Category: Blog

Understanding Hidden Values

Companies that have assets on their balance sheet, but the values of those assets aren’t accurately reflected are considered to have hidden value. As part of an investor’s fundamental analysis of a potential investment, it looks…

3 min read

Understanding Hidden ValuesCompanies that have assets on their balance sheet, but the values of those assets aren’t accurately reflected, are considered to have hidden value. As part of an investor’s fundamental analysis of a potential investment, it looks at a company’s financial statements, the state of the macro economy, and the business’ competitive position relative to its industry. It looks at assets’ book value, reflected on the balance sheet, compared to what the market values it on a fair value or market price. The difference between the balance sheet price and the prevailing market value is what may be hidden.

Defining Hidden Value

Common areas where hidden value may be found include natural resources, real estate, a business’ customer base, and inventory. When investors evaluate a project and conduct accurate analysis between the balance sheet’s book value and the hidden value they believe the market will price it to in the future, investors may take advantage of the increase in value through early investing.

Real Estate

When it comes to real estate, by the way of generally accepted accounting principles (GAAP), real estate asset purchases are reported at historical cost. However, real estate values oftentimes rise but are not necessarily reflected on the company’s balance sheet. Since the price is reflected on the balance sheet, minus depreciation, if the real estate’s appraisal sells for at or near the appraised price, the difference shows the potential for hidden value.

Asset Considerations

Regardless of the type of asset, and depending on how the items have been cared for, hidden value may exist in the difference between financial statement value and real-world production capability. Assets that are taken care of impeccably, such as machinery, despite following a depreciation schedule, may have actual value above their reported value. Where intellectual property is involved, the amortization schedule may not reflect the full value if the company uses the IP or licenses it for revenue.

Inventory accounting methods, specifically last-in, first-out (LIFO), can impact hidden value considerations. When inflation is elevated, this method denotes the latest costs to the cost of goods sold. More mature inventory at lower costs is kept on the balance sheet for longer periods. This accounting method reduces the assets’ fair value recorded on the final inventory figure, as well as potentially creating tax benefits by lowering the business’ recorded income.

Customer Loyalty

Businesses that have a strong base of loyal customers often own an undervalued asset of customer loyalty. When customers have established a positive relationship with a company, it can make customers more open to new products or services. By opening an easier reception for future growth, the business creates an asset that’s not completely reflected on the balance sheet.

Conclusion

Regardless of the industry or the type of company, implementing effective accounting analysis and recording is one way to maximize one’s tax obligations and maximize asset value to investors and purchasers. Understanding how to do it is the first step in identifying and strategizing current and future financial plans.

The Value of Diversifying with International Stocks

When investors think about building a strong equity portfolio, U.S. stocks often dominate the conversation. The United States is home to many of the world’s most innovative, profitable and well-known companies, and has a history of delivering…

4 min read

The Value of Diversifying with International StocksWhen investors think about building a strong equity portfolio, U.S. stocks often dominate the conversation. The United States is home to many of the world’s most innovative, profitable, and well-known companies, and has a history of delivering strong long-term returns. However, the United States is not the only country with successful, growth-oriented businesses. In fact, nearly half of the global equity market is located outside the United States, offering investors a much broader opportunity than in domestic markets alone.

Despite this reality, many investors stick to a home country bias. This behavioral tendency means they prefer companies headquartered in their own country because they’re more familiar and feel safer. Unfortunately, home country bias can unintentionally increase portfolio risk. A singular concentration of investments in one geographic region exposes investors to country-specific economic cycles, policy changes, and market disruptions, while limiting access to attractive opportunities elsewhere in the world.

Global investing offers the following benefits:

  • Overall Diversification – Spreading investments across different markets, sectors, industries, companies and currencies in various countries improves opportunities for higher growth potential while balancing risk.
  • Highly Regarded Brand Names – Investing internationally offers access to a larger universe of well-established global brands. Household names such as Toyota, Nestlé, and Samsung are headquartered outside the United States, yet they generate revenues throughout the world, boasting strong balance sheets, consistent cash flow, and favorable long-term prospects. International stocks offer investors exposure to global innovation and consumption trends beyond U.S. markets.
  • Sector Diversification – In recent years, the U.S. stock market has become saturated with information technology and related industries – even among broad market index funds. While tech is a powerful growth driver, this concentration increases portfolio risk if the sector underperforms. International markets tend to have greater representation in other sectors, such as industrials, financials, materials, and consumer staples, so adding international stocks can help diversify overall sector exposure.
  • Currency Diversification – International investing exposes U.S. investors to foreign currencies, which reflect the economic conditions of their respective countries. Because currencies do not always move in tandem, holding assets denominated in multiple currencies can help reduce overall portfolio volatility. For example, if the U.S. dollar weakens, gains from foreign currencies may partially offset losses in U.S. dollar-denominated investments. While currency movements can add risk in the short term, they may provide an additional layer of diversification over the long term.
  • Country Diversification – International investing extends beyond developed markets to include emerging economies around the globe. Emerging markets are countries experiencing rapid economic growth, industrialization, and rising household incomes. Examples include India, Brazil, South Korea, and Taiwan. While emerging markets can offer higher growth potential, they also tend to be more volatile. For this reason, investors should consider allocating only a modest portion of their international exposure to emerging markets as part of a diversified strategy.

Diversify Risk Via Your Investment Vehicle

While international stocks offer diversification and growth potential, they also come with distinct risks, including regulatory differences, lower market liquidity, and political instability. Also note that international investments may involve higher transaction costs compared to domestic securities, especially when purchasing individual foreign stocks

Investors can help mitigate these risks by choosing inherently diversified investment vehicles, such as international mutual funds and exchange-traded funds (ETFs). Broad index-tracking funds are often the most cost-effective way to gain exposure, while professionally managed mutual funds can actively navigate changing global conditions.

International stocks provide access to companies, markets, and currencies that cannot be reached through domestic investments alone. When thoughtfully integrated into a portfolio, they may enhance diversification and improve long-term risk-adjusted returns.

What Your Tax Preparer Wishes You Already Knew

Most people approach tax season thinking about one thing: getting their return done. What they rarely think about is what the experience looks like from the other side of the desk. Having seen it from both angles…

5 min read

What Your Tax Preparer Wishes You Already KnewMost people approach tax season thinking about one thing: getting their return done. What they rarely think about is what the experience looks like from the other side of the desk. Having seen it from both angles, I can tell you there’s a real difference between clients who make a preparer’s job easy and those who quietly make it harder than it needs to be.

Here’s why that matters to you specifically: being a better client isn’t about being polite for politeness’ sake. It translates directly into lower bills, faster turnarounds, and better advice. This is entirely in your own interest.

First, Understand How You’re Being Charged

The way the preparer bills you should shape how you work with them. There are three common arrangements, and each one rewards organization in a different way.

If you’re on a flat fee, the dollar amount doesn’t change whether your documents are immaculate or a complete mess. But here’s what does change: a preparer who powers through your tidy file in two hours now has time to actually think about your situation. That might mean spotting a deduction you’ve been missing for years or flagging something worth changing before next filing season. Advice like that can easily be worth more than the return preparation itself, but it only happens when there’s time and mental energy left over to give it.

Hourly billing leaves no room for ambiguity. Every follow-up email, every clarifying phone call, every minute your return sits untouched while you track down a missing form, it all runs the meter. Most of that extra cost is entirely preventable with a little upfront effort.

The hybrid model, which is a base fee with overage charges for complexity, is the most common setup you’ll encounter. Most preparers are generous about absorbing minor extra work without comment. But when documents arrive in scattered batches, questions go unanswered for days, and the timeline keeps slipping, that goodwill has a limit. And again, the extra charges that result are almost always avoidable.

There’s one more piece to this that doesn’t show up on any invoice. Tax preparers are human, and like anyone doing service work, they have clients they genuinely enjoy and clients they quietly dread. The ones they enjoy tend to get more, for example, a heads-up about a planning opportunity, a faster turnaround when things are hectic, and a little extra thought applied to their situation. Difficult clients still receive competent, professional service. They just don’t get the extras. That’s not a policy; it’s just how people work.

The Three Things That Actually Move the Needle

None of this requires becoming a tax expert. It really comes down to three habits.

Send everything at once, and send it organized. Before you submit anything, set aside an evening to go through your documents. W-2s, 1099s, interest statements, charitable contribution records, mortgage forms, gather everything. If your preparer sends you an intake organizer or questionnaire, use it. It exists because it tells them exactly what they need in the format that’s easiest to work with. If they don’t use one, just organize things logically and label your files clearly. “Scan_final_2” is not a file name. A small amount of effort on your end saves a disproportionate amount of time on theirs.

Don’t send documents as they trickle in. It’s tempting to forward your W-2 the moment it hits your inbox, making you feel like you’ve gotten ahead of things. In practice, piecemeal delivery creates more problems than it solves, for example, things get overlooked, work gets duplicated, and many preparers won’t even open a file until they believe everything has arrived. There are legitimate exceptions: a K-1 that shows up late, a corrected 1099 that comes in after the fact. Any experienced preparer will understand those situations. But make them the exception rather than your default approach.

Respond promptly when they reach out. When your preparer sends you a question, it usually means they’re actively working on your file and have hit a wall they can’t get past without your input. A week-long delay doesn’t just slow things down; it forces them to set your return aside entirely and context-switch back to it later. That kind of stop-and-start cycle costs time, and depending on your billing arrangement, it may cost you money too.

Conclusion

A single organized evening and a commitment to responding quickly when questions come up. That’s genuinely most of what separates the clients’ preparers who enjoy working with them from the ones they don’t. In return, you get a smoother process, a more accurate return, and very likely some guidance you’d never have received if you’d shown up with a shoebox and gone quiet.

5 Private Equity Predictions for 2026

For private equity investors, 2026 is going to be a good year. Financing conditions are stabilizing, interest rates are decreasing and valuations are beginning to reset. Further, these firms are moving to growth-at-any-cost strategies, deeper diligence…

3 min read

5 Private Equity Predictions for 2026For private equity investors, 2026 is going to be a good year. Financing conditions are stabilizing, interest rates are decreasing, and valuations are beginning to reset. Further, these firms are moving to growth-at-any-cost strategies, deeper diligence, and more disciplined risk underwriting. Here’s a high-level look at a few things you can expect.

PE firms thrive despite policy and market uncertainty. Driven by shifting tariffs, interest-rate cycles, and election-year fiscal debates, 2025 was certainly a challenge. This year, many firms will re-enter the market and hit the ground running with greater conviction, supported by stronger diligence, scenario modeling, and operational planning. A few tactics include doubling down on operational risk management at the outset; leveraging advanced technologies to improve transparency and accuracy, specifically in terms of finance, tax, and regulatory compliance; and diversifying portfolios across sectors, geographies, and business models.

In 2026, deal volume and value will appreciate. This prediction is based on declining borrowing costs and uncertainty around tariffs declining. Leading the acceleration are mega funds and middle-market managers with larger funds driving growth in deal value. But strategic buyers will also play a defining role in this escalation. According to a survey by BDO, 43 percent of fund managers say most competition for deals will come from strategic acquirers. Here’s why: Their ability to pay higher prices, driven by operational synergies and stronger balance sheets, will intensify pressure on PE funds on the buy side. Consequently, this creates more favorable exit conditions for PE funds looking to sell assets.

PE is betting on AI, big-time. Firms are making sizable investments in industries that are the backbone of AI transformation, including data centers, energy producersand network hardware suppliers. While these categories are capital-intensive and tap into measurable, long-term market demand, PE’s interest in AI expands beyond sector strategy and deal sourcing, as firms are looking at how to leverage AI not only for fund and portfolio company management, but also the investment life cycle (due diligence, fraud detection, standardized reporting), which improves the way decisions are made. Good news for investors, indeed.

Valuations will remain high for top-tier deals. Primarily, this isdriven by firms willing to pay premiums for companies considered resilient and/or strategically essential. Common features these businesses share are predictable cash flows, defensible business models, and a position in sectors with secular growth, such as AI, infrastructure, or technology-driven industries. Why? They’re better equipped to withstand macroeconomic volatility compared with other kinds of investments.

Lessons were learned from the 2021 buying frenzy. This eventful year was comprised of abundant liquidity, low interest rates, and pent-up post-pandemic demand, which led to aggressive dealmaking. Now that macro-conditions have shifted, those 2021 deals are struggling to perform. This year, fund managers are expected to learn from the dynamics of years past and recalibrate their strategies, looking more closely at valuations and focusing on fewer but high-quality deals. This builds greater flexibility for exit planning, whether it’s traditional sponsor-to-sponsor, strategic sales, or IPO pathways. For the private equity investors, 2026 might well supersede the revenue-rich dynamic of 2021.

These are a few of the variables that will affect the private equity market. That said, success will most likely depend less on timing markets and more on being operationally prepared to seize the lucrative, high-quality opportunities when they arise.

Sources

https://www.bdo.com/insights/industries/private-equity/2026-private-equity-predictions#:~:text=In%202026%2C%20many%20firms%20will,elevated%20relative%20to%20historical%20norms

What to Expect from U.S. Tax Policy in 2026

After a whirlwind 2025 that produced what may be the largest tax bill in American history, the coming year looks dramatically different. Tax policy experts are predicting a legislative standstill, a turbulent tax filing season…

4 min read

What to Expect from U.S. Tax Policy in 2026After a whirlwind 2025 that produced what may be the largest tax bill in American history, the coming year looks dramatically different. Tax policy experts are predicting a legislative standstill, a turbulent tax filing season, and lingering questions about how new provisions will work when put into practice.

A Year of Legislative Gridlock

The forecast for 2026 tax legislation is bleak. With Republicans clinging to an impossibly thin House majority of just 218 or 219 seats following recent resignations, passing any significant bills will be extraordinarily difficult. Every single Republican vote would be needed to advance legislation through reconciliation, and as 2025 demonstrated, keeping the caucus unified is no small feat.

While there has been discussion about a potential second reconciliation bill, most observers view this as wishful thinking. If such a bill were to materialize, it would likely focus on technical corrections to lingering Tax Cuts and Jobs Act issues and problems that emerged from the One Big Beautiful Bill Act. One notable concern involves accelerated research credits that did not deliver the benefits lawmakers intended because of unexpected interactions with the corporate alternative minimum tax.

The more pressing concern will simply be keeping the government running. A January deadline looms to avoid another shutdown and, given the contentious relationship between House Republicans and Democrats throughout 2025, even basic funding bills face uncertain prospects. With midterm elections consuming attention in the second half of the year, legislative bandwidth for tax policy will be virtually nonexistent.

A Rough Road Ahead for Taxpayers

The 2026 tax filing season is shaping up to be challenging. The IRS has experienced unprecedented upheaval, losing somewhere between 20 percent and 25 percent of its workforce through a combination of voluntary resignations and reductions in force. Many of these departures came from enforcement divisions, though customer service will also feel the impact.

Leadership instability has compounded these problems. The agency cycled through roughly seven commissioners or acting commissioners in 2025 alone. Former Congressman Billy Long was confirmed as commissioner but lasted less than two months before departing under unclear circumstances. The Treasury Secretary has since taken direct oversight of the agency, and an IRS CEO position was created for the first time in the agency’s history. No new commissioner nominee has been put forward, and there is currently no Senate-confirmed chief counsel either.

For taxpayers who need more than basic return processing, this means longer wait times, fewer answered phone calls, and potential delays. Those filing straightforward W-2 returns seeking refunds will likely fare better than individuals or businesses with complicated situations requiring IRS assistance. Audit rates will decline intentionally, as the current administration has committed to scaling back the enforcement emphasis of the Biden years.

The Justice Department’s Tax Division also has been gutted, losing many qualified litigators who previously maintained an exceptional track record against large taxpayers in court. This erosion of enforcement capability may not immediately move voluntary compliance numbers, but continued cuts will eventually catch up with the system.

Unresolved International Questions

The relationship between U.S. tax policy and the global minimum tax framework under Pillar 2 remains unsettled. Republicans declined to include a retaliatory tax provision known as section 899 in last year’s legislation based on an agreement with G20 nations. If that agreement unravels, there may be pressure to revisit retaliatory measures, though passing such legislation with current House margins seems unlikely.

American companies operating internationally could face pressure in foreign jurisdictions if the United States fails to align with Pillar 2 requirements. While many in Washington believe the international minimum tax framework will collapse, the reality on the ground suggests otherwise, and this disconnect might force future legislative action.

Conclusion

The bottom line for 2026: expect a holding pattern on major tax legislation and brace for a difficult filing season as an understaffed and unsettled IRS works to implement last year’s massive changes.

Reclaiming the Rent: Why 2026 is the Year Businesses Switch from SaaS to Sovereign Ownership

Every modern business is paying rent. Not for office space or equipment, but for the digital infrastructure that runs the company. This might include the cost of CRMs, email platforms, project management tools…

4 min read

Businesses Switch from SaaS to Sovereign OwnershipEvery modern business is paying rent. Not for office space or equipment, but for the digital infrastructure that runs the company. This might include the cost of CRMs, email platforms, project management tools, automation tools, analytical dashboards, and countless other tools designed to solve a specific business need. Individually, these tools seem affordable; collectively, they form a permanent tax on business growth.

For several years now, software-as-a-service (SaaS) has been sold as a form of freedom. Businesses were promised low upfront cost, instant deployment, and minimal complexity. For a long time, SaaS delivered on this promise. It helped companies move faster, scale quickl,y and compete globally regardless of size.

But this is shifting. Now, business leaders are beginning to question whether renting critical systems is still a worthy strategy.

The SaaS Era

The rise of SaaS was a necessary evolution. It lowered the entry barrier for tools that once required large IT teams and a huge capital investment.

However, this convenience turned into dependency. Businesses not only adapted SaaS tools, but they also built operations around them. Third-party platforms now hold business workflows, customer data, analytics, automations, and even institutional knowledge. This means that a business has dozens of subscriptions they don’t fully control, can’t meaningfully customize, and must keep paying for to keep operating.

What Sovereign Ownership Means

Sovereign ownership doesn’t mean abandoning the cloud or rejecting modern technology; it means owning the core logic of your business systems. The sovereign models emphasize self-management, control and long-term resilience.

When a business practices sovereign ownership, it controls:

  • Where data resides (e.g., virtual private clouds or sovereign clouds)
  • Access permissions and encryption keys
  • Workflows and automations
  • Internal knowledge systems
  • AI models and training data
  • The ability to move, adapt, or rebuild without needing vendor permission

Self-sovereign identity has been a great support for this shift. SSI protocols allow businesses, employees, and customers to control their digital identities and credentials without relying on centralized identity providers. This means that identity is not locked inside the SaaS platform, as it is portable, verifiable, and owned by the entity itself.

The Real Cost of SaaS Goes Beyond the Invoice

SaaS costs more than renting the service. Aside from monthly or annual subscriptions that compound into a huge expense over time, vendor lock-in makes switching platforms painful and risky. The pricing models also keep changing. Features may be removed or placed under higher payment tiers. Other issues include broken integrations and limited or messy data exports.

More critically, companies adapt their workflows to match the SaaS tools, rather than the tool serving the business. Therefore, innovation is constrained by what the platform allows and not what the business needs.

The biggest risk is when a SaaS provider is acquired, suffers downtime, or shuts down entirely. When this happens, your business absorbs the impact without control or leverage.

Why 2026 Is the Turning Point

Why now? Because the alternatives have finally matured. Decentralized physical infrastructure (DePIN), the maturity of enterprise-grade, open-source software, and modular cloud architecture have made system ownership accessible without deep technical teams. AI has transformed how businesses build, automate, and maintain internal tools. Modular infrastructure allows companies to own their core while selectively renting specialized services.

At the same time, external pressure is increasing as data privacy regulations tighten. Regulatory frameworks like the U.S. Cloud Act, the GDRP and the EU’s Digital Operational Resilience Act (DORA) demand operational independence that SaaS cannot fully deliver. Gartner predicts that by 2030, 75 percent of enterprises outside of the United States will implement data sovereignty strategies due to regulatory scrutiny and geopolitical tensions.

Major players are already responding. IBM is one example of the shift, as they already announced IBM Sovereign Core, software that helps businesses take back control of their data and systems.

Customers are also more aware. They want to know how their data is stored, processed, and protected. AI models trained on proprietary information raise new questions of ownership and risk. In an uncertain global economy, businesses want cost predictability and not endless variable subscriptions.

The mindset is shifting from speed at any cost to resilience by design.

From Renters to Owners

SaaS helped businesses grow. But growth built on dependency has limits.

2026 represents a strategic window where ownership is finally accessible, affordable, and necessary. The shift toward sovereign systems is not about rebellion against technology that has previously helped businesses. It’s about leverage, resilience, and long-term value.

The future belongs to businesses that stop renting their foundations and start owning their future.

Understanding the Equity Multiplier

Whether you are an investor, an owner or an internal financial analyst, understanding how the equity multiplier works and how to interpret it is a helpful skill.

3 min read

What is Equity MultiplierWhether you are an investor, an owner, or an internal financial analyst, understanding how the equity multiplier works and how to interpret it is a helpful skill.

Defining the Equity Multiplier

The equity multiplier is a metric that tells the user what percentage of the company’s assets are loaned against shareholders’ equity. The smaller the calculated number for the equity multiplier, the less risky the financing is due to less debt owed by the company. It’s more favorable since there are lower debt servicing costs needed. When liabilities and/or assets change, the company’s equity multiplier changes.

Conversely, the bigger the equity multiplier, the more likely investors will be exposed to financial risk. This is due to the company having more outstanding debt, requiring more cash flows to service ongoing debt repayment, along with normal operations. A good rule of thumb is that anything lower than 2 is good, while anything higher than 2 signifies risk.

Putting It into Context

Since companies obtain financing through a mix of equity, debt, or both, it’s important to measure and monitor how the combination changes over time. Since investors look at the metric, among other financial yardsticks, it can influence how they determine if a company is worth investing in. Investors compare one company to others in the same industry and against historical measures to see how the company rates financially. The equity multiplier is measured relative to past measures, industry standards, or its sector competitors.

The ratio is calculated as follows:

Equity Multiplier = Total Assets / Total Shareholders’ Equity

Both input values are found on the company’s balance sheet, either on the quarterly or annual reports filed with the United States Securities and Exchange Commission.

If a company wants to go public, it can calculate this ratio to determine if its present results are robust for lenders’ review. Say a company has $2 million in total assets and $1.25 million in shareholders’ equity. Based on these numbers, it’s calculated as follows:

= $2,000,000 / $1,250,000 = 1.6  

The equity multiplier in this scenario, which shows a moderate amount of borrowing, may or may not pose an issue for the company’s financial health.

If a business’ total assets are $450 billion, and shareholders’ equity, according to the financial statements, was $150 billion, the company’s ratio is 3X ($450 / $150).

If a different company’s assets are $825 billion with $165 billion of shareholders’ equity, the same resulting ratio is 5X ($825 / $165).

These calculations show that as the ratio of liabilities and asset values adjusts, the equity multiplier also changes because a company uses less debt and more shareholders’ equity to finance the assets. While higher equity multipliers can help companies grow faster, especially during low interest rate and high-growth environments, if borrowing costs rise and/or sales fall dramatically, it can forecast negative growth. Investors favor businesses with low equity multipliers since this indicates the company is using more equity and less debt to finance the purchase of assets.

Regardless of the company or the industry, understanding how the ratio is calculated and used in making investment decisions makes sense for both companies and their potential investors.

Accounting Considerations for Senior Debt

Also known as a Senior Note, Senior Debt consists of a company’s outstanding loans collateralized by the business’ assets. As the name implies, Senior Debt holders are the first claimants…

3 min read

What is Senior DebtAlso known as a Senior Note, Senior Debt consists of a company’s outstanding loans collateralized by the business’ assets. As the name implies, Senior Debt holders are the first claimants of the business’ cash flows and/or liquidated assets if that business defaults on its debt and files for bankruptcy. Subordinated or junior debt in the form of Preferred and Common Equity shares has claims to any subsequent assets – but only after Senior Debt holders are made whole. 

Originating via financial institutions, revolving credit facilities, and Senior Term Debt are the primary ways companies obtain financing. Whether the debt is funded by another business, an individual backer, or a traditional bank lender, if the borrowing company files for bankruptcy and liquidates its assets, Senior Bondholders are first in line for available repayment.

Senior Debt Characteristics and Structure

Much like any type of borrowed money, each tier has different interest rates and amortization schedules, including Senior Debt. Senior Debt issuers put terms in the debenture restricting companies from issuing additional, lower-tier debt. Debt issuers often require borrowers to maintain specific credit profiles, which are determined by financing ratios such as interest service coverage and debt service coverage.

Other stipulations may include requiring the borrower to maintain or refrain from business activities beyond their essential commercial functions. If the stipulations are flouted, the lender may retract, modify the borrowing terms, or mandate immediate payment of accrued interest and principal. It’s important to note that since Senior Debt has more restrictive terms, interest rates are generally lower compared to unsecured/less senior debt.

When it comes to unsecured debt, primarily junior or subordinated debt, although it’s not collateralized, the terms stipulate that the lender(s) have a claim to the company’s assets in case of bankruptcy/liquidation and are next in line to get paid off from the assets of the company, minus any pledged assets for secured debt debtholders.

Accounting Considerations

The first step to account for Senior Debt is to break it up into short-term and long-term debt (within 12 months and longer than 12 months). For example, long-term debt, which turns into long-term liabilities from short-term obligations, like accounts payable, is recorded on the company’s balance sheet. This generally happens when the short-term obligations are re-classified into a lengthier note.

If a business obtains a $10 million bank loan, secured by their machinery and other assets, for a new product line, with a 7 percent interest rate for 15 years, along with the business assets, liabilities and shareholders’ equity, the long-term portion would be reported on the company’s balance sheet. It would be recorded as a liability on the balance sheet, where any other long-term debt and bonds issued or borrowed by the company.

The income statement would document its loan interest. It’s calculated by taking the principal multiplied by the interest rate.  Once the interest is determined, it’s classified as an expense on the income statement, lowering the company’s net income and profits. As the loan’s principal is paid over the 15-year loan life, a set amount of the loan principal is repaid each year.

Conclusion

Senior Debt can be an effective way to obtain funding, but businesses must understand how funding agreements work and how to properly account for them.

 

Scam-Proof Guidelines for Wiring Money

Wiring money is like sending cash: Once you’ve sent it, it’s gone. It is very difficult to retrieve – in fact more difficult than recovering physical dollar bills.
If wire fraud takes place due to a security…

6 min read

Scam-Proof Guidelines for Wiring MoneyWiring money is like sending cash: Once you’ve sent it, it’s gone. It is very difficult to retrieve – in fact, more difficult than recovering physical dollar bills.

For businesses, always call the recipient to verify ACH details before sending; this is required by law in 50 states. This law does not require calling, but if the sender’s or recipient’s email is hacked, calling will help prevent the hacker from changing ACH details in a hacked email account.

If wire fraud takes place due to a security breach, such as a hacker infiltrating your account and initiating a wire transfer, you may have protection. Reputable financial institutions will generally cover your losses in the case of a cyber attack. Recoverability is dependent, however, on whether the wire was properly authorized or unauthorized and the payment type (wire vs. ACH).  However, if you fall for a scam and initiate the wire transfer yourself, you’re probably out of luck.

Another scenario is having an incorrect address or account number in your wire transfer instructions. For example, say you want to send a large sum of money to your lender to pay off your mortgage. It’s a good idea to contact the institution directly (by phone or in person) and ask them to tell you where to send your wire transfer to match it with the printed instructions you may have received. Always proofread the wire transfer instructions carefully.

Should you accidentally transpose the numbers in a wire transfer, you could lose that money. If you contact your bank immediately to report the error, they may be able to recall the funds. However, if the recipient has already accepted the transfer, particularly if they have transferred the money elsewhere, it is almost impossible to recover.

Remember, wire transfers settle quickly and are typically irreversible once accepted. That is why they are one of the prime targets for cybercriminals. If you are unfamiliar with the person or institution where you are wiring money, research them first to confirm their identity and see if there are any complaints or red flags associated with the entity. If you had no reason to initiate the wire transfer before being contacted, you should be especially suspicious.  Be extremely skeptical of unsolicited urgent requests, especially when instructions change, or you can’t verify independently

The following are some common scams perpetuated today.

Bank Fraud

Your bank or investment firm calls you directly to alert you to a possible scam; someone is attempting to hack into your account and steal your money. They may even verify your account with details they have obtained – such as your name, address, and perhaps even your Social Security and account numbers. Rather than an affirmation of their legitimacy, this should be a red flag. First of all, no legitimate financial institution or government agency would relay this information over the phone. Second, a fraudster may tell you the best way to block the potential hack is to open a new account and transfer your money there. This is a red flag. Third, the scammer may insist that time is of the essence – you must act immediately before your money is stolen.

If you get a call like this, hang up and either call (the number on your statement or debit/credit card) or visit your local bank branch to inquire about the call. Chances are good that the bank will confirm there is no breach and that your account is safe.

Dating Apps

Dating apps are the 21st-century version of blind dates. According to Statista, more than 60 million Americans used dating apps in 2024. Instead of meeting organically in a bar or at a party, users peruse dating profiles to find a prospective mate. Unfortunately, these platforms are rife with money-seeking predators – and they can be very patient.

Many online relationship predators interact for months before the scammer mentions that he or she is having money trouble. They may even wait for their paramour to offer money to help them out. Remember that the red flags apply – you didn’t initiate the need. The need for funds should never be immediate. You should research and verify the legitimacy of any person who would agree to accept money from someone they met online. Remember, once you send money, you may never hear from that person again. Or they may continue to interact, but you could get another request for funds a little further down the road.

One way to detect a dating app fraudster is by noticing clues that they are not who they claim to be. For example, many scammers live in other countries. They may not be familiar with common local interests in the town or city where they say they are from. Or, you may notice unusual grammar or phrasing in their communications, indicating English is not their native language.

The Friend or Relative Scam

One of the most heart-rending scams is when a person – often a senior citizen – is asked by a struggling friend or family member to send money. For example, a grandchild away at college who says she doesn’t want her parents to know she needs money. Pulling at the heartstrings, paired with aging cognitive decline, is a recipe for wire transfer fraud. It’s a good idea to establish a “family password” with which to verify proof of identity for suspicious scenarios. Also, call the family member or friend back at a known number for verification before sending money.

Investment Scam

The too-good-to-be-true investment opportunity is an old scam still used today, often to entice the purchase of cryptocurrency with cash. As with all these potential scams, do your due diligence and confirm the legitimacy of the receiver and their details.

The best way to prevent money wire fraud is to stay up to date with the latest scams and trust your gut: Do not act until you have thoroughly researched the details.

What Families Need to Know About the New Trump Accounts

American parents now have access to a completely new savings tool designed to give children a financial foundation for the future. Established through The One Big Beautiful Bill Act, these accounts carry the name…

4 min read

What are Trump Accounts?American parents now have access to a completely new savings tool designed to give children a financial foundation for the future. Established through The One Big Beautiful Bill Act, these accounts carry the name of the current president and come with a unique set of rules that the IRS has just begun to clarify.

Who Can Open One?

Any minor holding a Social Security number who has not yet turned 18 by Dec. 31 of the current year meets the eligibility criteria. Getting started requires an authorized adult, typically a parent or legal guardian, to submit an application to the Treasury Department. Once processed, the government establishes the child’s account.

Free Money for Newborns

Families welcoming babies during a specific four-year window stand to benefit the most. American citizens born anytime from the start of 2025 through the end of 2028 qualify for a $1,000 federal deposit through a pilot initiative. This starter contribution sits outside all annual limits, meaning it will not reduce how much others can add later.

Billionaire Backing Adds More

Tech titan Michael Dell and his wife, Susan, have pledged $6.25 billion to boost these accounts further. Their generosity will provide an extra $250 to the first 25 million children meeting specific requirements. Kids must be no older than 10 and reside in areas where the median household income is under $150,000. Dell, who runs Dell Technologies as chairman and CEO, ranks 10th among America’s wealthiest individuals with a fortune estimated at $148.9 billion.

How Much Can Be Contributed Each Year?

The law caps annual contributions at $5,000, though this figure will rise with inflation over time. Grandparents, aunts, uncles, family friends, and parents can all put money in, but every dollar from these sources counts toward that yearly ceiling. Exceed the limit, and you will need to pull the excess back out.

Workplace benefits offer another channel. Companies can deposit as much as $2,500 annually into accounts belonging to workers or their children. While this money does apply toward the $5,000 threshold, employees will not owe taxes on these contributions.

Charitable organizations and government bodies at various levels have permission to fund these accounts through something called qualified general contributions. Unlike personal or employer deposits, this category of funding exists completely outside the annual cap.

Keep in mind that money coming from family members or friends provides no tax break. These contributions use after-tax dollars. Also worth noting: the earliest anyone can start funding these accounts is Independence Day 2026.

Strict Rules Govern Investments

Congress placed tight restrictions on where this money can go. Only mutual funds and ETFs tracking American stock market indexes qualify. These funds cannot employ any leverage strategies, and their annual expense ratios must not exceed one-tenth of one percent.

Accessing the Funds

Until reaching adulthood, account holders face severe limits on touching their money. The rules permit withdrawals only in narrow circumstances: transferring everything to a different Trump Account, correcting over-contributions, or closing the account following the child’s death.

Everything changes at 18. From that birthday forward, the account essentially transforms into something resembling a traditional IRA with comparable guidelines around distributions and taxation.

Filing Requirements

Establishing one of these accounts means completing Form 4547, which the IRS titled Trump Account Election. This document accompanies your annual 1040 filing and handles both account setup and pilot program enrollment. The form number itself contains a nod to history, combining 45 and 47 to reflect Trump’s elections as both the 45th and 47th commander in chief.

Conclusion and Official Resources

This new savings tool gives families an innovative avenue to save. Taxpayers seeking detailed information can review Notice 2025-68, which the IRS published to address questions about account creation, investment options, contribution types, distribution rules, and reporting obligations. Full regulations remain in development, with proposed rules expected before final versions emerge following public input. The government maintains a dedicated portal at trumpaccounts.gov for ongoing updates.