system....