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A Better Way To Sell A Structured Settlement - Via Auction

By: Clayton Frantz

Structured settlements were introduced in Canada and the United States in the 1970’s. They were introduced as an alternative to lump sum payments, common in insurance settlements and lottery winnings. In the decades since, they have also been accepted as legal financial instruments in England and Australia.

The aforementioned common law countries have decided to include structured settlements in their statutory tort laws. These four countries handle tort law and the structure settlement packages a little bit differently, but the general overall definition applies across the board. In a nutshell, a structured settlement by legal definition is a statutory agreement to pay a specified sum of money over a period of time, on a payment system.

Payment Arrangements

When someone wins a court settlement (or if they settle the case beforehand), the insurance company often gives the winner a choice of taking a specified amount of money in a lump sum, or a bit more money if the insurance company can enter into a structured settlement arrangement. Of course, it is in the insurance company’s best interest to pay the claimant in a structured settlement, because the insurance company can earn interest, during the structured payment cycle, on the full sum of money it would have paid in a lump sum.

The insurance company wins in the profit game, when they get to enter into a structured settlement. They will be able to invest the full sum of money owed, and they get to earn interest or dividends on the money in hand during the payment period.

Structured settlements are most often paid out in the form of an annuity over a period of time. An annuity is also legally classified as a financial instrument. Once again, the financial institution will gain an additional financial advantage, because they can collect interest or earn other kinds of income on the bulk amount, during the payment period.

Annuity And Structured Settlement Buyouts

Structured Settlements for a great deal of clients are the ideal solution. Payments spread out over a period of time allow clients to balance their finances and pay bills in the years to come. Some people get their structured payments $300, $1000 or even more each month. Sometimes they may include lump sum payments many years in the future. This is fine as long as their life is humming along and their bills are being paid. Yet, circumstances sometimes get in the way, and people need the lump sum cash right away to solve some issue that has come up in their lives.

Because annuities and structured payments are a legally-binding financial agreement, those items can be transferred to another person under the terms of the laws that have been set up to manage these financial products.

But, when faced with a serious financial crunch, some people hastily sell their annuities and structured settlements to the first company who would be willing to buy them for a lump sum amount

These companies who are willing to buy-out annuities and structured payments are commonly referred to as “Factoring” companies, because they use “Factors” to determine how much future payments are currently worth, and how much they should buy them for.

The Standard Method of Selling A Structured Settlement - Persistence and Patience (not always used)

We’ve all seen the countless ads on TV from a variety of companies, “Get Lump Sum Cash Now.”

For years, people have turned to factoring companies in their time of financial need.

Smart consumers will learn from the insurance companies. Have you ever been involved in a car wreck? The insurance company requires for you to get three estimates and then they will pay the company that offers them the best deal.

The smart consumer will invest a little bit more of his or her time to make sure they get the best deal for their annuity or structured settlement. They will call at least three factoring companies and get competitive bids from each. Then they will go back to the three aforementioned companies and see if any are willing to beat their best offer.

It can be tiring and time-consuming to follow through in this process, but for the average person, it could be worth several thousand or even tens of thousands of dollars in one’s bank account at the end of the process.

The Better Method of Selling a Structured Settlement ? Open Marketplace Auction

A new service has been introduced by www.QuoteMeAPrice.com (QMAP). This website allows Structured Settlement owners the ability to list details of their settlement online, and receive cash bids directly from Top-Rated Funding firms.

The process is relatively simple.

Clients sign up for a free account and list the details of the structured settlement or annuity. Once an account is created and the details of the payment arrangement are known, Funding Firms can log in and make cash bids directly on the purchase of the structured settlement.

Each firm can see the current highest cash offer, and if they wish to beat it with a higher cash price, they can do so.

Sellers do not need to worry about being called countless times by salespeople because the contact information of the structured settlement owner is not shared. When a factoring company makes a cash bid on the settlement, QMAP notifies the settlement owner of the new bid via email.

Having settlement buyers compete in an open marketplace lowers the profit margin for funding firms, and forces the lowest possible discount rates to be applied when funding companies compete to buy future payments. This in turn ensures that clients can get the maximum amount of money back from their settlement.

The Importance of Comparison Shopping (actual Quote Me A Price client)

Two siblings had been receiving separate, but identical annuity payouts in the form of a structured settlement from an accidental family member death.

Sibling one got into a financial crunch. When this happened, sibling one called a “Factoring Company.” She was offered a lump sum buyout, and although the offer was much lower than the value of the settlement, sibling number one didn’t realize the importance of shopping the competition, and sold her settlement for $70,000.

Sibling number two heard about the buyout and thought that it would be nice to have her cash now also. But, sibling number two was not as desperate for an immediate buyout. Sibling number two took the time to shop around for a better deal. Sibling two managed to uncover QuoteMeAPrice.com, and they helped to secure the best offer possible.

Sibling number one got a $70,000 buyout and was initially happy with her cash buyout. Sibling number two came to QMAP with the same initial $70,000 buyout offer for the settlement. After working with Quote Me A Price, sibling number two got offered $100,000 for the same settlement sibling number one sold for $70,000. Sibling number two sold her settlement for $100,000 to JG Wentworth who is a partner in the QMAP service.

While sibling number two did get the best possible deal, sibling number one unfortunately has to live with the fact knowing that she made a $30.000 mistake by not shopping the competition.

In Conclusion

Your structured settlement or annuity is the foundation of your financial future. If you find yourself in financial need now, you should at the very least give yourself a couple more weeks to shop your deal to the competition.

You might be telling yourself that you cannot afford to wait, but the truth is that you cannot afford to take the first bid that you are offered. In some cases, jumping at the first offer could be the equivalent of financial suicide to a structured settlement owner.

So, be patient and persistent in the process of finding a buyer for your settlement. And remember, if you are willing to negotiate with a car dealer on the price you pay for a car, then there should be no reason in the world that you should not negotiate with a factoring company when you are looking for a buy-out of your settlement.

Article Source:
http://www.articlecity.com/articles/business_and_finance/article_8845.shtml

Filling The Self Assessment Tax Return Detailed Profit And Loss Account

By: Terry Cartwright

Businesses whose turnover has exceeded 15,000 pounds are required to show greater analysis of the income and expenditure. From a practical point of view even those businesses who expect the turnover to be less than 15,000 pounds should also maintain financial accounts which show the increased analysis to both maintain financial control and be prepared to enter the increase3d analysis should turnover exceed the 15,000 turnover threshold.

A self employed business enters the income and expenses on page SE1 of the self assessment tax return form if the total sales of the business for the financial year were less than 15,000 pounds. Only the totals of turnover, expenses and net profit are required.

When turnover exceeds 15,000 pounds totals are required of the sales and business income and then deducted from that total the cost of sales which is split into three categories of expense. Cost of sales is the direct costs of purchases which are resold, these purchases usually being physical materials but should also include any services which are bought for resale.

In particular reference to taxi drivers and haulage contractors the vehicle costs would be included in this cost of sales category as the items being resold are transportation costs. Other types of business who principal business is not the resale of transport would enter vehicle running costs in the motor expenses expense category. Another example would be an IT consultant who purchased and installed software for clients and would enter his software costs as a cost of sale as that is the service they are reselling while other businesses would enter software costs in general administration charges.

Subcontractors costs is the second category while other direct costs makes up the third area of the cost of sales. Other direct costs is a useful category in which to include all costs of the business not analysed elsewhere which are basically the costs of operating the business other than items being purchased for resale. The difference between the turnover and the sum of the three costs of sales categories is the gross profit.

Other income and profits is where the business would enter such items as rental income or for start ups taxable new deal payments. Bank interest would not go in this box as nit can be entered elsewhere on the tax return. Also business start up grants and enterprise allowances would not be entered in this box as there is a separate box in which to enter these receipts.

The remaining and main body of the inland revenue self assessment tax return form concerns an analysis of the expenses. The majority of the expense categories are self explanatory in the title. Additional expense analysis other than the prescribed headings on the self assessment tax return is unnecessary for the vast majority of self employed business.

Employee costs include the wages, salary, pension and employers national insurance contributions for all employees. Also include in this section any costs associated with employees such as recruitment fees and staff benefits. Excluded are the self employed own wages and taxes as these are not included in the inland revenue self assessment tax return form at all being a distribution of net profit after tax not a tax deductible expense.

Premises costs would include rent, rates, gas, electricity, power costs and items associated with the business premises such as property insurance. Also included in this section would be the portion of home costs being claimed as business expenses. Household expenses can be claimed as business expenses to the extent that the costs represent the proportion of the home that is used exclusively for business purposes.

Repairs include the repair, maintenance and renewal of plant and machinery. Vehicle repairs would not be entered in this category but in the motor vehicle category.

General administrative costs telephone, postage, stationery and general office expenses. Also in this section would be included all other general operating costs of the business not entered elsewhere.

Motor expenses include the running costs of the vehicles being fuel and oil, repairs and maintenance, tax and insurance, parking charges and membership of breakdown services. Parking fines should not be included as these are legal fines and not deductible expenses.

Travel and subsistence includes all travel costs excluding those included in motor expenses. Typically these items would be air and train fares, toll fees, hotel costs and subsistence costs incurred on business journeys. Receipts should be presented for all subsistence costs claimed where possible.

Advertising, promotion and entertainment expenses include all types of expenditure related to the promotion of the businesses products. Entertainment of clients to obtain business is allowed while the entertainment of staff is not and is a disallowed expense on the self assessment tax return.

Legal and professional costs include all professional fees and bills. These would include accountants, solicitors, surveyors, architects and other professional bodies. Also included in this section would be indemnity insurance.

Bad debts are sales made and included in turnover where a decision has been taken that the outstanding unpaid sales invoice will not be paid. A general percentage of sales is not acceptable and if included in the accounts is disallowed on the inland revenue self assessment tax return. The items entered being specific debts. Normally any debt that is 6 months overdue would reasonably be considered as a bad debt.

Interest and finance payments includes bank interest paid on loans and overdrafts, credit card interest and any payments made to raise finance to fund the business operations.

Other finance charges are entered in a separate category. Other finance charges would include bank and credit card charges, hire purchase and lease charges other than property leases.

Depreciation charges include the cost of writing down the value of the asset in the business accounts. As depreciation of fixed assets is a management decision and has no foundation in tax law then the value of depreciation charged against profits is disallowed for tax purposes and replaced in the calculation of tax payable by capital allowances.

The final expense category is other expenses. Enter in this category any other business expenses not entered in the other categories. As the other categories are reasonably comprehensive and sufficiently general for the vast majority of expenditure to be entered it would be regarded as unusual if any significant sums of money were to be shown in this category. A significant level of expenditure unusual for that category may give rise to an inland revenue enquiry into the self assessment tax return and this is particularly the case of significant expenditure being shown as other expense items.

Tax adjustments to the net profit and loss are where disallowed expenses are entered. Disallowed expenses being items such as the business expenses already entered of which there was personal use, and generally all expenses which have been included that were not wholly business expenses. These would include for example meals paid by the business not classified as client entertainment except where incurred on overnight trips.

Also disallowed is the depreciation charge on fixed assets which as stated is replaced in the tax calculation by capital allowances. Balancing charges being capital allowances on assets sold where the price obtained exceeded the written down value of the asset and entered in the capital allowance section of the self assessment tax return.

Added back to net profit are capital allowances that are claimed by the business. The capital allowances in effect being the tax allowance that replaces the depreciation charge.

A number of potential adjustments can also be entered in the next section which is the adjustments to arrive at the net taxable profit or loss. These adjustments are variable in nature and very much dependent on the adjustments required when the basis year has been changed or past losses are claimed to offset the net taxable profit.

The final section of the self assessment tax return is a list of the business assets and liabilities at the end of the financial year. Completion of this section is optional and should only be completed by those businesses that have produced a balance sheet as part of the accounts. In effect this section is the totals of assets and liabilities taken from the balance sheet and should represent the increase or decrease indicated by the net profit being declared by the business.

Article Source:
http://www.articlecity.com/articles/business_and_finance/article_8902.shtml