What Does Bankruptcy Discharged Mean?

Just as we often resort to financial institutions such as banks to ask for a loan when we can't afford expensive purchases, businesses can also do it when they lack the capital to fund their operations. However, instead of going to a bank to ask for a loan, most business owners opt for signing a bond with investors, not only because it allows them to borrow larger sums of money but also because bonds have longer maturities.  At this point, you may be saying, “Hold on, what are bonds and how do they work?” Well, this article is all about bonds, so keep reading to find out. What Are Bonds? Simply put, a bond is a source of funding that companies obtain through the public through investment banking. Even though bonds are similar to loans since they both involve money borrowing and interest rates, one significant difference sets them apart.  Unlike loans, which come from financial institutions and have short repayment periods, investment bonds come from individual investors or even other, larger corporations and have longer maturities. But in essence, yes, bonds are a type of loan. When you issue bonds, you're committing to repaying the entire amount and paying periodic interest payments to the bond issuer. The payment of interest depends on the arrangement between the two parties, but they are often made twice a year, and the rate is lower than compared to an actual loan from a financial institution. Understanding Bonds - How Do They Actually Work? When companies or other entities like governments need to raise money to fund their operations or maintain ongoing ones, finance new projects, or simply pay existing debts that are about to mature, they may issue bonds directly to investors. After the decision to issue a bond has been made, business owners present their case to investors, who decide if investing is a good idea after analyzing the company’s financial situation. If investors believe you're in a good position to pay the money back in the stipulated time lapse, they will purchase the bond and become bondholders. Keep in mind that, after being issued, investment bonds can be sold by the initial bondholder to other investors. That means a bond investor is under no obligation to hold a bond all the way through its maturity date and can sell it on the secondary market whenever they want if they decide to do so.  Bondholders may decide to 'resell' bonds if they believe they could increase in value and get gains on the sale. However, just as bonds could increase, they could also decrease in value from the original purchase, resulting in a loss of money for the investor. If you have a good credit score, chances are that you will find an investor interested in buying your bond quite easily. Unlike other recognized investment opportunities like buying stocks, bonds provide investors with a predictable income stream that allows them to preserve capital while investing, which is why they are so popular among risk-averse investors.  Characteristics of Bonds You need to be familiar with certain concepts when dealing with bonds. Here are some of the key elements that you will find in every type of bond: Face Value. Also known as the par value, it refers to the amount of money the bondholder will receive at the bond's maturity date; however, the par value isn’t actually the price of the bond, which is what most people struggle to understand at first.  Depending on a w number of variables, the price of investment bonds can change over time before reaching maturity. When that happens, the bond’s price stops being the same as the face value. When a bond trades at a price higher than its face value (for whatever reason), it is said to be selling at a premium, and when it sells for lower than the face value, we say that it’s trading at a discount. Maturity date. This is the term used to refer to the deadline for the bond issuer to pay the face value of the bond to its holder. Coupon rate. Always expressed as a percentage, it refers to the nominal interest rate a bond issuer agrees to pay to the bondholder each year until the bond matures. That means that if an investor agrees to a bond with a coupon rate of 6% and a face value of $1,000, they'll receive an annual interest of $60 during that period. Coupon dates. The established dates on which the bond issuer will make interest payments to the bondholder. Although there's no rule for setting coupon dates, most bond terms usually include two for every year before the bond matures. Now that you know the most important bond characteristics, we can talk about bond categories, so you’ll better understand the pros and cons of each type of bond. Types of Bonds There are four main categories of bonds: treasury bonds, government bonds, municipal bonds, and corporate bonds. Let's learn more about them. Treasury Bonds These are bonds issued by the US Department of the Treasury on behalf of the federal government. With this type of bond, you must pay federal income tax on interest, but the interest is generally free from state tax. Most investors see these as the safest bond investment possible, mainly because they are backed by the US government, so the chances of not getting your money back are practically nonexistent. Government Bonds The Federal Government issues this type of bond to raise money to support its expenditures. Just like treasury bonds, one of the characteristics of bonds issued by the government is that they are considered zero-risk investments; however, most are taxable at the federal and state levels. Municipal Bonds Also known as munis, these are bonds issued by states, cities, and municipalities. Although they are not as safe as the two types of bonds mentioned earlier, municipal bonds bring tax benefits to bondholders, such as not having to pay federal taxes on the interest. Corporate Bonds These bonds are issued by both private and public companies. This type of bond can be either high-yield (higher interest rate & risk) or investment-grade (lower interest rates because the risk is lower). The interest you earn on corporate bonds is always taxable. Final Thoughts In conclusion, bonds are a type of security sold by corporations and government agencies to gather money from investors to fund their activities. They are similar to loans in that one entity effectively lends the funds to another, but the differences are in where that money comes from and how long it takes issuers to pay it back. There are several different types of bonds that represent different opportunities for investors. Some are safer investments with lower interest rates, while others are riskier but with a much better interest rate and a higher possibility of getting significant gains out of them. Lastly, you can always hire an investment firm or a business loan broker to ensure you get the best value out of your business investment.

It’s never a good idea to mix your personal money with your limited liability company funds and thus be personally liable for your LLC’s legal obligations and potential debts.  That’s why we’ve compiled detailed instructions and a comprehensive list of requirements for opening a bank account for an LLC. Stay with us and learn more about the procedure and the required documents.  Why Should Your LLC Have a Designated Bank Account? There are a variety of legal and practical reasons for you to open a designated business checking account for your LLC. Here are some of them: Having an LLC means that you have formed a separate business entity. If your LLC doesn’t have a separate bank account, your personal and business finances will be commingled, and you’ll be at risk of jeopardizing the LLC. Should your LLC end up in debt or get sued, your personal funds won’t be sought after, leaving only your business funds open for scrutiny. If you set up an LLC bank account, calculating the taxes, keeping track of your business’s expenses and income, and preparing and auditing financial statements will be much easier. With two separate accounts, you won’t need to pay your accountant for doing the extra work of sorting through your personal and business expenses.  When paying your business partners, stating your company’s name on the check instead of your personal information seems more professional. Your clients will take you more seriously when you have a separate account for your business. Another practical reason for a dedicated checking account for your LLC is that it can be a requirement for applying for an LLC business loan or a good business credit card.  How To Open a Business Bank Account for LLC Now that you know why a separate bank account is a good idea for your LLC, here are the steps you need to take to get one: 1. Choose a Bank The first step when opening a bank account is choosing the right bank for your small business needs. When shopping around for the bank that you’ll place your trust in, pay attention to the following: Online or Brick-and-Mortar Bank Depending on whether you prefer to go to the physical bank branch or enjoy banking from your home or office, you can open an LLC bank account online or choose a bank with physical branches. If you decide on the latter, a favorable system is to pick the same bank you have your personal account with. Visiting the same branch for both business and personal transactions can save you a lot of time. Check the Fees There are other basic LLC bank account rules, such as checking which banks offer the best terms, conditions, and fee structures. That’s why you should always ask about the monthly maintenance fee, minimum monthly balance, minimum initial deposit, and overdraft fees before you make a decision.  You should also see whether you can write checks and if there are any promotions, enticing rewards programs for business customers with high balances, or discounts on loans.  Debit and Credit Cards Most banks will issue you a debit card for your business account right on the spot, while others might mail them, so you could end up waiting for a couple of days. An LLC debit card is useful for tracking your business expenses.  Make sure to check whether the bank offers a business credit card that you can use for cash-back rewards, miles, points, and other perks. 2. Gather the Documents When you decide to open an LLC bank account, the requirements might differ from institution to institution. However, here’s a list of some of the most common documents that banks will ask you to submit: A copy of LLC’s articles of organization is a legal document that establishes your LLC at the state level. Depending on where your company is registered, this document can also be referred to as a certificate of formation or certificate of organization.  Your Employer Identification Number is necessary as it lets the IRS identify your business entity for tax purposes. If the LLC is formed as a single-member LLC, you can provide the Social Security number of the sole proprietor. Also, an EIN verification letter would be accepted, too.  An LLC operating agreement is necessary when opening a bank account for an LLC as it lets the bank know who is authorized to sign, deposit, and withdraw funds on behalf of the company. Government-issued photo ID, such as a valid driver’s license or a passport is a must. Additional documents will be required if the LLC is doing business under a different name. Banks usually accept a business license, trade name certificate, fictitious name certificate, certificate of assumed business name, or occupational license. 3. Fill In the Application If there’s an option to open a bank account for your LLC online, you’ll be required to fill out the application form. It usually asks for information such as the name and address of the business, the date the company was established, the country and state of legal formation, and the country and state of the primary business operation. Keep in mind that the business must be formed and operational in the US. Be prepared to enter your company’s EIN number and personal information, such as SSN, for all business owners listed in the application, should they have at least 25% of the ownership. Remember that you’ll also be asked to state the person who will be authorized to sign financial and legal documents. Unless you’re a single-member LLC, that is. Some banks will require applicants to come personally to the branch and meet with a designated banker to discuss setting up a bank account for their LLC. In that case, make sure to call the bank beforehand and inquire about all the necessary documents so that you can come prepared. 4. Fund Your Account Congratulations! The time has come to fund your account using any of the deposit methods supported by your bank. Make sure to check whether the bank asks for a minimum deposit amount. What About Nonresidents? Nonresidents, too, can open a business bank account in the US. However, in that case, the business needs to be officially registered in the US and have its unique EIN number. So, how do you open an LLC business bank account if you are a nonresident? If you registered your LLC in the US and got your EIN number so that the IRS could identify you, the first step would be to find a bank with foreigner-friendly options.  Then, the documents: You won’t need a residency requirement, an SSN, or an Individual Taxpayer Identification Number, but most banks will require the following: LLC’s registered agent address as LLC’s office address or proof of having an office in the US. A lease agreement or utility bill works, too. The EIN number A certificate of formation, articles of organization, or an equivalent document LLC’s operating agreement or an equivalent document  A US phone number Foreign driving license and foreign passport Information on the company’s owners In most cases, setting up a bank account for your LLC when you’re a foreign entity has to be done in person. However, some banks might allow you to start the procedure online and then show up to hand over the documents. There are also agencies that help you set up a US business remotely using a registered agent.  Business Credit Score Concerns A business’s credit score is a potential problem that’s often overlooked.  Similar to your personal FICO score, from the moment you open your business account, you’ll start to build up your business credit history. Opening a bank account for an LLC also means that the way you run your business can affect your credit score in both good and bad ways. These numbers are available to the public and will be used by banks to decide if you can get a business loan or insurance, as well as by potential business partners and rental agencies.  Whereas a personal credit score usually falls between 300 and 850, your business score will range anywhere from one to 100. The calculating models depend on which of the three major bureaus the bank reports to: Dun & Bradstreet, Experian, or Equifax.  Finally, even though it would be beneficial for your business to maintain a good credit score, remember that even if you end up with a less-than-stellar score, you can still get a business loan. Final Thoughts  If you’re still wondering whether you should open a bank account for your LLC, we can assure you that it’s worth the effort. With a business account, your personal assets will be safer, you’ll appear more trustworthy to your business partners, and it will be much easier for you to keep track of your business transactions.

Business credit cards offer a number of perks to business owners, regardless of the size of their operation. In addition to rewards and welcome bonuses, business credit cards also tend to have higher credit limits than personal ones. The obvious benefits lead many professionals to ask one simple question: should I get a business credit card? In this article, we will tell why it’s a good idea to apply for a business credit card and walk you through the eligibility requirements. You May Be Eligible and Not Know It You may have convinced yourself you can’t possibly obtain a business credit card because you don’t own a large company or even a small business in the traditional sense. But do you need a business to get a business credit card?  When you hear the term business owner, you probably think of someone running a company with a number of employees. However, you don’t need to be incorporated or have a formal business structure to qualify for a business credit card. You are eligible even if you are self-employed and working as a freelancer from home. That said, the options offered to a contingent worker, for example, are bound to be limited. As such, you need to do your homework on what cards are available to you. On the other hand, if you own a company and need a business credit card, you can explore the list of the top business credit cards on the market.  It Can Help You Boost Your Credit Score So why get a business credit card in the first place? Getting a business credit card is a great way to raise your personal credit score. A business credit card enables you to reduce spending on your personal one and use less of your available credit. This and covering any work-related expenses with a separate card will boost your credit score. However, keep in mind that when you apply for a business credit card, you may initially lose anywhere between two to five points on your credit score. That’s because financial institutions usually evaluate your creditworthiness by pulling your personal credit report when you’re applying for a card.  This is done to determine whether you’re eligible for a new credit card, and it’s the only part of the process that negatively affects your credit score. After the credit inquiry, your personal and business lines of credit are kept separate, and your score won’t be affected by your credit utilization ratio.  This doesn’t mean that you can afford to be irresponsible about your spending with your business credit card. If the card is tied to your Social Security number and your business defaults, you’ll still be held personally responsible for the money spent. It Allows You to Separate Your Business Expenses From Your Personal Ones Using a business credit card for personal purposes is usually considered bad practice. It can be quite a hassle when the time comes to file your taxes and sort through your credit card statements. Choosing a business credit card over a personal one for your business allows you to have a clear insight into your business expenditure. Furthermore, you will save on accounting expenses, as there will be less work for the accountant since they will have fewer expenses to go through.  That’s not all. Many business credit card issuers allow you to export your expenditure details to accounting software such as Quickbooks. This can exponentially speed up the accounting process. It Enables You to Improve Your Cash Flow One of the main reasons to have a credit card is to gain access to a line of credit. It’s also easier to qualify for than a bank loan. Since even a new business can get a business credit card, this is an ideal option for startups to secure the necessary cash flow to expand their operations. Having a business credit card enables you to pay your contractors and suppliers upfront while simplifying the transaction process. Some vendors offer discounts for those who have a good track record when it comes to making payments early or on time.   To avoid high-interest payments or other more extreme unpleasantries like having to file for bankruptcy, make sure to cover your entire balance on time.  It Offers Many Convenient Rewards Regardless of whether you get a business credit card or a personal credit card, you’ll likely be treated to a few generous rewards. There are typically three kinds of rewards: Miles Cashback Points  If you aren’t sure how to use business credit cards in order to make use of these rewards or you find the rewards programs too complicated, you’re not alone. A lot of cardholders don’t actually know how rewards on credit cards work. The important thing to remember here is that these programs reward you for the money spent through your line of credit.   Some business credit card issuers offer rewards in the form of discounts on everyday purchases, while others offer discounted flights, hotel stays, and gift cards. Therefore, if this is something you need for your business, such rewards can be very valuable. It Comes With More Generous Sign-Up Bonuses A major difference between a business credit card and a personal credit card is that the business ones usually offer bigger welcome bonuses. Given that you’re likely to spend more for business purposes than you would for your personal expenses, these bonuses can really come in handy. For example, with the Ink Business Preferred Credit Card, you can earn a 100,000 bonus for spending $15,000 within the first three months. You can redeem the points by getting $1,000 cash back or spending $1,250 on travel expenses. To put things into perspective, a similar personal credit card, the Chase Sapphire Preferred Card, gives you 80,000 bonus points as a welcome offer after spending $4,000 in the first three months. The maximum bonus value for the Ink Business Preferred card is 1,250, while for its personal counterpart, the maximum value is $750. Many business credit cards have 0% APR for a certain period of time, which can exceed 12 months in some cases. This can be very helpful for small startups, which often need to cover a range of investments on a limited budget. Not having to pay the interest rate for at least a year gives them time to get their business up and running. You Can Get Free Employee Cards Finally, many business card issuers offer free employee cards, which can significantly simplify making business-related purchases. For instance, employees can use the card for business trip expenses.  With employees having their own business cards, the business owner won’t have the extra task of repaying the employees, and the workers won’t have to use their personal cards. The employer can set the limit on these cards to prevent overspending. Final Comments As you can probably tell, business credit cards are a great asset to keep your business running smoothly. If you’re still wondering do I need a business credit card, remember that this is a great way to boost your personal credit score, separate your business expenses from your personal ones, and take advantage of some generous rewards and bonuses.