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12/01/2020

Tax SeasonTax season is the time period, generally between January 1 and April 15 of each year, when individual taxpayers traditionally prepare financial statements and reports for the previous year and submit their tax returns. In the United States, individuals typically must file their annual tax return by April 15 of the year following the reportable earnings. Tax returns submitted after the end of tax season are subject to late penalty fees and interest charges.""
In Tz dates are different according to the accounting period adopted.

10/06/2019

Need to know?
""A Shadow Economy Exists

Small businesses in corrupt countries tend to avoid having their businesses officially registered with tax authorities to avoid taxation. As a result, the income generated by many businesses exists outside the official economy, and thus are not subject to state taxation or included in the calculation of the country's GDP. Another negative of shadow businesses is they usually pay their employees lower wages than the minimum amount designated by the government and they do not provide acceptable working conditions, including appropriate health insurance benefits, for employees. " investopedia.

Make your own research in our economy!!

16/03/2019

Need to know?

""
What Is a Trade Deficit?

A trade deficit is an economic measure of international trade in which a country's imports exceed its exports. A trade deficit represents an outflow of domestic currency to foreign markets. It is also referred to as a negative balance of trade (BOT).

Trade Deficit = Total Value of Imports – Total Value of Exports

How Trade Deficits Are Tracked

Nations of the world record trading activity in their balance of payment (BOP) ledgers. One of the chief data silos in this item is the "current account," which tracks goods and services leaving (exports) and those entering (imports). The current account shows direct transfers such as foreign aid, asset income such as foreign direct investment (FDI), as well as the BOT.

A trade deficit typically occurs when a country fails to produce enough goods for its residents. However, in some cases, a deficit can signal that a country’s consumers are wealthy enough to purchase more goods than their country produces.

Fast Facts:

Some of the biggest influencers on the balance of trade include currency exchange rates, the availability of raw materials, as well as bilateral and unilateral taxes.In the 50 years ending in 2018, the United States has shown a trading surplus in just five of those years: 1969, 1998, 1999, 2000, 2001, while it has shown a trading deficit for all remaining years. "
Investopedia.

20/07/2016

Great article to learn and compare our strategies!!!!

By the year 2020, a great shift will have occurred in the worldwide balance of economic power. Analysts predict emerging market economies will become some of the most important economic forces, and China will take the top spot in the list of the world’s largest economies by gross domestic product (GDP), both outright and measured in terms of purchasing power parity.

The Current Top Economies of the World
As of 2015, some of the largest economies in the world include the United States, China, Japan, Germany, the United Kingdom, France, India, Brazil, Italy and Russia. Most of the economies in this top 10 list are developed countries in the western world, while China, India, Russia and Brazil are emerging market economies.

The Top Economies of 2020
The rising importance of emerging market economies in 2020 will have broad implications for the world’s allocation of consumption, investments and environmental resources. Vast consumer markets in the primary emerging market economies will provide domestic and international businesses with many opportunities. Although income per capita will remain the highest in the world's developed economies, the growth rate in per capita income will be much higher in major emerging market nations such as China and India.

According to anticipated GDP in terms of PPP, in 2020 the top economies will be China, the U.S., India, Japan, Russia, Germany, Brazil, the U.K., France and Mexico. One of the major reasons for the growth of emerging economies is that advanced economies are mature markets that are slowing. Since the 1990s, the economies of advanced countries have experienced far slower growth in comparison to the rapid growth of emerging economies such as India and China. The worldwide financial crisis from 2008 to 2009 fueled the trend of decline among the advanced economies.

For example, in 2000 the U.S., the number one economy in the world, accounted for 24% of the world's total GDP. This declined to just over 20% in 2010. The financial crisis and a faster-paced growth by emerging economies were key factors in the decline of the U.S. economy in relation to China. In the mid-2000s, Japan’s economy saw a slight recovery after a lengthy period of inactivity that was due, at least in part, to inefficient investments and to the burst of the asset price bubbles. The global economic downturn has had a significant impact on the country because of prolonged deflation and the country’s heavy dependence on trade.

The economies of countries in the European Union, which include France, Italy and Germany, account for just over 20% of the world’s total GDP. This is a relatively large decrease from the year 2000, when these countries collectively held over 25% of the world’s GDP. The increase in average population age and rising unemployment rates is contributing to this slowdown.

Before the Brexit vote in late June, the International Monetary Fund (IMF) issued a report warning the UK of the economical consequences of leaving the EU. The IMF estimated that the negative effect on GDP following a leave-vote could be anywhere between 1-9.5%. The UK voted to leave and until trade agreements have been made, it will be difficult to accurately estimate an impact on the GDP.

Brexit aside, the IMF predicts advanced economies will experience a growth of less than 3% in 2020. Advanced economies are also facing challenges in terms of public debt reduction and government budget deficits. The IMF also forecasts that growth of Asian economies will be significantly higher, at approximately 9.5%. As of 2015, the growth of these Asian economies is one of the factors driving the worldwide economic recovery.

The Advancing of Emerging Countries
Emerging economies are catching up with the progress of the advanced world and are predicted to overtake many of them by 2020. This will cause a substantial shift in the balance of economic power around the world. China’s share of the world’s total GDP increased more than 6% from 2000 to 2010. Analysts and the IMF anticipate China taking over the lead position as the world’s largest economy, and posit China may overthrow the U.S. as early as 2017. By some calculations, China is already ranked as the largest economy in the world.

As of 2015, India has the 10th largest economy in the world. Many analysts foresee India surging in growth and taking over Japan’s place as the third largest economy in the world by 2020. Some believe India may grow even faster and push the U.S. into third place. Analysts point out India’s young and faster-growing population as key factors in the rate of growth for this country’s economy.

Russian and Brazilian growth potential is great, as both countries are two of the world’s largest exporters of natural resources and energy. However, in the future, the lack of economic diversification in Russia may be likely to cause the country some difficulty with continued growth.

Analysts also expect that by 2020, Mexico will have the 10th largest economy by GDP measured at PPP terms. The country’s proximity to the U.S., growing business and trade deals with the U.S. and a growing population will aid its economic development.

Implications of the Economic Shift
As household incomes rise and populations expand, the service and consumer goods markets will present exponential opportunities in emerging markets. More specifically, luxury goods will have opportunities in these markets as more families reach the middle class.

One of the biggest implications is the importance placed on younger consumers. Though in some emerging countries, including China, the population is aging, the population of emerging markets is overall significantly younger than those of people in advanced economies. Young consumers also represent substantial power over purchases, particularly large items such as cars and homes, as well as the items needed to furnish homes.

Emerging countries are likely to become important foreign investors. The foreign investments they are responsible for making only serve to enhance their influence in the global economy. Investments from foreign countries, including those from advanced nations, will also flow more readily into these developing nations, further driving their economies toward future growth.

03/06/2016

NEED 2 KNOW. !!!

DEFINITION of 'Peak Oil'
A hypothetical date referring to the world's peak crude oil production, whereby following this day, production rates will begin to diminish. This concept is derived from geophysicist Marion King Hubbert's "peak theory", which proclaims that oil production follows a bell-shaped curve.

BREAKING DOWN 'Peak Oil'
Because oil is a non-replenishing resource, there is a limit to how much the world can extract and refine. Peak oil is the day that oil production reaches a maximum and will subsequently begin to decline until full depletion is ultimately reached.

31/05/2016

DEFINITION of 'Physical Capital'
Physical capital is one of the three main factors of production in economic theory. It consists of manmade goods that assist in the production process, like machinery, office supplies, transportation and computers.

BREAKING DOWN 'Physical Capital'
In economic theory, factors of production are the inputs needed to engage in the production of goods or services in pursuit of profit. Economists have sometimes disagreed about the exact contours of each category, but there are generally said to be three main factors of production:

Land or natural resources: This is both the land on which factories, shipping facilities or stores are built and the natural resources of a production process, like the corn needed to make tortilla chips or the iron ore which is used to make steel.
Human capital: This includes labor as well as other resources that humans can provide - education, experience or unique skills - which contribute to the production process.
Physical capital: Manmade goods which enable the production process, like machinery, buildings, computers and other goods needed for the production process to run smoothly.
New or startup companies have to invest in physical capital early in their lifecycle, often before they have produced a single good or landed a single client. This can have many different applications. For example, a company that manufactures microwave ovens will have to make a series of investments before it can expect to sell a single microwave; it must build a factory, purchase the machinery it needs to manufacture the product and it must manufacture some sample microwaves before convincing any stores to carry their product.

The accumulation of physical capital with established firms can make the investment required to catch up a major barrier to entry for new companies, especially in manufacturing-intensive industries. The diversification of physical capital is a good way to judge how diversified a particular industry is. From the perspective of physical capital, starting a new law firm is much easier than opening a new manufacturing plant - theoretically, an attorney would only need an office, a phone and a computer. Consequently, law firms outnumber steel manufacturers by a significant margin.

It has long been agreed that physical capital is an important consideration in a company's valuation, but it is also one of the most difficult assets to evaluate. It is considered fixed capital, which is appropriate in that something like manufacturing machinery has long-term value and is relatively illiquid, since it is usually only designed to fulfill a particular purpose. On the other hand, the value of physical capital can change over the years, or can increase in value with upgrades to the asset itself or with changes to the firm that affect its value.

06/05/2016

The Obama administration tightened the screws on tax evasions and money laundering yesterday by announcing a set of new financial regulations that plug loopholes in existing laws. The new regulations, which include an updated customer due diligence rule and closure of single-member limited liability companies, are a response to the Panama Papers leaks, which disclosed widespread cases of money laundering and tax evasion in the U.S., earlier this year.

In his letter to Congressional leaders, Treasury Secretary Jack Lew wrote that additional statutory authority was necessary to “put the United States in the strongest position to combat bad actors who seek to hide their financial dealings and evade their tax responsibilities.”

Among the changes announced yesterday are updates to the customer due diligence rule . The new rule makes it mandatory for financial institutions to identify and verify the identity of “beneficial owners” of bank accounts. According to the updated rule, beneficial owners must be natural persons rather than another legal entity. Financial institutions must obtain a standard certification form directly from the individual opening the new account to satisfy this requirement. However, the rule hasn’t changed the requirement of a 25% ownership to trigger disclosure. A list of beneficial owners for shell companies would have the effect of bringing transparency to several real estate and art transactions in the States.

The Treasury also strengthened its hand in pursuing foreign tax evaders on home soil. In his letter to Congress, Treasury Secretary Lew urged U.S. “reciprocity” for the Foreign Account Tax Compliance Act or Fatca. The act requires IRS disclosure from firms which have foreign accounts held by U.S. citizens. However, U.S. banks and financial institutions are not obligated to do the same for their foreign counterparts. This has led to a flow of funds from individuals and companies seeking to evade taxes in their home countries and the U.S. now rivals Switzerland and Caribbean islands as a tax haven for the rich. He also urged Congress to ratify eight tax treaties that have been languishing in the Senate. According to Lew, ratification will help law enforcement authorities catch tax evaders.
The Bottom Line

The new set of rules released by the Obama administration take aim at money launderers and tax evaders by making ownership disclosure mandatory.

Source Investopedia

What About us!!!!!

19/07/2015

DEFINITION of 'Boutique'
A small financial firm that provides specialized services for a particular segment of the market. Boutique firms are most common in the investment management or investment banking industries. These firms may specialize by industry, client asset size, banking transaction type or by other factors to address a market not well addressed by larger firms.

Smaller players in the financial segment can do well by positioning themselves to serve a niche. Although they may lack some of the resources of larger firms, boutique firms aim to offer more individualized services and tailor their offerings to the needs of their clients. Boutique firms are often started by former employees of larger firms who wish to strike out on their own. Working at a boutique firm can offer an alternative for finance workers who are looking for something different from the large firm experience.

05/05/2015

Good to know

'Path To Profitability (P2P)'

The path to profitability is typically interwoven throughout a company's business plan, with elements of it contained in various sections such as marketing strategy, strategic planning, and financial projections. The actual numbers are contained in the projected financial statements such as the Income Statement and Statement of Cash Flows.

A critical consideration of the path to profitability is that the assumptions and forecasts contained therein should be achievable and backed by solid data and analysis, rather than wildly optimistic targets that may be impossible to meet.

The P2P timeframe will also vary significantly from one company to the next, depending on the sector to which it belongs. While an early-stage technology company may have a P2P horizon of five years, a biotechnology start-up may be in no position to achieve profitability even after a decade.

The newfound emphasis on P2P can be seen in the initial public offerings (IPOs) that have taken place in the bull market that commenced in 2009, especially in the technology sector. Technology companies that have gone public in the second tech boom have done so at a relatively advanced stage, when they had either attained profitability or were on the verge of it. This represents a marked contrast to the numerous technology start-ups that had their IPOs in the first dot-com boom of the 1990s, when business plans emphasized website traffic rather than profits. These companies burned through billions of dollars in capital before going belly-up. The new focus on P2P is a direct outcome of the 1990s dot-com boom-and-bust.

Cheers

31/03/2015

Fiat Money
DEFINITION OF 'FIAT MONEY'
Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. Fiat is the Latin word for "it shall be".

21/03/2015

EXPLAINS 'CURRENCY CARRY TRADE'
Here's an example of a "yen carry trade": a trader borrows 1,000 Japanese yen from a Japanese bank, converts the funds into U.S. dollars and buys a bond for the equivalent amount. Let's assume that the bond pays 4.5% and the Japanese interest rate is set at 0%. The trader stands to make a profit of 4.5% as long as the exchange rate between the countries does not change. Many professional traders use this trade because the gains can become very large when leverage is taken into consideration. If the trader in our example uses a common leverage factor of 10:1, then she can stand to make a profit of 45%.

The big risk in a carry trade is the uncertainty of exchange rates. Using the example above, if the U.S. dollar were to fall in value relative to the Japanese yen, then the trader would run the risk of losing money. Also, these transactions are generally done with a lot of leverage, so a small movement in exchange rates can result in huge losses unless the position is hedged appropriately.

19/03/2015

Credit Card Vs. Line of Credit
Small business credit cards are marketed as an attractive alternative to a traditional line of credit, but there are some important differences.

The first and most obvious difference is that a credit card provides you with a revolving line of credit for your business whereas a loan or line of credit is fixed. That means that you can continue to borrow or charge up to your credit limit as you repay your monthly bill when you use a credit card, compared to a fixed line of credit which requires that you apply for a new loan once you have used and repaid your first loan.

Another important difference is the amount of money you can access and the amount of interest charged. Traditional small business loans or fixed lines of credit typically provide a larger amount of financing, which is necessary for more substantial purchases such as equipment leasing and facility costs. These loans cost less because they charge a lower rate of interest.

Lastly, unlike most loans or fixed lines of credit, small business credit cards do not require that the card holder put up collateral to qualify for the line of credit. Credit cards represent an unsecured line of credit, meaning that the money is not secured with an asset. Instead, the card includes a requirement for the card holder to sign a personal guaranty, meaning that she or he is personally and legally liable for repaying the money borrowed on the card. (For more on this read Asset Protection For The Small Business Owner.)

Business Credit Card Pros
There are a number of reasons why a small business owner may consider applying for a small business credit including:

Easier Qualification
It can be easier for business owners who do not have a well-established credit history to qualify for a revolving line of credit with a credit card, rather than a traditional line of credit or bank loan.

Convenience
Credit cards are the ultimate in financing convenience. Business owners can quickly access funds for purchases or cash withdrawal, much more easily than having to find cash and/or use a checkbook.

Financial Cushion
A credit card can provide business owners with a much-needed financial "cushion" when accounts receivables are behind or sales are slow and the business is short on cash.

Online Ease
Increasingly, business owners make purchases and do business online with vendors, contractors and suppliers. Using a credit card makes online transactions easier.

Financial Bookkeeping Assistance
In addition to receiving a monthly statement, most cards provide small business card holders with online tools to manage their account, and a year-end account summary which can help a bookkeeper track, categorize and manage expenses. It can simplify bookkeeping, help when using outside professionals to navigate an audit and pay taxes, and provide an easy way to monitor employee spending.

Rewards and Incentives
Many cards offer business owners rewards for using the card including discounts, airline travel miles and more. Some also provide"cash back" incentives, repaying card holders a percentage of their purchases. (For more information on this read Credit Card Perks You Never Knew You Had.)

Tool to Build Credit
Responsibly using a small business credit card - which means paying the bill on time, paying more than the minimum due, and not going over the credit limit - can be an easy way in building up a positive credit report for your business. That, in turn, can help you be more likely to qualify for a loan or line of credit, and at a potentially lower interest rate, in the future. (To learn more, see How Credit Cards Affect Your Credit Rating.)
Business Credit Card Cons
Before rushing to apply for a business credit card, it's important to consider these potential downsides:

More Expensive
The convenience and ease of small business credit cards come at a price - they typically charge a much higher interest rate (1-3% over prime) than a bank loan or fixed line of credit. That interest can add up quickly if card activity is not repaid on time and in full each month. According to the National Small Business Administration, 71% of business owners who used credit cards as a source of financing in 2007 carried a monthly balance. In addition, without a system to regularly and carefully monitor card usage it can be easy to accidentally overextend your firm financially by going over your firm's credit limit or incurring late fees or penalties. (For more on this, read Six Major Credit Card Mistakes.)

Personal Legal Liability
Most small business credit cards require a personal-liability agreement (your personal security) to repay debt. This means that any late or nonpayment could result in a negative personal credit report and the inability to personally borrow money. You also may have to pay more with a higher interest rate.

Security Issues
Business owners need to carefully manage their business credit cards. Security measures should be created to ensure that cards or card information is not stolen by employees, vendors, contractors and others who come through the office space. It's also important to make sure that employees that are authorized to use the card do not use the cards for personal spending, and that they take precautions when making online transactions to avoid being hacked. (Find out how to protect your personal information from phishers, scammers and thieves; read Keep Your Financial Data Safe Online.)

Less Protection
Often, small business credit cards do not carry the same protection as consumer credit cards. For example, many cards will not provide the same level of assured services when disputing billing errors or needing to make merchandise returns. Be sure to review what level of protection and services a card offers before applying.

Fluctuating Interest Rates
Unlike a loan or fixed line of credit, the company that issues your credit card can reset the interest rate on your credit card depending on how you use and manage your account.
Conclusion
Small business credit cards are one option business owners may want to consider when choosing financing tools and resources. Make sure you understand the credit card's terms of usage, costs and benefits before applying, and have a system in place to monitor and manage usage.

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