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When University of Notre Dame sophomore Calyn “KK” Bransford takes the court this upcoming basketball season, she’ll do so with a touch of glam thanks to her false lashes. She wants to look good while hooping, but wearing the lashes is also her job.
Bransford is under contract as a brand ambassador for Opulence Lashes and earns money by promoting the company’s products. That’s possible thanks to a sea change in NCAA rules governing college athletes, who can now make money from their “NIL” — name, image and likeness.
Prompted by a Supreme Court decision that invalidated restrictions on certain payments to student-athletes, the NCAA changed its rules on NIL income in 2021. While student-athletes still can’t be paid to play their sport or attend a specific school, they can receive money for things like ad deals, endorsements and appearances. Student-athletes’ NIL earning opportunities are governed by a patchwork of state laws and school and conference rules.
Before Bransford went to college, she and her parents studied the NIL rules that apply to her. Now, her parents help her manage the money she earns. “A percentage of the money I spend, but my parents put the rest in a savings account,” Bransford says. “It’s important to have someone helping you who is older, more experienced, who knows about taxes and bills.”
Not every student-athlete has a sound financial support system like Bransford, so many of them need guidance managing NIL income. For this cohort of earners, NIL money can be used to pay for education expenses, hire professional support and invest in their future. With a prudent financial strategy, NIL income could be the foundation for generational wealth for some athletes.
Consider a marketplace
If you’re hoping to monetize your NIL, you may want to join a marketplace, a digital platform that helps match student-athletes with companies or individuals who want to work with them. Some marketplaces are affiliated with a school, and some aren’t.
Working with a marketplace isn’t required to monetize one’s NIL, but it can make the process easier. Student-athletes should report all NIL activity to their school, which evaluates every deal to ensure it’s compliant with state law and the school’s policies. College and university marketplaces automatically process NIL contracts through their compliance departments so the student doesn’t have to submit the paperwork.
Some marketplaces charge fees, so it’s important that students determine whether the cost outweighs the benefit of being promoted by the marketplace. “Do your due diligence,” says Justin Bass, sports and entertainment managing director at MAI Capital Management. “Are you getting something more for the fee?”
Pay for school
Only 1% of student-athletes receive full-ride scholarships that cover all college expenses, so it makes sense to use NIL income to pay for school. NIL compensation doesn’t affect athletic scholarships, but depending on the amount of the NIL earnings, a student-athlete may no longer qualify for need-based financial aid.
Those making NIL income should talk to their school’s financial aid office to determine how that money will affect their aid package. “If I get $50,000 via NIL activities, I might need to set aside a good portion of that to pay for my tuition next year,” says Adam Cocco, assistant professor of sport administration at the University of Louisville.
Get professional help
Managing NIL rules and income in addition to keeping up with athletics and academics can be overwhelming. Consider hiring a professional like a financial advisor, and thoroughly vet anyone before adding them to your team.
Former University of Miami track star and Olympian Lauryn Williams turned pro in 2004 when she accepted a $200,000 contract from Nike, an amount she described as “awesome but terrifying.”
She admits to making financial mistakes, which she attributes to taking the advice of others who didn’t have experience with significant sums of money. After retiring from professional sports, Williams became a certified financial planner to give others the financial help she needed as a 20-year-old college student.
Williams advises working with a fee-only certified financial planner and a certified public accountant or enrolled agent for help filing taxes. Student-athletes who earn more than $400 need to file. Taxes can be tricky, especially for those who earn NIL income in different states.
“Get a professional in your life even if it costs money,” Williams says. “This is a unique earning situation, and you don’t want to mess that up.”
‘Let the money transform your life’
According to the NCAA, fewer than 2% of student-athletes turn pro, and even for those who do, a professional athletic career usually lasts just five to seven years, according to a study from the RBC Sports Professionals group. These sobering facts make investing a way to safeguard one’s future, whether sports are a part of it or not. “Let compound interest work for you, and let the money transform your life and how it’ll look 20, 30 years from now,” Cocco says.
NIL income qualifies student-athletes to contribute to individual retirement accounts, or IRAs, and their self-employed status unlocks access to simplified employee pension IRAs and solo 401(k)s. A financial advisor can help choose the best retirement accounts for you.
Williams recommends investing in one’s financial education, too. If your school doesn’t offer personal finance education, Williams says, use some NIL income to pay for an online course.
“With the NIL money, you can have fun with it — or do something responsible with it,” she says. “This is your opportunity to get yourself on track for retirement.”
This article was written by NerdWallet and was originally published by The Associated Press.
The gig economy was just beginning to blossom pre-pandemic. Between 2010 and 2020, the number of gig workers or side hustlers increased by 15%. Unlike many aspects of life, which stagnated during the pandemic, freelancing only grew. Statista reported that 73.3 million people work as freelancers in the U.S. right now, an increase from 57.3 million pre-pandemic.
Freelancing has tremendous benefits for many people. Freelancing or gig work can provide:
Flexibility
A better work-life balance
Increased income potential
But it can come with some financial complications, too.
As a freelancer, you’ll need to manage cash flow so that you’ll have money in your account to pay your bills. You’ll be responsible for paying your own taxes. And, with that in mind, you’ll want to track expenses carefully so that you can deduct the costs of running your freelance business from your bottom line.
That’s where having a business bank account can come in handy.
Why You Need a Bank Account If You Have a Side Hustle
According to tax laws, you don’t have to have a business bank account to run a side hustle or a freelance business. You can file your taxes using your Social Security number and receive a 1099 form as a sole proprietor.
But as your business grows, you may want to incorporate under a tax ID number. You may choose to register as a corporation like an S-Corp or, more commonly, a limited liability corporation or LLC. This can get confusing, so it’s important to speak to a tax account before you take this step.
If you incorporate your business, you’ll need a business checking account to keep your personal finances separate from your business expenses. You would pay yourself a salary out of your business account and use your personal bank account to pay for your daily living expenses, entertainment, and anything that isn’t considered a business expense.
Benefits of Business Accounts
Most small business owners, freelancers and side hustlers prefer to open a business account even if they aren’t incorporated. Having a dedicated business checking account makes it easier to track your business income and expenses, which makes filing taxes – and making quarterly estimated tax payments – easier. If you ever get audited, you’ll have a clear record of your personal and business finances.
Plus, if you do any sales and marketing for your freelance business, your business debit card can often pique people’s interest. You’d be surprised how having a debit card with your business name on it can help you generate leads in odd places, whether you’re at your favorite bar or paying for groceries.
If you’re ready to open a separate business account, it’s important to find one that will meet your needs.
Freelancer vs. Side Hustler vs. Entrepreneur
Before you choose a business account, you may be wondering about the differences between entrepreneurs, freelancers, and side hustlers. Which category do you fit in?
These are all loose terms to describe anyone who owns their own business or is self-employed. Self-employed is a tax designation, which means you are a 1099 contractor for other companies. This term would apply to most freelancers and side hustlers.
On the other hand, if you start your own business, you might consider yourself an entrepreneur. The dictionary defines an entrepreneur as someone who starts a business and is willing to take a financial risk in hopes of great success.
A freelancer may also take financial risks, including leaving a steady paying job. In a lot of cases, whether you describe yourself as an entrepreneur, small business owner, freelancer or side hustler is up to you.
Compare the Best Freelancer Checking Accounts
In most cases, business owners, freelancers and side hustlers can all benefit from a good business bank account. Read on as we compare the best business checking accounts for freelancers, gig workers, and entrepreneurs.
1. Lili Bank: Overall Best Bank for Freelancers
Lili calls itself “the one-stop shop for all your small business financial needs.” An online financial services company that provides business banking, accounting for freelancers, invoicing, and tax support, Lili is backed by Choice Financial Group Inc.
As a US-based bank, Choice is a member FDIC, which means your funds deposited in Lili are protected by the federal government up to $250,000 per account.
What sets Lili apart as one of the best bank accounts for freelancers?
In addition to all the other services it offers to business owners, Lili has no minimum balance requirements, no monthly fees for basic checking, and a network of 38,000+ fee-free ATMs nationwide. You can also open a business savings account and earn 1.50% APY at Lili.
Lili’s basic business checking account has no monthly fee, expense categorization for your purchases, and the ability to generate quarterly expense reports.
Alternatively, for $9 per month, you can earn 1.5% on savings, get a Visa business debit card with cashback rewards, overdraft protection up to $200 and tax, invoicing software, and accounting support.
Lili integrates with third-party services that gig workers may use, including Etsy, Shopify, Venmo, QuickBooks, and your PayPal business account.
When you compare the prices of other invoicing and online accounting services, you may find that Lili offers tremendous value for the money as one of the overall best banks for gig workers you can find.
Bluevine: Best for Business Interest Checking Account
Like Lili, Bluevine is a financial technology company. It is backed by Coastal Community Bank, Member FDIC to protect your deposits. The Bluevine business checking account offers 2.0% interest, which sets it apart from competitors.
To take advantage of the interest, you’ll need to either spend $500 per month with your Bluevine Business Debit Mastercard or receive $2,500 per month in customer payments to your Bluevine business checking account.
There are no monthly fees or minimum balance requirements and you can make unlimited transactions with no fees. Like Lili, Bluevine also offers other services for business owners.
If you are looking for a business interest checking account with value-added services, consider Bluevine. Your account integrates easily with QuickBooks, with no fees involved. Plus, you can set up sub-accounts to easily manage your money, add authorized users, and pay bills via ACH or wire transfer from your Bluevine account.
While many credit providers offer business credit cards, Bluevine is one of only a few business checking accounts that offers a business line of credit. You may qualify for a credit line of up to $250,000, with a rate as low as 6.2% interest. This interest rate is much lower than the national average of 20.46% for business credit cards right now, as reported by The Balance. Plus, you could get approved in as fast as five minutes, according to the Bluevine website.
For entrepreneurs seeking to purchase tools or resources, or freelancers in need of business equipment, Bluevine’s line of credit could provide you with the financial security you need to grow. Take note that you’ll need a credit score of 625 or more to qualify and $40,000 in monthly revenue. This is probably not a service for a gig worker, but for a seasoned entrepreneur.
Even so, it’s never too early to get started with a business checking account, especially one with no monthly fees.
Amex: Best for Debit Card Rewards and Bonus Offer
American Express is a renowned name in business and consumer rewards credit cards. But you might not be aware that the company also offers a business checking account with 1.30% APY on balances up to $500,000.
American Express also has no monthly maintenance fees, no fees on domestic ACH payments, and no fees at MoneyPass ATMs. The American Express Business Blueprint app makes it easy to manage your account.
Amex stays true to its credit card rewards roots with a rewards business debit card. Earn 1 Membership Reward point for every $2 on eligible purchases. You can combine points earned with Membership Rewards points accrued with other Amex cards, and use those points for travel, gift cards, or cash back. You can also convert those points into cash deposits directly into your new business checking account.
Amex’s bonus offer stands out to us. Earn 30,000 Membership Rewards points after you deposit $5,000 or more within the first 30 days of account opening, maintain that balance for the next 60 days, and make five or more qualifying transactions within those first 60 days.
NBKC Business Checking: Best for No Fees
If finding a business bank account with no fees is most important to you, a nbkc Business Checking account might fit the bill. The bank offers unlimited transactions with no fee, no minimum balance requirements, no monthly fees, and no opening deposit requirements either. You can also have out-of-network atm fees reimbursed for up to $12 per month.
If you are a freelancer just getting started or just looking to supplement your full-time income with a side hustle, you’ll find nbkc bank a low-cost and convenient option among free business checking accounts.
NBKC lacks some of the bells and whistles of the top choices on our list. You won’t get integrations with common business software or invoicing and accounting support. But a nbkc business checking account is free with your personal account and provides an easy way to keep your business and personal funds separate.
Novo: Best for Payment and P2P Money Transfer App Integration
Novo is another choice with no monthly maintenance fee, no monthly fee, free ACH transfers, and no minimum balance needed. Like many of the business bank accounts on this list, Novo is a financial technology company. It’s backed by Middlesex Savings bank, a Member FDIC, which means your money is protected up to $250,000 per account.
Novo is the best for business owners looking for an easy way to process payments or transfer funds. You’ll get free ACH transfers from another checking or savings account and refunds on all out-of-network ATM fees.
Novo integrates with many P2P payment apps, including Square, Shopify, and Stripe, as well as Etsy, eBay, Amazon and more.
When you use Novo Boost, you can get paid 95% faster through Stripe, or two business days before the funds would ordinarily appear in your account.
Plus, it’s quick and easy to open an account online, with approval as fast as 10 minutes – rather than days with some other online bank accounts.
Axos Bank: Best for New or Scaling Businesses
Many freelancers don’t think about opening a business account until they have incorporated their company to make that transition from self-employed to entrepreneur. If this sounds like you, Axos Bank could have the best bank accounts for you. The online bank is offering business owners who incorporated after June 2020 an extra $200 in their new business bank account.
If you aren’t newly incorporated, you can earn a $100 bonus.
Like many of the best business accounts on this list, Axos has no monthly fee, no minimum monthly average balance to hold, ATM fee reimbursements for all domestic transactions, and no minimum opening deposit. The bank accepts cash deposits or you can transfer money from other checking accounts via ACH.
Unlike many online banks, Axos offers business owners a dedicated relationship manager to help point you to the products and services that are best for your growing business.
Chase Business Complete Banking: Best for Credit Card Processing
As the largest U.S. bank, with assets of $3.31 trillion, Chase is a traditional bank that offers all the convenience of online banks. This includes personalized service, stellar fraud protection, and a host of other features and benefits we’ve come to expect from any financial institution.
The Chase Business Complete Banking account is ideal for entrepreneurs, offering unlimited transactions and no monthly fee (if you meet certain requirements). These requirements are relatively easy to meet with a $2,000 minimum balance, $2,000 in purchases on your Chase Ink Business credit card, a link to a Chase Private Client Checking account, or $2,000 in deposits from QuickAccept or Chase eligible merchant services.
The best aspect of Chase Business Complete Banking is the ability to process credit card transactions and receive funds the same day through Chase QuickAccept. (Additional fees apply.)
You can open an account with no minimum deposit to get started.
Wave Money Business Banking: Best for Free Business Banking
Wave Money integrates a free checking account with easy bookkeeping for freelancers and solopreneurs. Wave is best for those who want to improve cash flow with instant pay and want bookkeeping tools to make tax prep easier.
Wave has no monthly fee or transaction fees, so you keep more of what you earn. You can use the mobile check deposit feature for convenience, and make ACH transfers easily. There are no transaction limits with Wave, and you can also connect third party payment processors.
Wave is another fintech company, with banking provided by Community Federal Savings Bank, Member FDIC. That means your funds are insured for up to $250,000 per account.
TIAA Bank: Best for Business Investments
Besides checking accounts, TIAA Bank offers a variety of banking products for entrepreneurs and gig workers that sets it apart.
If you’re considering business savings accounts, TIAA offers CDs and money market accounts to earn interest at a rate higher than you may get with another account. Currently, TIAA’s one-year business CD offers an APY of 3.75%.
TIAA’s checking accounts offer easy online banking and mobile check deposit, along with personalized service from a business solutions specialist.
LendingClub Bank Tailored Checking: Best for Earning Checking Account Rewards
The LendingClub Bank tailored checking account for freelancers is one of the few banks on our list where you can earn interest on your checking balance, plus 1% cash back rewards when you use your debit card.
Account holders earn 1.5% APY on balances up to $100,000 and 0.10% APY on the portion of your balance that exceeds $100,000.
LendingClub Bank reimburses fees if you use an out-of-network ATM. The bank also supports QuickBooks, Quicken and Mint for budgeting and bookkeeping. You can also send digital invoices and get paid directly to your LendingClub account, making LendingClub Bank Tailored Checking one of the more robust and affordable online banks for freelancers.
Just make sure to maintain an average daily balance of at least $500 to have the monthly fee waived.
How to Choose the Best Bank Account for Your Business
When you’re evaluating business bank accounts, you’ll want to consider your needs and the features that are most important to you.
It should go without saying that you want an account with no monthly fees or no monthly fees. Unless you’re an established business owner, you may also want no minimum balance requirements. You don’t want to get saddled with fees if your business runs into cash flow problems or you have a down month.
If you run a high-volume business, look for a bank account with no transaction limits, no in-network ATM fees, and unlimited ATM fee rebates.
Need a way to manage contracts, collect invoices, and help with taxes?
Your business bank can represent much more than just a place to deposit cash and a means to pay your bills. Many of the best bank accounts on this list also offer freelancer invoicing, tax assistance, and ways to manage contracts.
Budgeting and Savings Features to Look For
When you’re a freelancer, it’s convenient to have an easy way to track your expenses and budget for not just expected costs, but surprise opportunities or financial emergencies.
Just as you should have a personal bank account established with emergency savings, you want a business savings account. In fact, you may want multiple business savings accounts or the ability to divide money into various buckets for known costs – like taxes – and unexpected expenses, such as car repairs or a new phone.
Some budgeting and savings features are nice to have, such as an interest-earning checking account and cash back on debit card purchases.
Why We Chose Lili as the Best Business Bank Account
Lili graces the top of our list because the fintech company offers so many value-added services for entrepreneurs that it’s virtually a one-stop shop for freelancers. However, the other banks on our list for best business accounts have their own benefits you might want to consider.
Should You Use Different Banks for Personal and Business Finance?
If you already have a separate bank account for your personal finance, there is something to be said for opening a business account through the same bank. You may get extra perks and benefits or waived fees. Best of all, it’s easier to use one app to manage all your personal and business banking.
But if you opt for an online financial services company, instead, it is typically easy to transfer funds between accounts. Also, companies like Lili and Bluevine specialize exclusive in business accounts, which means they have services tailored specifically to your needs.
Bottom Line
A lot of factors go into choosing the best bank account for your business checking needs. Knowing your must-haves, nice-t0-haves, and those features that don’t really matter to you can help make the decision easier.
FAQs
What is a business bank account?
A business bank account is a dedicated account separate from your personal accounts that you use to deposit cash, checks, or other customer payments earned through your business. You should also use your business checking account to pay for business expenses.
Do You Need a Business Bank Account if You’re a Freelancer?
Freelancers are not required by law to have a separate business banking account. But if your business is incorporated as an S-corp, C-corp, or LLC, you are required to keep your business and personal accounts separate.
Should You Have a Separate Bank Account If You’re a Freelancer?
Even though it’s not required by law, it’s a good idea to have an account separate from your personal checking account to help you keep track of business income and expenses.
What Makes a Business Bank Account Ideal for Freelancers?
Business bank accounts often have many of the same features as some of the best personal bank accounts. That would include low or no minimum balance requirements, no monthly maintenance fee, no transaction fees, and no hidden fees.
You may also look for features like mobile check deposit, unlimited electronic deposits, and low wire transfer fees if you have a lot of customers, clients, or vendors outside the U.S.
Methodology: How We Select the Best Bank Accounts for Freelancers and Side Hustlers
We evaluated the best bank accounts for freelancers based on the ability to earn interest, monthly maintenance fees, minimum balance requirements, the ease of making cash deposits, customer service, and more.
Some banks are better for freelancers who don’t maintain a high balance or only have a few transactions per month. Entrepreneurs with fast-growing businesses looking to scale may prefer a business checking account with unlimited transactions and the ability to accept credit card payments through the same bank.
Some business owners may want to be able to integrate their Quickbooks accounting system through their bank.
We have banks on this list designed for small business owners, freelancers and side hustlers at every stage of business growth.
Part of estate planning is preparing for when you are incapacitated or other cases when you might still be physically present but have mentally declined. Hopefully, that will not happen. Many people remain sharp and present throughout their entire life, but for many others, very old age is a period of mental weakness. They get less capable of making clear choices as they age and may often be physically unable to make those choices. In that case, you often need someone else to help you make crucial decisions. Two of the most common options for this are the healthcare proxy and power of attorney. Here’s what you need to know. You may also want to talk to a financial advisor to make sure your individual situation is fully taken care of.
What Is a Healthcare Proxy?
A healthcare proxy refers to when you name someone to make any necessary healthcare decisions on your behalf if you are unable to do so. This individual is also referred to as your “agent” or, in some jurisdictions, your “health care agent” or “health care power of attorney.”
You typically name your agent in a living will, a document that establishes any rules and requirements that you have if you are physically or mentally incapacitated. You can also fill out a form that is itself called a “health care proxy,” in which you name your agent. However you name them, in this same form, you will also give instructions for how you want your agent to make healthcare decisions on your behalf.
These instructions are extremely important. In general, a healthcare proxy gives the agent the same scope of medical decision-making power that you have. You have, effectively, authorized this person to act in your stead for the purposes of your health. This authority is only limited by the instructions that you leave in your healthcare proxy form or living will. If you want them to make certain decisions in certain ways, you need to make that clear in their authorization.
A healthcare proxy can only act if you are incapacitated, either mentally or physically and their authority only lasts for the duration of your incapacitation. For example, say that you are in a car crash and knocked unconscious. The hospital would look to your healthcare proxy and the agent that it names, to make any decisions on your behalf until you woke up.
A healthcare proxy can also take effect due to mental decline. In these cases, it’s possible for the grant of authority to become long-term or effectively permanent. If a doctor or court (depending on the rules of the jurisdiction) rules that you are not mentally competent to make your own decisions, your healthcare proxy will kick in and the hospital will look to your agent to make all necessary decisions on your behalf.
In all cases, however, a healthcare proxy has a very specifically defined role. Your agent can only make decisions regarding your healthcare and they can only do so if you are medically incapacitated. It’s important to note that this is an area generally dominated by state law. There are few if any, federal laws that apply here.
What Is a Power of Attorney?
A power of attorney refers to when you name someone to make any necessary legal or financial decisions on your behalf. This individual can be referred to as your agent or your power of attorney, which can get slightly confusing as the form appointing them is also referred to as a power of attorney.
The format for naming a power of attorney is different across jurisdictions, but it typically requires a notarized statement granting someone this authority. You can do this in several different formats such as a specific letter granting someone power of attorney or in a living will. Similar to a healthcare proxy, in the form of naming your power of attorney you also give instructions for what authority you want them to have and how you want them to make decisions on your behalf.
As above, these instructions are extremely important. A power of attorney has the authority to make almost any legal or financial decision on your behalf as though you had made it personally. This includes but is not limited to, signing contracts, conducting business, making financial transactions, filing taxes, employing agents, assuming legal and financial liabilities and more. For example, if they sign a contract, it has the same authority as if you had signed that document.
This is true even if you do not specifically authorize a given transaction. As long as your power of attorney is acting within the scope of their authority it will be legally binding.
Instructions can narrow this grant of authority. When you name your power of attorney, you can assign them a specific scope of authority. For example, you can give someone power of attorney to sign the paperwork on a specific real estate deal or to file your 2023 taxes. If this person then tries to go and sell a bunch of your stocks, the transaction would be illegal because you didn’t give them the authority to do that.
Unless you specify otherwise, a power of attorney can apply whether you are incapacitated or not. In fact, it’s common for people to have a power of attorney for when they are perfectly healthy, just unable to attend a given transaction. When and under what conditions the agent has authority is another matter that you can specify in the form granting them power of attorney.
There are four basic types of power of attorney:
Durable: With a durable power of attorney, you give someone an indefinite grant of authority. This authority lasts until you either revoke it or until you die. It is relatively uncommon to give someone an unlimited, durable power of attorney.
Limited: With a limited power of attorney, you give someone a specific grant of authority. This authority applies only to specific situations and/or only lasts until its terms expire. For example, it’s common to give your accountant power of attorney to file your taxes or to conduct specific transactions when you can’t be present.
Springing: With a springing power of attorney, you give someone a grant of authority that only begins under certain circumstances. It is common, for example, to name a springing power of attorney that only takes effect if you are incapacitated.
Conditional: With a conditional power of attorney you give someone authority that ends or only lasts under certain circumstances. For example, you might give someone power of attorney that automatically begins if you are incapacitated and that automatically ends when you wake up.
You can combine different types of power of attorney. For example, a springing, durable power of attorney is a common feature of living wills. In that case, the power of attorney would give someone an indefinite grant of authority, but only if you become permanently incapacitated.
The Key Differences Between Healthcare Proxies and Power of Attorney
Healthcare proxies and power of attorney each play a different role in estate planning, but each is critical. The most important differences are:
Scope
A healthcare proxy can make decisions regarding your healthcare and nothing else
A power of attorney cannot make decisions regarding your healthcare, but they can make decisions about almost all other legal and financial matters
Conditions
A healthcare proxy can only act if you are incapacitated and is automatically triggered by your incapacitation
A power of attorney can act under any circumstances based on the terms you set, but it is only automatically triggered if you define the conditions in advance
Duration
A healthcare proxy’s authority ends once you are no longer incapacitated but can become permanent if your incapacitation is permanent
A power of attorney’s authority ends when you say it does and can be temporary or permanent based on your instructions
Revocability
A healthcare proxy’s authority is automatically revoked once you are awake and mentally competent
A power of attorney’s authority can be revoked at any time at your instruction
The Bottom Line
A healthcare proxy makes decisions related to healthcare on your behalf and can only act if you are medically or legally incapacitated. A power of attorney makes legal and financial decisions on your behalf and acts based on the scope of authority and under the conditions you have given them. It’s important to plan out your entire estate planning with an advisor.
Power of Attorney Tips
When do you need power of attorney? That’s an excellent question for the professionals. Consider working with a financial advisor who can help you plan out your entire estate. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you want to assign a power of attorney or a healthcare proxy, it’s absolutely essential to do this right. Otherwise, someone might challenge their authority when you aren’t able to clarify matters on your own behalf.
Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.
When it comes to smart money decisions, understanding a ledger balance is key. A ledger balance is an important tool for small business owners and investors that helps track their financial health in real-time. It’s the foundation of any successful budgeting or investing strategy, but how exactly do you calculate your own? In this article, we’ll discuss what a ledger balance is, why it matters and how to calculate yours accurately – so you can make better-informed money decisions!
What’s Ahead:
What is a Ledger Balance?
A ledger balance is a record of all the financial transactions that have taken place in an account. It is used to track and monitor the money coming into and out of an account, such as income, expenses, investments, loans, etc. You can use the ledger balance to determine how much money is available for spending or investing at any given time.
Definition of a Ledger Balance
A ledger balance summarizes all financial activity within an account over a certain period. It shows the total amount owed (debits) versus the total amount received (credits).
Components of a Ledger Balance
The components of a ledger balance include debits and credits from various sources, such as deposits, withdrawals, transfers between accounts, or payments for goods/services. Debits are amounts subtracted from your account, while credits are amounts added.
For example, if you make two payments on your credit card bill totaling $200 each month, your debit would be $400 ($200 x 2). If you also deposit $500 into your checking account during this same period, your credit would be $500 ($500 x 1). Your net ledger balance after these transactions would be +$100 ($500 – 400 = +$100). This means that you now have an extra $100 in your checking account compared to before these transactions took place.
A ledger balance is integral to understanding your financial situation and making smart money decisions. In the next section, we’ll discuss using a ledger balance to help you make informed decisions about your finances.
Benefits of Maintaining a Ledger Balance
Maintaining a ledger balance is essential to the financial organization and record keeping. It can help you keep track of your finances, save time when preparing taxes, and ensure accuracy in all your financial transactions.
Improved Financial Organization
A ledger balance helps you stay organized by tracking all the money in and out of your accounts. You can easily view where each dollar goes and how much you have left to spend or save for future goals. This will give you a better understanding of your overall financial picture so that you can make informed decisions about spending, saving, investing, etc.
Accurate Record Keeping
By maintaining a ledger balance, you can accurately document every transaction made from each account – income or expenses – making it easier to audit if needed. This also allows for more efficient tax preparation since everything is already documented in one place instead of searching multiple documents for the same information.
Easier Tax Preparation
When filing taxes with accurate records on hand, such as those found in a ledger balance, it eliminates any guesswork or potential errors that could occur while manually entering data into forms or spreadsheets used during tax season. This information readily available saves time when filing taxes because there is no need to go back and look up specific details regarding certain transactions throughout the year; they are already recorded within the ledger balance!
By maintaining a detailed ledger balance throughout the year, individuals and small business owners can benefit from improved financial organization, accurate record-keeping practices, and easier tax preparation processes come April 15th. These benefits will help ensure that all finances are properly tracked and documented for future reference and provide an efficient way to file taxes without any guesswork or potential errors.
Maintaining a ledger balance is essential to keeping your finances organized and up-to-date. In the next section, we’ll discuss setting up a ledger balance and tracking your transactions.
The Gist: Maintaining a ledger balance is essential to the financial organization and record keeping. It can help you stay organized, accurately document transactions, and simplify tax preparation: • Improved Financial Organization • Accurate Record Keeping • Easier Tax Preparation. A detailed ledger balance throughout the year provides individuals and small business owners with efficient ways to track finances, ensure accuracy in all their financial transactions, and save time when filing taxes.
How to Calculate Your Ledger Balance
It helps you stay organized and keep accurate records, making tax preparation easier. Knowing how to calculate your ledger balance is essential for small business owners and investors. Here’s what you need to know about calculating your ledger balance:
Step 1: Gather All Relevant Financial Documents
The first step in calculating your ledger balance is gathering all the relevant financial documents related to the account or accounts you want to track. This includes bank statements, credit card bills, investment portfolios, loan agreements, etc. Make sure all these documents are up-to-date so that you have an accurate picture of where you stand financially.
Step 2: Add Up All Debits and Credits
Once you have gathered all the necessary documents, it’s time to add up all debits and credits associated with each account or transaction. A debit is any money taken out of an account, while a credit is any money put into an account (including interest earned). When adding debits and credits for each transaction or account, be sure to include fees and taxes paid on investments, if applicable.
Step 3: Subtract Debits from Credits To Get The Final Amount
After adding debits and credits for each transaction or account, it’s time to subtract them from one another to get the final amount owed or due on each item/account/transaction listed in Step 1 above. For example, if there were $500 worth of debits associated with a particular bank statement, subtracting this number from $1000 worth of credits would give us a total remaining balance due on that particular statement of $500 ($1000 -$500 = $500). Once we do this for every document we gathered in Step 1, our overall ledger balance should be accurately calculated!
Knowing how to calculate your ledger balance can help ensure everything adds up correctly when it comes time to file taxes or make other financial decisions, such as investing in stocks and bonds. Keeping track of income versus expenses will also help small business owners budget accordingly, so they don’t overspend beyond their means.
Once you have gathered all your financial documents, added up the debits and credits, and subtracted them to get the final amount, you will be able to calculate your ledger balance. Next, we’ll look at how to use this information to make intelligent money decisions.
The Gist: Calculating your ledger balance is integral to managing finances. It helps you stay organized and make accurate records for tax preparation, budgeting, and investing decisions. Here are the following steps: 1. Gather all relevant financial documents 2. Add up all debits and credits 3. Subtract debits from credits to get the final amount owed or due
Tips for Maintaining an Accurate Ledger Balance
Maintaining an accurate ledger balance is essential for any individual or business to ensure their financial records are up-to-date and accurate. Here are some tips that can help you stay on top of your finances:
Keep Track of All Transactions Regularly
It’s essential to keep track of all incoming and outgoing transactions to understand where your money is going clearly. This includes recording deposits, withdrawals, transfers, bills paid, etc. Doing this regularly will help you stay organized and prevent errors from slipping through the cracks. Additionally, reviewing these transactions periodically ensures everything adds up correctly.
Double Check Your Math Before Finalizing Entries
When entering numbers into your ledger balance sheet or other financial documents, it’s always best practice to double-check your math before finalizing entries. Even if you think something looks correct at first glance – take the extra time to verify accuracy by running calculations twice just in case you made any mistakes. This will save you time and energy when reconciling accounts or preparing tax returns!
Utilize Automated Accounting Software When Possible
Technology has come a long way in recent years, making tracking finances more manageable! Utilizing automated accounting software such as QuickBooks or Xero can be extremely helpful when managing multiple accounts simultaneously, as they provide real-time updates with each transaction entered into them. Not only does this save time, but it also helps reduce the human error associated with manual entry processes – making it much more efficient overall!
Overall, maintaining an accurate ledger balance is key for anyone looking to manage their finances properly and efficiently over time – whether they’re a small business owner or simply trying to budget better personally. By following these simple tips outlined above (keeping track of all transactions regularly, double checking math, utilizing automated accounting software), individuals should be able to set themselves up for success in no time.
Maintaining an accurate ledger balance is essential for making sound financial decisions. With these tips, you can stay on top of your finances and make smart money moves.
The Gist: Maintaining an accurate ledger balance is essential for any individual or business to keep their financial records up-to-date and accurate. To do this, it’s vital to • Keep track of all transactions regularly • Double check math before finalizing entries • Utilize automated accounting software when possible By following these tips, individuals can set themselves up for success in managing their finances efficiently over time.
The Importance of a Ledger Balance for Small Business Owners and Investors
A ledger balance is integral to managing your finances, especially for small business owners and investors. A ledger balance is the total amount of money combined in all accounts. It’s calculated by subtracting all debits from credits to get the final amount. A clear understanding of your ledger balance can help you make better financial decisions and stay on top of your finances.
Why It Matters for Small Business Owners
For small business owners, having an accurate record of their ledger balance is essential to running their businesses efficiently and effectively. Knowing exactly how much money they have in each account helps them plan for budgeting, taxes, payroll, and other expenses. Additionally, keeping track of their ledgers allows them to quickly identify any discrepancies or errors so they can be addressed immediately before they become more significant problems.
Why It Matters for Investors
Investors also need to keep close tabs on their ledger balances because it gives them insight into how well their investments perform over time. By regularly monitoring changes in their ledgers, investors can determine if certain investments are worth continuing or if adjustments need to be made based on current market conditions or other factors that may affect returns on investment (ROI). This information can then be used as a guide when making future investing decisions.
Overall, a good understanding of one’s ledger balance is critical for small business owners and investors alike, as it provides valuable insights into where funds are coming from and going at any given moment in time. This ultimately leads to more informed decision-making about personal finance management strategies.
A clear understanding of your ledger balance is essential for small business owners and investors alike, as it allows them to make informed decisions about their financial future. Next, we’ll discuss why it matters for small business owners.
The Gist: A clear understanding of your ledger balance is essential for small business owners and investors. It allows them to keep track of all their accounts, quickly identify discrepancies or errors, monitor investments’ changes over time, and make more informed decisions regarding budgeting, taxes, payrolls, and other expenses. Key takeaways include: • Subtracting debits from credits to get the total amount • Monitoring ledgers regularly for any discrepancies or errors • Keeping track of investments’ performance over time • Using ledger information as a guide when making future investing decisions.
FAQs about What Is a Ledger Balance
Can we withdraw money from the ledger balance?
No, you cannot withdraw money from your ledger balance. Ledger balances are a record of the transactions that have occurred in an account and do not represent actual funds available for withdrawal. You must transfer funds to another account or use a payment method such as a debit card or check to access funds.
How long does the ledger balance take to be available?
The availability of a ledger balance depends on the financial institution you are using. Generally, most banks and credit unions will update your account information within 24 hours. However, if you have recently made a deposit or withdrawal from an ATM, it may take up to 3 business days for the transaction to be reflected in your ledger balance. Additionally, suppose you have recently transferred funds between accounts at different institutions. In that case, it could take up to 5 business days for the transfer to be completed and reflected in your ledger balance.
How do I make my ledger balance available?
The best way to make your ledger balance available is to use online accounting software such as QuickBooks or Xero. These programs allow you to easily track and monitor your financial transactions, giving you a real-time view of your current finances. Additionally, they provide helpful features like budgeting tools and automated reminders to help you stay on top of your money management goals. With these services, you’ll be able to quickly access and review your ledger balance whenever needed.
Can I transfer the ledger balance to the bank account?
Yes, you can transfer your ledger balance to a bank account. This is typically done through an online banking platform or app. It’s important to double-check the transaction details before confirming it, as mistakes may be costly and time-consuming to fix. Additionally, there may be fees associated with transferring money from one account to another, so understand those costs beforehand.
Conclusion
It allows you to track your financial activity and make informed decisions about where to invest or how much money to allocate for certain expenses. By understanding the basics of calculating and maintaining a ledger balance, you can ensure that your finances are in order and that you’re making smart money decisions. So take some time today to review your ledger balance and get on the path toward financial success!
Often, there are two camps of people when it comes to wrangling financial documents: Some keep everything, every ATM receipt, every bank statement, sometimes in a drawer or box with little to no organizing principle. Others throw away (hopefully after shredding) just about everything that arrives in the mail.
The best approach is likely somewhere in between. There is a happy medium. Here, you’ll learn how to keep just what you need, organize it well, and dispose of financial documents properly when they no longer serve a purpose.
The Importance of Financial Statements
“Out of sight, out of mind” is a cliche for a reason. Once taxes are filed, paychecks are deposited, and the rent or mortgage is paid, we tend to forget about these transactions, dumping the receipts in a deep file cabinet or throwing them away altogether.
However, the consequences of financial documents and bank statements stick around long after they’ve been settled. For example, the IRS can come calling years after a person files taxes if the organization suspects that income was misreported. Or, in the event of loss or damage, having a record of purchase for big-ticket items like electronics or jewelry can make it easier to file a claim.
Keeping track of financial statements can help serve as protection or proof if a transaction is challenged or misreported. Without the statement, people might spend days trying to obtain duplicate records, when they could have just had them neatly filed in the first place.
Not everything needs to be saved forever, but some things should be safely filed away for a rainy day.
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What to Keep and For How Long
Like items in a grocery store, each type of financial document has its own expiration date. Some will be relevant years after they’ve been filed; others can be tossed within months. Here’s the general rule of thumb of how long a person should keep each statement:
Tax Documents: 6-7 Years
Keep tax documents — anything related to filing taxes — around for seven years. Why so long? The IRS can audit anyone up to three years after they file if the agency suspects that an error was made in “good faith,” aka an accident.
income tax return up to three years after the fact for a refund.
Additionally, the IRS has six years to follow up on returns if it thinks the filer underreported income substantially, meaning by 25% or more.
It’s not a bad idea to keep the tax return, in addition to supporting documents. That could include evidence of:
• Retirement plan contributions
• Charitable contributions
• Interest payments on a mortgage
• Alimony or child support payments
Record of Sales: 3 Years
From selling stock to selling a home, and every large sale in between, it could be smart to keep these records of sale for at least three years after the transaction takes place. These documents can be called up in tax-related issues.
Paycheck Stubs, Bills, Bank Statements, Investment Statements: 1 Year
If someone isn’t using direct deposit for payday, they should keep their physical paychecks for a year. Once they receive their W-2 and confirm that the amounts match, the stubs can go.
Utility bills, bank statements, and other bills should stick around for a year , just to be safe. Budgeters can use them to compare balances month over month. It also can be a helpful habit to check over bank and credit card statements each month. It’s a chance to catch and dispute fraudulent or incorrect charges. In addition, bills for services like medical treatment and auto repair should be kept for at least for a year for reference.
Investment statements that are distributed quarterly should be kept on hand until the annual statement is revealed and the numbers are lined up.
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Receipts, Resolved Credit Card Statements: Toss It
Unless purchases are logged manually, a person should feel comfortable tossing receipts almost as soon as they acquire them. As long as they don’t plan to return the item, all they should do is confirm the amount against the debit or credit card charge, then send that little slip to the trash.
credit card is paid in full each month, there’s not much reason to keep the statement lying around. Again, it can be used to check charged amounts and spot mistakes or fraud, but once statements are resolved against transactions, it should be okay to ditch the statement.
Although there are suggestions for how long people should keep a statement, at the end of the day, they should trust their gut. If there’s an urge to hold on to something not listed above, keep it.
Three Ways to Store Sensitive Documents
It won’t matter what a person saves and shreds if they don’t know where to find records in the long run. Safely storing sensitive financial documents doesn’t really mean tucking them away and forgetting about them. Here are a few ways to store and organize financial records:
• Use an old-school filing system. Finding an affordable, fire-safe file box to keep statements in is already a massive step up from the bottom of a junk drawer. Everyone will have their own approach to logical filing, but it could be done by year, type of record, or institution the record comes from.
Some might be tempted to go extra safe and take this paperwork to a safety deposit box at the bank. However, if the documentation is needed, it won’t do a person much good sitting miles away in a bank vault. Keeping it close and safe is probably preferable.
• Scan and save online. Many smartphones come with the capability to scan documents, and there are other well-reviewed scanning apps on the market. Those who tend to lose paper might choose to scan everything and save it online. The only hitch is keeping up with the scanning, and saving all documents to the cloud instead of just on the phone.
• Go paperless. Many institutions offer paper-free transactions, meaning customers don’t get statements in the mail. Online banks vs. traditional banks have made this a priority. Going paperless does not mean having to log on to each site to get financial information, but it does mean a person is less likely to lose papers.
Going paperless with financial statements may require a little more work to access records — people can’t just wait for documents to arrive in the mail. But if done correctly, they can find the papers they need with the click of a few buttons.
Recommended: Are Online Bank Accounts Safe?
The Takeaway
Going paperless with records doesn’t have to be tricky or time-consuming. That’s one of the benefits of opening an online bank account like SoFi Checking and Savings. It’s easy to find the information you are looking for online, as well as to track your spending and saving in one convenient place. What’s more, SoFi offers a competitive annual percentage yield (APY) and charges no account fees, which could help your money grow faster.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice. SOBK0523022U
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