Monthly Archives: June 2016

Ten Tips to Choose the Right Credit Card

Have you decided to apply for a credit card? That’s nice. No doubt these cards are useful and convenient way to pay for services in daily life. It provides you finance flexibility if used sensibly. One can use it for daily purchases, for business dealings, for managing debt problems and even for charity purposes. It can also be used abroad in foreign currencies through online network facilities.

But before applying for a credit card you must consider certain factors particularly if you are living in UK. As UK has one of the most competitive credit card market in the world so searching a right card that best meets your needs could be a time consuming process. So must keep in mind some special tips while choosing a best credit card. Info policy available with each credit card can also serve as a guide to compare between different cards.

1- Status Of an Individual

Choosing a credit card depends upon individual status. It means whether he or she is a student, a businessman, a middle class man, a retired person or a widow. Different types suit different persons. Standard credit card is available for everyone over 18 years while premium credit card offers comparatively higher credit with lower interest rates and some extra benefits. So you can choose a credit card accordingly to your priorities.

2- Reason For Applying

Why are you applying for a credit card? This question matters a lot. Is it for managing your financial pressure or for business dealings. Do you want to enjoy special offers and incentives available with it or you want to use it for emergency situations. Whether you want to reduce interest payment on other existing credit card through balance transfer or want to donate for charity programs. Ask these questions to yourself before applying for a card. If you are able to clear the bill in full each month then annual fee and length of interest free period are more important factors than interest rate. But if you want some cash advances to manage financial burden then you must consider fees for cash advances and related interest rate (higher for cash advances).

3- Interest Rates And Interest Free Period

You must have a complete detail of interest rates alongwith additional information about length of interest free period, interest calculation method, introductory low rates offer and APR. APR is annual percentage rate which expresses the cost of using credit card. Interest rates can also be increased or reduced over time. Monthly statement shows the current interest rate for respective card. In case of an increase in interest rate advance warning is given while in case of decrease in interest rate customer is informed within thirty days.

4- Rewards And Incentives

Rewards and incentives can also be another attraction to apply for a credit card. It includes cash backs, voucher schemes, price promise deal, travel insurance and purchase protection insurance etc. In cash back offer minimum percentage of cash is given back to you on spending certain amount. In voucher schemes vouchers or certain number of points are given to you which can be redeemed for future rewards. Price promise cover ensures refund in case of difference in prices if you bought an item on higher price and but later you found it on cheaper rate elsewhere. Through travel insurance you will find assistance in case of flight delay, lost of luggage and personal injury during travelling. While purchase protection insurance covers purchases in case of damage or loss for certain time period.

5- Paymant Structure or Repayment Policy

Payment structure also matters a lot when taking final decision in this regard. You must be fully aware of specified ways to pay off balance on credit card account. Different ways of payment include cash payment, using cheques or debit cards, direct debit option, telephone or internet banking etc. Most of the companies set up monthly minimum repayment percentage on your total balance that you are required to pay. This percentage can be a fixed amount or 2% to 4% of total balance. Knowing payment structure is very important as it is not a free money and you have to repay it through specified procedure to avoid any complexity.

6- Annual Fees

You should also consider annual fees (if exists), as some companies charge annual fees for holding their card which can also be paid in twelve monthly installments.

7- Online Transaction Facility

Credit card network is another factor to ponder over. Card company must offer 24 hour online transactions facility and must have a strong credit dealing network in your own country and abroad as well so you would have no problem in using credit card when and where you need it.

8- Default Charges

Default charges include extra payment in case of violating terms and conditions. Any kind of violation including late payments or exceeding credit limit can lead to the imposition of default charges.

9- Requisites for Card Qualification

Qualifying for a credit card depends upon certain factors including verification of your personal information provided in application form, previous credit history or credit rating (if exists), your overall ability to pay off the balance and above all your credit limit. If you get qualified then better otherwise some companies also offer appeal procedure in case of disqualification. So you can avail this opportunity as well for becoming qualified for a credit card.

10- Responsibility And Protection

Final and most important thing to remember is that credit money is a responsibility not a right. Credit card offers many potential benefits. It’s a flexible way of borrowing money in short time to manage any financial pressure. But if you use it as free money without moderating your spending habits it can also become a liability for you. It can damage your credit rating and can cost you much more than the actual balance. So be responsible in your spending ways instead of ending up in serious debt complexities. In case of additional card holder, the main account holder who signed the agreement will be responsible for paying off. Protect your card against any fraud or theft and take benefit of Pin or Chip facility which is available around the world to ensure balance security. In fact UK is one of the first countries to provide this facility. In case of disable persons chip is provided with signature card. So safe your PIN and always use secure websites while shopping online. Visit http://www.pinandchip.co.uk for further detail on pin and chip.

Debit Cards

But unfortunately if you don’t get qualified for a credit card then debit card could be another better choice. Popularity of debit card can be gauged by the fact that about 41 million (about 84%) people in UK are debit card holders while the number of credit or other charge card holders is around 31 million (about 66%). Debit card is considered the best option for cash withdrawal with no additional charges while credit card issuers charge withdrawal fees of about 2.5%. Most of the credit cards don’t provide any interest-free period for cash transactions and incur additional interest and fees which gives debit cards an edge over credit card in such circumstances.

The Importance Of Financial Accounting In A Latin Country Environment

Financial Accounting, as it is commonly described, focuses on organizing the financial information of an entity into financial statements to help the decision making of people outside the organization, such as stockholders or suppliers, among others. Its objective is to historically record the economic life of an entity so that its operational development can be analyzed and interpreted by third parties. This is the international accepted definition of Financial Accounting, but one thing is its definition, and another very different one how it is applied to different economic environments.

In some countries with non-stable economies, such as the majority of Latin countries, Financial Accounting becomes essential for a company’s survival and is the most important aspect of business decisions. In the country of Colombia, for example, business decisions (supplying, investing, borrowing, lending) are made after analyzing the financial statements of the companies involved. In a country where assets are guarded thoroughly, organizations take extreme precautions before making any decisions that will affect those assets in any way.

Financial Statements become the most important source of information about companies involved in a business deal. Since they are of public use by law, they’re the first documents requested in any type of negotiation. To become a new supplier for another entity, for example, a company would have to present documents such as bank and clients or suppliers recommendation letters, but the most essential ones would be the Balance Sheet and the Income Statement of the fiscal year immediately prior to the date. Without these two documents, the entity would not be accepted as a supplier, even if the recommendation letters show it to be a very profitable and stable organization.

The main reason for financial statements to be so valued in the business environments of these types of economy countries is because they provide a very trustworthy source of information about an entity’s financial performance. It may not be a very different reason for why they are valued in every other economy, but especially in these ones, where investing has so many risks, and where procedures may take double the time of an average international company, resulting in time expenses, it helps make decisions easier.

Having the financial statements ready in time is also a priority of every President or General Manager of a company. Even though they’re not the ones directly involved in the process of elaborating these documents, they have a close supervision of the task. They’re responsible for making sure the Accounting Department is doing its work correctly and with the honesty and ethics required to be able to present accurate and true financial information. In Colombia, Financial Statements need to be signed by the Legal Representative of the company, who in the majority of the cases is the same General Manager or President or CEO; by the Statutory Auditor (or Company Auditor), and by the Comptroller. By signing them, they are confirming that the financial information recorded in the Balance Sheet and in the Income Statement, as well as the explanatory notes, is true and real and hasn’t been tampered with in any way.

Being a country where corruption sometimes messes up the flow of businesses, having the assurance that the financial information of a company is backed up by these three significant signatures, makes it easier to be able to trust an organization when business decisions need to be made. It also helps the company maintain its place in the industry and be recognized as profitable and stable.

Since Financial Statements play such an important role in the decision making of every type of organization, almost every administrative employee understands the basics of financial accounting, and know how to interpret a Balance Sheet. Even if they may not understand what every account means, they are instructed in what a good and acceptable Balance Sheet should look like and the importance of its information, related to their line of work. They also know how an Income Statement and its content is very important when preparing future budgets.

Even though the general importance of Financial Accounting is the same in every country, it plays a very significant and primordial role in Latin economic environments. That is why serious measures are taken to make sure that Financial Statements are done in the most ethical and transparent way, allowing Financial Accounting in non stable economies, to continue being a source of reliability and trust in the process of business decision making.

Defending Yourself in an IRS Trust Fund Recovery Penalty Assessment Controversy

In the current economic climate, many firms are having a hard time paying their bills and some choose to borrow from Uncle Sam by taking employee withholding taxes and using them for operating capital instead of depositing them with the United States Treasury. IRS takes a very dim view of this unorthodox practice and the interest and penalties can be severe. Many companies never get current and go under owing IRS unpaid 941 Payroll Tax. Thus the do-it-yourself “loan” becomes an unpaid debt that the corporation can’t pay if it is liquidated with no assets to pay Uncle Sam.

When this happens, the corporate protection for shareholders, officers, and directors against debts owed to company creditors does not fully apply. However, liability is limited to the trust fund and does not include penalty, interest, or the corporate share of FICA. The unpaid trust fund may be recouped against these persons upon investigation and determination of liability by an IRS Revenue Officer. Unfortunately, if the 941 tax is from a sole proprietorship, there is no need for the TFRP. The owner is 100% liable.

The IRS goes after the corporate officers and directors or other “responsible persons” under IRC 6672. A “responsible person” is one who has the duty to perform or the power to direct the act of collecting, accounting for, or paying over trust fund taxes. A Trust Fund Recovery Penalty (TFRP) may be proposed on those who are guilty of:

1. Willful failure to collect tax;
2. Willful failure to account for and pay over tax; or
3. Willful attempt in any manner to evade or defeat tax or the payment thereof.

The Trust Fund Recovery Penalty (TFRP) under IRC 6672 is equal to the total amount of tax evaded, not collected, or not accounted for and paid over. Even a Chapter 7 bankruptcy of the corporation doesn’t stop the TFRP. However, in some cases a Chapter 11 may provide for a repayment plan of the tax and the TFRP not assessed pending resolution. Once assessed, the TFRP is a priority debt of the individual charged and is generally excepted from discharge in a personal bankruptcy.

The Revenue Officer uses a Form 4180 to conduct interviews with those persons he or she feels can provide reliable information on the operation of the business prior to and during the run-up of the tax debt. They will secure bank signature cards, copies of signed checks, loan applications etc during the course of the investigation. If the documents are not provided, they can be secured from third parties by issuance of a summons.

So what if you were a lowly secretary at Worldwide Wonderful Widgets LLC when they went under but you signed payroll checks? You may or may not be liable depending on the circumstances. If you were directed to sign the checks by your boss and your position did not require responsibility for making sure the taxes were paid, you may have a defense against the penalty. The issues are whether or not one has the status, duty, or authority required to meet a liability determination and willfulness. The IRS considers precedent when evaluating responsibility. A major case is the Supreme Court decision in Slodov v. United States, 436 U.S. 238, 78-1, USTC 9447 (1978).

The primary defenses to the TFRP are denial of status, duty and authority; or denial of willful conduct in the non-payment. Other defenses are limited periods of liability (example-I was Controller of WWW for 2 months whereas the tax debt is for the past year); assessment outside the statute of limitations; or that the tax was paid already. In some cases if you can prove you are broke with no assets or prospects, IRS may choose to not assess the TFRP based on non-collectability. If you think you have a defense, do not sign the Form 2751 and agree to the tax assessment no matter how much pressure the Revenue Officer puts on you. File an appeal of the assessment within 60 days. Hire a CPA, Enrolled Agent, or Tax Attorney to help you.

IRS Circular 230 Disclosure: The discussion of U.S. federal tax matters contained in this article is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding valid penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or tax-related matter[s] designed to avoid payment of taxes due the United States. No “covered opinion” under IRS Circular 230 is provided by virtue of this article.