Author: Complete Controller

International Financial Reporting Standards (IFRS) is a framework of rules and formats to guide companies in reporting their financial information. It was derived following the development of the International Accounting Standards Board (IASB). It has been adopted on a mass level, with 120 countries following its framework. It helps users detect fraudulent activity by making it easier for them to read it through the familiarity factor.

IFRS is utilized principally by organizations detailing their money-related outcomes, except for those in the United States of America.  Generally Accepted Accounting Principles (GAAP) is the bookkeeping structure utilized in the United States and has considerably more guidelines than IFRS. IFRS concentrates more on general standards than GAAP, making the IFRS group of work a lot smaller, transparent, and easier to comprehend than GAAP.

One of the most awaited standards in IFRS is IFRS 9 (financial instruments), which is expected to change dealings in the banking sectors and was introduced and implemented effective January 1, 2018. Companies should follow it after 2018 and implement it in three stages.

Financial Instruments

It is the classification done in financial instruments and how they are measured regularly. IFRS 9 presents a legitimate methodology for grouping monetary resources driven by cash flows and the plan of action in which an asset is held. This single, rule-based methodology replaces principle-based necessities that are considered excessively confusing and hard to apply. The new model additionally results in a solitary impairment connected to every monetary instrument, consequently expelling a wellspring related to past bookkeeping necessities.

Impairment of Financial Assets

When the financial crisis occurred, delays in recognition of financial loss was identified as one of the biggest weakness of the accounting standards and might have been a reason for the downfall. IFRS 9 requires companies to recognize credit losses as soon as the instruments are used.

Hedge Accounting

Hedge Accounting is a strategy for bookkeeping where passages for security and the restricting fence are treated as one. Hedge Accounting endeavors to lessen the unpredictability made by the rehashed alteration of a money-related instrument’s esteem, known as stamping to advertise

This portion of IFRS 9 revolves around risk management and hedge accounting. It helps financial statement users realize the related risks and explains the hedge accounting process.

Hence, IFRS 9 has proved itself to be revolutionary in the banking sector, and the problems that were caused while following IAS 39 have been removed. It was the biggest contribution after the effects of 2008’s financial crisis. It has helped banks in more effective risk modeling. It has provided them with a powerful technology system. However, there are certain challenges that banks are going to face while following this accounting standard.

IFRS 9 details classifying an entity and measuring financial liabilities, non-financial items, assets, and sales contracts. This way, companies need to identify financial liability and assets in the financial position’s statement. It happens when a connection builds with the instrument’s contractual provisions. Plus or minus the fair of your financial asset, that entity evaluates it further at the beginning of recognition.

The entity’s business architecture manages its assets and contractual cash flow qualities. If your business model handles contractual cash flow or there is a rise in cash flow, companies will measure their financial assets at an amortized price. Reclassify all your affected financial properties by making certain changes in your business model that manage your financial assets.

There are two simple ways to manage fair value. First, through different comprehensive income, and second, by evaluating the correct percentage of profit or loss. You and your team must have full command using IRFS 9 as a company owner.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Many minority investors perform a passive management of their investment where the objective is to place savings in financial products, such as shares or fixed-income products. This investment provides an annual income with the objective of minimizing risk without taking control as detailed or exhaustive as an active investment.

Motivation for Passive Investment Management 

Most minority investors do not have adequate financial training to manage their portfolios. If they do, they cannot devote the time required for this type of investment since the number of variables and factors to consider seems almost endless. However, any minority investor knows that large securities and fixed-income products are safe investments that have virtually no risk despite not maximizing the return on investment.

On the side of fixed income, the most important financial products are fixed-term deposits. Banks immobilize customer money by offering an interest rate for capital in exchange. Often, a fixed-term deposit is the star product of most banks. Additionally, there are other products, such as public debt or corporate debt, in which savings clients act as lenders of public and private entities, respectively.

On the equity side, passive investment is based on the purchase of shares of large corporations, such as Santander, Telefonica, BBVA, or Iberdrola, which usually have generous profit-sharing policies among shareholders. That is, the saver buys shares of these companies to obtain the dividend that provides an inevitable return on their investment in addition to the revaluation of share value.

Recently, the scrip dividend strategy has been extended, which is based on capitalizing the dividend or converting this income into shares. In this sense, many investors have seen how the number of their shares increases, thereby increasing the dividend to be received and seeing their portfolio grow almost automatically.

Investment Funds

There are almost as many financial products as investment strategies, either active or passive investment. Within the first group, for example, variable investment funds or pension plans are included, whose results depend on the decisions of a manager that modifies their composition based on expected results.

Within the second group, there are investment funds, such as Exchange Traded Funds (ETFs), which replicate the evolution of the stock index like the IBEX. The fund will be composed of the same values ​​as the index with a similar weight, making its evolution similar to the index’s evolution.

In the case of ETFs, the manager’s job is to change the composition of the portfolio based on the changes introduced within the index. For example, if a value leaves the index and another value enters, the manager would be in charge of liquidating the positions of the value that leaves the index and, subsequently, acquiring new shares of the value that is incorporated.

Conclusion

A mixed strategy may be appropriate depending on the profitability you want to achieve and the risk you want to assume. In any case, the question to ask should be: When can I carry out a passive management of my investment?

Obviously, the risk and investment attention to buying shares is not the same between a large and emerging company with growth potential but volatility. When investing in smaller, riskier companies, it is necessary to have more exhaustive investment control to avoid significant losses. In these cases, passive management can be counterproductive.

This decision to engage in active or passive investment is personal to each investor or saver. There is no better or worse strategy because each strategy will vary depending on the needs and goals of the investor. Each situation is different, so it is important not to put all your eggs in one basket but to diversify.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Debit or credit is a mandatory part of beginning any small business. A bank loan, line of credit, and professional credit card will help you hire employees, purchase equipment, and finance business growth. 

While most entrepreneurs consider debt healthy, too much debt is undoubtedly adverse for a small business. It acts as a chain around your ankle, holding you back from accomplishing your business’s permanent financial stability and goals. Severe debt is a trauma that creeps up on many entrepreneurs during the initial years of their business venture. 

Digging a small business out of serious debt is no different than pulling you out of personal debt. You’ll have to generate more revenue than the total expenditures and put the remaining profitability towards the business debts until they are fully paid off. 

As an entrepreneur, you must always distinguish the simplicity of debt repayment with effortless execution. Avoiding serious debt requires hard work, so roll up your sleeves and get started. 

Examine The Credit Report 

Primarily, you’ll have to examine every little detail of the business issues, including debt. With accurate facts, you will be able to tackle any existing problem. Most specifically, an entrepreneur must inspect the credit reports and scores. Even the tiniest errors influence a credit score, and you clearly understand current happenings. 

While your credit score is an instant analysis of where you stand on an unvaried scale, a credit report represents the nature of your current accounts. Therefore, you can determine the debt situation and plan remedial strategies for tackling it. 

Prioritize Debt Payments 

Paying off debts is physiologically as crucial as any other business operation. If you get aggressive when the time comes for the debt repayment, you’re more likely to fall into dangerous loops. On the contrary, if you start to pay the debts timely, you’ll notice the creation of momentum. Many financial advisors suggest repaying the debt payments before the due date.

Another great idea is to list down all the debt payments you owe to different creditors and begin paying more minor to more significant amounts. In this way, your debt will start shrinking away in order. 

Negotiate With The Lenders 

Often, it’s feasible to consider the debt from the lenders’ perspective. If you have ever had a customer owe you money for an extended period, you must know what it feels like. To some extent, you assume that you’ll never get your amount back. Therefore, if that customer contacted you after months and offered you to settle for a lower amount, you’d accept. 

Similar is the case with your business debt. If you have uncontrollable debts that might be unaffordable to pay in full, ask the creditor to settle for a percentage of the total debt amount. Most will agree with your terms to get you off their books. 

Seek Out Late-Paying Customers 

You might have late-paying customers who owe you debts. Now is an excellent time to seek out for them and ask for unpaid debts. However, you might be willing to settle for less if you are sure about not getting the amount in full. You can turn around and utilize this money to pay off your debts, and it will be a win-win condition for everyone involved. 

Cut Down Expenses 

Ideally, generating sales brings enough revenue to handle your debts, but if your expenses are getting out of hand, you might need to reduce them. You can sell out the excess equipment and machinery you don’t need or consider getting into a less expensive workplace. 

As an entrepreneur or business owner, it’s the right time to shift the mentality regarding business debt. You must exclude the concept that large purchases require more considerable debt. Debt is not evil, but too much debt can be a lot more stressful, and it’s better to get out of it as quickly as possible, especially for small businesses.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Burger Economics has become a more significant concern from an economist’s point of view and consumer perception. It was introduced back in 1986 by Pam Woodall to understand the concept of Purchasing Power Parity (PPP) while explaining the idea of the Big Mac Index. Because the idea was more appealing, it started to be published by The Economist annually.

The Big Mac PPP

Burger Economics, or more precisely Burgeromics, is the outcome of something that was once illustrated humorously but later took on a new meaning since that day. The Economist magazine explained burgeromics with the help of purchasing power parity theory, keeping an account of Big Mac sales and purchases under observation. It resulted in the factual formation of Burger Economics, where the Big Mac Index could be compared to place a well-presented foreign exchange account.

According to Economists, the Big Mac PPP has an exchange rate that can be compared using the currency of two countries. For example, take the price of a Big Mac in one country and the price of the same Big Mac in another country with different currencies. Now, divide the prices of the first country to that of the second country. If this value is lower than the actual exchange rate, the first currency is undervalued, or the second country’s currency is overvalued.

The Difference in the Currency Exchange Rate

The Big Mac PPP is more likely to determine the exchange rate of MacDonald’s’ hamburger. The Big Mac Index is a friendly guide that determines the rates of hamburgers at places with different currencies, which are similar despite the currency difference. It means that the price of a Big Mac in the United States is almost the same as in other places globally, irrespective of the currency exchange. Purchasing power parity equalizes or adjusts the price of goods and services across different states.

Economists have thoroughly researched this exchange rate index of Big Mac, describing the variants in consumer purchases. For example, Michael Pakko and Patricia Pollard explain that countries that prefer something other than beef, like India, are not included in the Big Mac survey. Similarly, due to consumption differences, Islamic countries that prefer halal food or Israel’s kosher diet are also excluded from the survey of McDonald’s consumers and the Big Mac Index.

Effects of Big Mac on Fast Food Consumers

Even though the Big Mac Index is a global standard, it is not wise to confuse Burgeromics with currency misalignment. It is merely a tool that makes the exchange rate theory easily understandable. It is now included in several economics studies for a better understanding. For those who lean on fast food for most of their lives, there is a more authenticated gourmet version of the index in nearly 48 countries.

According to keynote speaker Dan Ariely, people purchase burgers at a lower price in a fast-food restaurant while they are happy paying more for the same product in a food carnival. This difference is because of the will and decision-making process. Therefore, this occasional price exchange is not included in the Burgeromics survey.

Consumers who buy Big Mac burgers might be interested in Burgeromics. Most people crave burgers at different times of the day, which can be eased by knowing Burger Economics as a better deal for everyday burger yearning. Street food or fast food is the most common American purchase that helps their economy and creates fierce competition in the food industry.

Using the cost-effective benchmark and its comparison expresses how a country’s economic power is increasing due to the popularity of one sector. It also affects foreign trade that exchanges different currencies. In this way, burgeromics provides a taste of international economics.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

One of the most critical questions one faces while charting his career is whether to find a job in a company or start his own business. Both choices have their benefits and drawbacks, and one must consider the tradeoff of each before making the decision. Below are the advantages and disadvantages of working as an employee in an organization and running a business.

Liability

Working as an employee in someone’s company means the liability on his shoulder is limited. Although he will lose his job if the performance continuously declines, he does not have to suffer financial burdens due to the decreasing profitability of the company. Assume the company is struggling with a supplier and cannot make considerable profits; the employee’s monthly wage is unaffected. All he must do is continue working hard, giving the best of his efforts.

However, the liability of an entrepreneur is unlimited. Every loss and expense incurred directly impacts the entrepreneur; therefore, there is constant pressure to generate profits and ensure the venture’s sustainability. Similarly, an increase in profitability is hardly enjoyed by an employee because the salary remains the same with specific bonuses. Hence, the motivation to perform above and beyond expectations is often lacking. Conversely, an entrepreneur enjoys company profits, which motivate him to work tirelessly every day.

Shared Success

An employee works to help the company enhance its profitability, foster customer loyalty, and take the organization to new heights of success. An employee’s focus is to help the company prosper, while an entrepreneur does the same for himself and his company. An entrepreneur can stand out in the crowd with his work and identity, but an employee cannot claim the company’s success as it is credited to the company, not to a team or an individual. An employee is one of the several reasons behind the success, but an entrepreneur is often the sole face of the venture’s success.

Interest and Motivation

Often, people suffer from work stress because they spend their entire day at work trying their best to perform and make ends meet. Unfortunately, many people work in different organizations they cannot relate to or are interested in. For example, think of a creative marketer who must sell a product he does not find interesting. His skills, abilities, and creativity are wasted as he must work with products he dislikes. Therefore, his frustration and stress are not a surprise. If this situation is like yours, you can start a business and work creatively with your desired products. For example, starting a small café or restaurant would be a wonderful choice if someone loves food. If someone is a painter or interested in art, having an art gallery would be a viable option. Entrepreneurship allows one to practice his interests and enjoy the work.

Authority 

An entrepreneur is his boss and does not have to report to a superior authority. Hence, entrepreneurship allows one to work freely and under one’s authority. If you cannot wake up early and struggle to follow the rules, chances are you will have a tough time working within the confines of a traditional working structure. But, if you are an entrepreneur, you enjoy the freedom of working whenever and however you like. Similarly, an employee must abide by the company’s values, policies, traditions, and rules, which may contradict his personal beliefs and values. It leads to conflicts and often demotivates the employee. However, entrepreneurship lets one choose the vision, values, and policies he wants to live and work by.

Finances

Employees do not have to worry about the finances required to fund a project. The company provides all the necessary resources to implement an idea efficiently, but an entrepreneur must look after all the aspects, which is stressful and demands tireless effort. Also, entrepreneurship is about risk-taking, while employment is about security and safety.

When determining which option is best, one must look at both options and choose the one that complements his goals and personality.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

A recession is less than a 10% decrease in a country’s Gross Domestic Product (GDP). The decrease must last more than a consecutive quarter of a year. GDP is the sum of private and public spending on goods, services, labor, and investment.

The terms recession and depression are often confused. It can be said that a recession is generally not as severe as a depression, and a recession tends to resolve quicker than a depression.

Only some people agree on a specific definition for determining an economic recession. Still, most can point to several factors that can cause a recession:

1. Either a significant fall in prices or a substantial increase in prices may occur
2. A decline indicates that people can spend less money, so the GDP is reduced
3. An increase in price can also reduce private and public spending and, therefore, lower GDP

In a way, it is natural that countries experience mild recessions. It is a built-in or endogenous factor of society. Spending and consumption will increase or decrease, as will prices. However, another factor is needed in addition to these occasional drops in expenses to create a recession. Often, something changes rapidly and causes sharp increases or decreases in prices.

A recent recession in early 2000 was due to the sudden decline in dot.com industry activity. In the 1990s, the telecommunications industry made vast amounts of money. It began to exceed expectations regarding future demand. Suddenly, the previously sought-after demand was much smaller than expected, leading to massive layoffs, decreased production, and therefore decreased expenses.

The dot.com fall is considered a “shock” in GDP, which can greatly decrease if the product or industry falls in production. Although the recession resulting from the dot.com bust was considered during 2003, it has far-reaching consequences that are still felt.

Those who initially made excessive amounts of money can still find themselves without work. Telecommunications companies significantly reduced jobs, and employment rates in the industry have never been fully restored. Telecommunications companies also reduced costs by outsourcing production to foreign countries. While this outsourcing has allowed some companies to continue operations, it left many with training for specific jobs they could no longer utilize.

However, other industries have expanded since then and raised GDP. So, the recession is deemed “over,” even though many still feel its effects on a personal level. Rating a recession as “over” does not necessarily account for positive economic changes for the individual.

For example, a recession is sometimes evaluated regarding the country’s unemployment rate. When this is the case, and people find work, the failure to assess changes in income can make the economy seem more productive than it is. A former telecommunications employee who now works at Wal-Mart may have a job. Still, this work is not equivalent to the previous work in compensation. Thus, the analysis of only one aspect of a recession should not be used to indicate economic recovery.

• Getting a job during a recession can be difficult.
• A fall in GDP for two consecutive quarters is a recession.
• Consumers are less likely to make superficial purchases during a recession.
• Consumer spending decreased during the recession.
• More people tend to stay at home instead of leaving to save money during a recession.
• The recession is sometimes evaluated regarding a country’s unemployment rate.

The core effects of the recession are;

• For two consecutive quarters, economies faced a decline in the actual gross product of the country.
• Real Gross National Product (GNP) decreases by 1.5%
• There is more than a 75% decrease in company vacancies for six or more months.
• Around a 6% increase in the level of unemployment occurred due to the recession.

The recession can also be beneficial as you can cure inflation by the recession. As the Federal Reserve does, you can overcome inflation without causing recession by slowing the economy with balance. It does this without using any financial policy.

Politicians are responsible for setting, managing, and controlling the country’s budget well. They strive to stimulate the country’s economy by reducing the social program’s taxes and overlooking the national budget deficit. In this way, American debt increased up to $10.5 trillion. It happened when the United States government didn’t spend on the Economic Stimulus Package of 2009. People call it the American Reinvestment and Recovery Act.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

How Do Inflation and the CPI Affect Us?

Rising prices and inflation

When the economy is in a growth cycle, the improvement of domestic economies leads to an increase in the consumption of goods and services, which translates into an increase in prices. The basic rule of economics says that the higher the demand, the higher the price.  

National monetary base 

When countries are not experiencing economic growth, governments make and issue money to pay their debt or deficit, which has increased the country’s monetary base. In these cases, more money is in circulation than the economy needs.

Consider if each of us were given a million dollars, our final position would be the same since the demand for goods and services would go up so much that prices would counter-balance the available money. It could cause typical household items to skyrocket; for example, a loaf of bread would be worth $1,000.

Interest rates

Inflation may also vary depending on the behavior of interest rates. If inflation rises because of a good economic situation, this is considered an overheated economy. The way to cool down the economy is to raise interest rates, which will reduce the number of loans granted. It will consequently reduce consumption so that prices will fall. In the same way, lower interest rates will favor economic growth and, therefore, inflation.  

Increased energy prices

The rise in energy prices also produces widespread inflation, as it is present in manufacturing or transporting almost all products. The most difficult thing for a government to maintain is a good rate of sustained economic growth and low inflation.

Measuring inflation

Many indexes measure the variation in the price of goods and services in an economy. These indexes include the Index of Prices of Investment Goods, the Wholesale Price Index, the Producer Price Index, and the Consumer Price Index. The Price Index is particularly interesting since it directly affects family economies.

 Consumer price index

The Consumer Price Index (CPI) measures the price variation of goods and services necessary for the daily life of households and families. In particular, the prices of a series of products called basic baskets are measured monthly. In that basket, products are excluded and included as the uses and customs of consumers vary. For example, 20 years ago, the price of a mobile telephone was not counted but is included in today’s basic basket.

How does the CPI affect us?

The importance of the CPI is that it measures the variation of our purchasing power. If prices rise, we can buy less goods and services with our income, so it is said that we lose purchasing power. We are poorer, even if we earn the same income.

Many companies and the State offer their employees or pensioners at the beginning of the year a salary increase in relation to what the CPI of the previous year has risen.

Many people mistakenly think they have a larger salary when the increase is equal to the CPI increase. However, they are maintaining their purchasing power because they can buy the same as the previous year. If the wage increase exceeds the CPI, we gain purchasing power. Similarly, if the wage increase is lower than the rise in the CPI, then there is a wage freeze and loss in purchasing power. 

Price increases and purchasing power

The price increase affects us if our salaries do not increase to accommodate them. Even so, as prices rise steadily and wage increases are made at the beginning of the year, to maintain our purchasing power, a low or moderate rate of inflation that does not cause the speed of price rises to cancel wage increases will be necessary. If not, we will permanently lose purchasing power.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Loans are a financial transaction by which a natural or legal person, usually a financial institution, grants a given amount of money to another in exchange for interest that will be paid together with the money granted, typically in monthly installments.

In exchange for the money obtained through the loan, the holder undertakes to return the amount within a certain period, together with the interest accrued and other expenses associated with the process. The specific conditions of the loan are detailed in the contract signed between the involved parties.

Loans and Credits

Although the concepts “loans” and “credits” are often used as if they are common in banks, financial institutions of credit, or newspapers, loans and credits are two different financing products. Their characteristics and differences are below to help determine which option to use:

Loans  

1. The entity transfers the money in its entirety that was requested to finance a specific project, such as funding a home renovation.
2. The repayment installments are fixed and monthly until the loan has been fully repaid.
3. Interest will be generated on the total amount granted.
4. The repayment is made to the lender and will not be available again.

Credits

1. The entity disposes a credit account with a certain amount of money according to the borrower profile, and it can be used in part or total for any purpose.
2. Repayment can vary depending on the amount of money used or has already been reimbursed.
3. Interest will only be generated on the money used, not on the total money available.
4. As money is reimbursed, the borrower will have that money available to use again.

Types of Loans and Credits 

Within the United States financial market, a variety of loans and credits are commercialized, from conventional bank loans to finance projects to innovative private fast loans designed to grant financing on the same day and with little paperwork. Below are all types of loans and credits accessible in the United States.

Personal Bank Loans

Personal loans offer relatively high amounts of money, from $3,000-$75,000. Its repayment period ranges between 12 months and ten years, depending on the amount requested, and funds are returned in monthly installments of the chosen amount. These types of loans are designed to finance large projects. Additionally, it is currently possible to find loans for ecological projects.

Quick Personal Loans

These are loans granted by non-banking entities and offer amounts of $100 up to $5,000 in less than 24 hours. These loans can be contracted online without changing banks or obtaining related products. These are some of its advantages and many reasons why these loans can be obtained quickly. Quick personal loans usually cost 3%-5% per month. The return period is between 3 months and three years, and the repayment is made in monthly installments.

P2P Loans 

P2P loans, also known as crowdlending, are loans for individuals managed and granted through crowdlending platforms or platforms from which company financing is granted. These platforms of collaborative loans put individuals or legal entities that need financing in contact with independent investors who want to lend them money to obtain a certain profitability.

The interest in these products may differ depending on each project’s credit rating. Therefore, the better the profile, the lower the assigned interest.

Mini Credits

Online mini-credits are the fastest product and have recently become one of the most popular products. With these credits, new clients can secure limits of $50-$300 or up to $1,000 for existing clients.

The application and grant process for mini-credits lasts only a few minutes. Repayment is made within 30 days as a single payment consisting of the money requested plus the 1.1% daily interest generated.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

Investment properties give you an incredible multitude of tax benefits.

Despite having deductible expenditures, real estate investors enjoy tax benefits a lot. A self-employed person in the top tax bracket encounters around 60% income tax liability. The high-income tax rate for San Francisco citizens is about 67%, over two-thirds of their income. With these scores, you can’t move forward in life. It becomes more challenging when you spend 30% to 60% of your income on tax payments.

Let’s slash your tax bill by real estate investment to reduce your tax liability.

Real Estate Tax Reduction Strategies

Buy properties in a self-directed IRA

IRAs and Roth IRAs (Individual Retirement Accounts) are tax-deferred ways to invest for retirement. You can open your private and self-directed IRA. You can also use this account to invest in tax-free real estate. According to Transamerica, US citizens have an average retirement savings of only about $50,000.

It is not as easy as purchasing a proprietorship in a regular IRA. You need to hire a trusted company to direct the self-directed IRA. It will be responsible for building an IRA, and you will be accountable for depositing your funds. Also, you can make a lawful entity, such as a Limited Liability Company (LLC), to purchase private property for investment purposes. Financing the investment property rather than buying it in cash will be tiresome. With an IRA, you can reduce your real estate taxes by a non-financed portion. You will apply the conventional rules of the IRA, that is.

• Get your money back after the age of 59.5
• You will have to eliminate it by the age of 70.5

Integrate your interest by investing in real estate via a self-directed IRA. Join the campaigns of researching attorneys. Discuss the project and its fees.

Don’t sell your property within a year

If you sell your property within a year for a profit, the tax on that profit will be according to the average income tax rate. You will spend all your return on investment to buy at a low price and sell at a high cost. If you buy more than two properties in a year, the IRS will enforce the double tax on you because it will classify you as a self-employed dealer.

You can avoid all this by holding your property for more than a year after purchasing. This practice will reduce the IRS division risk, and tax on profit will benefit you. The tax on American tax gain will be 15%, which is lower than average income tax rates.

Don’t sell your residential property for two years

Do you ever think about doing a live-in flip? You move forward, over time, make advancements and renovations. The first capital gains will be tax-free if you are the residential property owner for at least two years. It is for only unmarried people, and married ones, the limit would be full.

Indeed, you may not wish to stay in a constant work zone or shift after every two years. The tinkering and renovation of your residence is a fun-loving process of tax-free earning.

Die as the owner of properties

If you die being an owner of properties, their actual acquisition cost will disappear. In this way, the authorities will not have capital gains. If your property is giving you a rental amount, don’t dare to sell it. For smooth cash flow, you must leave financial liabilities.

Your property will be handed over to your authorities after your death as a part of your estate. Maybe they will pay estate taxes. But, if you die wealthy, your estate would be tax-free. You can sell the property for more profit.

Conclusions

If you want to know the actual wealth management, you need to learn rules and regulations. Now, you have cleared about slashing your income taxes. Also, it would be best to acquire capitalization on the tax benefit that real estate owners enjoy. This way, you will save lots of money or make wealth with that savings.

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.

By: Jennifer Brazer

Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.

Fact Checked By: Brittany McMillen

Properly Manage Your Taxes: Top Tips for Success

Taxes represent one of the most significant financial obligations for individuals and businesses, requiring strategic planning, knowledge of current regulations, and careful optimization of deductions and credits to minimize liabilities while remaining compliant with IRS requirements. Whether you’re navigating the complexities of self-employment taxes, managing business deductions, or planning for retirement contributions, understanding the fundamentals of tax management can save thousands of dollars annually and prevent costly mistakes that trigger audits or penalties.

Tax season doesn’t have to be overwhelming when you have the right strategies in place. Over my 20 years as CEO of Complete Controller, I’ve guided thousands of businesses through tax planning challenges, from freelancers maximizing home office deductions to corporations navigating multi-state compliance requirements. This comprehensive guide will equip you with actionable insights on leveraging 2025 tax adjustments, optimizing your filing strategy, and implementing year-round planning techniques that transform taxes from a dreaded obligation into a powerful wealth-building tool. You’ll discover specific strategies for different tax scenarios, master the latest IRS updates, and gain the confidence to make tax-efficient decisions that align with your financial goals.

What does proper tax management mean?

• Proper tax management involves strategically organizing finances, maximizing deductions, staying compliant with deadlines, and planning proactively for future liabilities
• Strategic organization includes maintaining accurate records throughout the year rather than scrambling during tax season
• Maximizing deductions requires understanding both standard and itemized options to choose the most beneficial approach
• Compliance extends beyond filing on time to include quarterly estimated payments and proper documentation
• Proactive planning involves adjusting withholdings, timing income and expenses, and leveraging tax-advantaged accounts

Understanding Tax Brackets and Maximizing Deductions

The foundation of effective tax management starts with understanding how the progressive tax system works and identifying opportunities to reduce your taxable income through strategic deductions. The 2025 tax year brings significant adjustments that can impact your filing strategy, particularly with increased standard deductions and modified income thresholds.

For single filers in 2025, the standard deduction rises to $15,000, while married couples filing jointly can claim $30,000. These increases mean fewer taxpayers will benefit from itemizing deductions, making it crucial to evaluate your specific situation carefully. The marginal tax rates remain unchanged, ranging from 10% on income up to $11,925 for single filers to 37% on income exceeding $626,350.

Breaking down the 2025 tax brackets

Understanding where your income falls within the tax brackets helps you make informed decisions about timing income and maximizing deductions.

• • 10% bracket: Single filers earning $11,925 or less; married filing jointly earning $23,850 or less
• • 12% bracket: Single filers earning $11,926 to $48,475; married filing jointly earning $23,851 to $96,950
• • 22% bracket: Single filers earning $48,476 to $103,350; married filing jointly earning $96,951 to $206,700
• • 24% bracket: Single filers earning $103,351 to $197,300; married filing jointly earning $206,701 to $394,600
• • 32% bracket: Single filers earning $197,301 to $250,525; married filing jointly earning $394,601 to $501,050
• • 35% bracket: Single filers earning $250,526 to $626,350; married filing jointly earning $501,051 to $751,600
• • 37% bracket: Single filers earning over $626,350; married filing jointly earning over $751,600

Tax deductions vs. credits: Maximizing your savings

While both deductions and credits reduce your tax burden, they work differently and understanding this distinction can significantly impact your tax strategy. Deductions reduce your taxable income, effectively lowering the amount of income subject to tax. Credits, on the other hand, directly reduce your tax bill dollar-for-dollar, making them generally more valuable.

Common deductions include mortgage interest, charitable contributions, state and local taxes (limited to $10,000), and medical expenses exceeding 7.5% of adjusted gross income. For business owners and self-employed individuals, additional deductions encompass home office expenses, vehicle mileage, professional development, and equipment purchases.

Tax credits provide even greater value per dollar. The Child Tax Credit offers up to $2,000 per qualifying child, with up to $1,700 being refundable. The Earned Income Tax Credit can provide substantial relief for lower-income workers, while education credits like the American Opportunity Credit can offset up to $2,500 in college expenses.

Strategic Tax Planning for Different Scenarios

Every taxpayer faces unique challenges based on their employment status, income sources, and life circumstances. Tailoring your tax strategy to your specific situation maximizes savings and minimizes compliance risks.

Optimizing taxes for freelancers and self-employed professionals

Self-employment brings both opportunities and responsibilities in tax planning. As a freelancer or business owner, you’re responsible for both the employee and employer portions of Social Security and Medicare taxes, totaling 15.3% of net earnings.

Key strategies for self-employed tax optimization include:

• Quarterly estimated payments: Calculate and pay estimated taxes by April 15, June 15, September 15, and January 15 to avoid underpayment penalties
• Business expense tracking: Maintain detailed records of all business-related expenses, including software subscriptions, professional services, and marketing costs
• Home office deduction: Claim either the simplified method ($5 per square foot up to 300 square feet) or actual expenses based on the percentage of home used for business
• Retirement contributions: Maximize SEP IRA contributions (up to 25% of net self-employment earnings or $69,000 for 2025) or Solo 401(k) deferrals
• Health insurance premiums: Deduct 100% of health insurance premiums paid for yourself and family members

Managing family tax situations and the kiddie tax

Families with investment income need to navigate special rules designed to prevent income shifting to children in lower tax brackets. The Kiddie Tax applies to unearned income exceeding $2,700 for children under 19 (or full-time students under 24).

Understanding these thresholds helps families structure investments efficiently:

• First $1,350 of unearned income: Tax-free under the child’s standard deduction
• Next $1,350: Taxed at the child’s rate (typically 10%)
• Above $2,700: Taxed at the parent’s marginal rate

Strategic approaches include utilizing 529 education savings plans for tax-free growth and qualified withdrawals, investing in growth stocks that don’t generate current income, and considering custodial Roth IRAs for children with earned income.

Leveraging 2025 Tax Adjustments and Maintaining Compliance

The IRS annually adjusts various tax provisions for inflation, and 2025 brings several important changes that impact planning strategies. Staying informed about these adjustments helps you maximize benefits while avoiding costly mistakes.

Key tax adjustments for 2025

The most significant changes for 2025 include:

• Standard deduction increases: Single filers receive $15,000 (up from $14,600), while married filing jointly increases to $30,000 (up from $29,200)
• Retirement contribution limits: 401(k) deferrals increase to $23,500, with catch-up contributions for those 50+ remaining at $7,500
• Health Savings Account limits: Individual coverage allows $4,300 contributions, family coverage permits $8,550
• Estate and gift tax exemption: The lifetime exemption rises to $13.99 million per person
• Annual gift exclusion: Increases to $19,000 per recipient

Common IRS audit triggers and how to avoid them

Understanding what raises red flags with the IRS helps you maintain compliance while legitimately minimizing taxes. The IRS uses sophisticated algorithms to identify returns with higher audit potential.

Common audit triggers include:

• Income discrepancies: All income reported on W-2s, 1099s, and other information returns must match your tax return
• Excessive deductions: Claims significantly above average for your income level attract scrutiny
• Home office deductions: Claiming exclusive business use requires careful documentation
• Cash-intensive businesses: Restaurants, retail, and service businesses face higher audit rates
• Foreign accounts: Failure to report foreign bank accounts over $10,000 triggers severe penalties

Protecting yourself requires maintaining comprehensive documentation, including receipts, bank statements, and contemporaneous logs for business mileage and meals. Working with qualified tax professionals provides additional protection through their expertise in properly substantiating deductions.

Advanced Tax Planning Techniques

Sophisticated tax planning extends beyond annual filing to encompass multi-year strategies that optimize your overall tax burden. These techniques require careful timing and coordination but can generate substantial savings.

Timing income and deductions

Strategic timing of income recognition and deduction acceleration can significantly impact your tax liability, particularly when tax rates or circumstances change between years.

Income deferral strategies include:

• Retirement plan contributions: Maximize 401(k), 403(b), or IRA contributions to reduce current year income
• Deferred compensation: High earners can negotiate deferred compensation arrangements
• Installment sales: Spread gain recognition over multiple years for property sales
• Like-kind exchanges: Defer real estate gains through 1031 exchanges

Accelerating deductions involves:

• Bunching charitable contributions: Combine multiple years of donations to exceed standard deduction
• Prepaying deductible expenses: Pay January mortgage payments or property taxes in December
• Timing medical procedures: Schedule elective procedures when expenses exceed the 7.5% AGI threshold
• Business equipment purchases: Utilize Section 179 expensing or bonus depreciation

Tax-efficient investment strategies

Investment decisions significantly impact your tax burden, making tax-aware portfolio management essential for wealth accumulation.

Key investment tax strategies include:

• Asset location: Place tax-inefficient investments (bonds, REITs) in tax-deferred accounts while holding tax-efficient index funds in taxable accounts
• Tax-loss harvesting: Offset capital gains by selling losing positions while avoiding wash sale rules
• Qualified dividends: Focus on investments generating qualified dividends taxed at preferential rates
• Municipal bonds: High-income investors benefit from tax-exempt interest on municipal securities
• Long-term capital gains: Hold appreciating assets over one year to qualify for reduced tax rates

Technology Tools for Streamlined Tax Management

Modern tax software and financial technology have revolutionized tax preparation and planning, making professional-level strategies accessible to individuals and small businesses. Selecting the right tools depends on your complexity and comfort with technology.

Choosing the right tax software

The tax software landscape offers solutions ranging from free basic filing to comprehensive business packages:

• TurboTax: Offers extensive guidance and audit support, ideal for complex returns
• H&R Block: Combines software with optional professional review
• FreeTaxUSA: Provides free federal filing with affordable state returns
• QuickBooks: Integrates business accounting with tax preparation

For businesses, specialized solutions provide year-round benefits:

• Complete Controller: Cloud-based bookkeeping with integrated tax planning and compliance monitoring
• Xero: Real-time financial reporting with tax-ready reports
• FreshBooks: Simplified expense tracking for freelancers and small businesses

Automating tax planning throughout the year

Year-round tax planning beats last-minute scrambling every time. Technology enables continuous monitoring and optimization:

• Expense tracking apps: Automatically categorize business expenses and capture receipts
• Mileage tracking: GPS-based apps log business travel automatically
• Document management: Cloud storage organizes tax documents securely
• Estimated tax calculators: Avoid underpayment penalties with quarterly payment reminders
• Tax projection software: Model different scenarios to optimize current year decisions

Real-World Success: Case Study in Retirement Optimization

Sarah, a freelance marketing consultant earning $95,000 annually, transformed her tax situation through strategic retirement planning. Initially paying nearly $19,000 in federal taxes, she implemented a comprehensive strategy combining a Solo 401(k) and SEP IRA.

By contributing $19,500 to her Solo 401(k) employee deferrals and an additional $18,000 as employer contributions, she reduced her taxable income to $57,500. This strategic move dropped her from the 24% bracket to the 22% bracket, saving over $7,500 in federal taxes while securing her retirement future.

The key to Sarah’s success involved:

• Setting up automatic monthly contributions to ensure consistent savings
• Timing additional contributions based on high-income months
• Coordinating with her accountant to optimize quarterly estimated payments
• Reinvesting tax savings into a taxable investment account for medium-term goals

Conclusion: Your Tax Success Action Plan

Mastering tax management transforms a dreaded annual obligation into a powerful wealth-building strategy. The combination of understanding current tax laws, implementing year-round planning, and leveraging available deductions and credits creates substantial savings opportunities for every taxpayer.

Success in tax management comes from taking action before deadlines loom. Start by organizing your financial records, understanding your tax bracket, and identifying applicable deductions and credits. For business owners and freelancers, establishing systematic expense tracking and quarterly tax routines prevents year-end surprises.

As we navigate increasingly complex tax regulations and ongoing legislative changes, having expert guidance becomes invaluable. At Complete Controller, we’ve spent two decades helping businesses optimize their tax strategies while maintaining bulletproof compliance. Our cloud-based platform combines cutting-edge technology with seasoned expertise to transform your financial management.

Don’t wait until next April to start planning. Take control of your tax situation today and discover how proper tax management can accelerate your path to financial freedom. Contact the experts at Complete Controller to learn more about comprehensive tax planning strategies tailored to your unique situation.

FAQ

What is the 2025 standard deduction?

For tax year 2025, the standard deduction is $15,000 for single filers and $30,000 for married couples filing jointly. Head of household filers receive a $22,500 standard deduction.

How do I file taxes online as a freelancer?

Freelancers can file taxes online using IRS Free File if income is below $79,000, or through commercial software like TurboTax or H&R Block. Report self-employment income on Schedule C and pay self-employment tax via Schedule SE. Track all business expenses throughout the year and make quarterly estimated payments to avoid penalties.

What are the IRS deadlines for 2025?

Individual tax returns (Form 1040) are due April 15, 2025. Estimated quarterly payments are due April 15, June 16, September 15, 2025, and January 15, 2026. Extension requests must be filed by April 15, extending the filing deadline to October 15, 2025, though taxes owed are still due April 15.

Can I deduct home office expenses?

Yes, if you use part of your home regularly and exclusively for business. You can choose between the simplified method ($5 per square foot, maximum 300 square feet) or actual expense method (percentage of home expenses based on office square footage). The space must be your principal place of business or used for meeting clients.

How does the Kiddie Tax apply in 2025?

The Kiddie Tax applies to children under 19 (or full-time students under 24) with unearned income exceeding $2,700. The first $1,350 is tax-free, the next $1,350 is taxed at the child’s rate, and amounts above $2,700 are taxed at the parent’s marginal rate. Parents must file Form 8615 with the child’s return.

Sources

• John Hancock. 2025 Tax Planning Guide. PDF, 2023.
• TIAA. Quick Tax Reference Guide. PDF, 2023.
• IRS. Tax Time Guide 2025. Newsroom, 19 Feb. 2025.
• IRS. Tax Topics – Topic 313 Kiddie Tax. https://www.irs.gov/taxtopics/tc313
• IRS. Tax Inflation Adjustments for 2025. Newsroom, 22 Oct. 2024.
• NerdWallet. Tax Planning Guide.
• Tax Foundation. Common IRS Audit Triggers. https://taxfoundation.org/
• Baird. 2025 Tax Planning Guide. Private Wealth, 7 Nov. 2024.
• Complete Controller. Maximizing Home Business Tax Benefits. https://www.completecontroller.com/maximizing-home-business-tax-benefits/
• Complete Controller. 9 Bookkeeping Tips for Small Businesses. https://www.completecontroller.com/9-bookkeeping-tips-for-small-businesses/
• Complete Controller. Self-Employed Retirement Alternatives to Increase the Pension. https://www.completecontroller.com/self-employed-retirement-alternatives-to-increase-the-pension/

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.