Spending Money to Save Money: Purchases That Pay You Back Over Time

Sometimes it’s true that you’ve got to spend money to save money. Let’s look at some things you can buy that may seem price prohibitive at first but which will pay you back over the long term.

A Smartphone

Smartphones, on both the Android and iOS platforms, are expensive to buy outright and cost even more over the long term when you purchase them on a plan. However, because of the incredible amount of productivity you can get out of one, smartphones may be a great investment that will pay you back over the years.

If you use your smartphone to answer emails, go online shopping or any of the other tasks that you would normally use your home computer for, then you may be prolonging the life of your other devices by using the smartphone. Additionally, depending on how you use it, a smartphone can take the place of other things that you would otherwise buy, such as a calculator, set of maps, compass, flashlight, stopwatch and other things that can be substituted by an app.

A Filtered Water Bottle

How much money do you spend buying bottled water? Though American tap water is safe to drink, as a culture we’ve begun purchasing bottled drinks, and water, at a fast pace. It’s not cheap. Save money by purchasing a filtered water bottle instead. You’ll get the pure taste of filtered water, save money and reduce the amount of trash you generate in throwing disposable bottles away.

Smart Power Strips

If your home is like most households nowadays you have a variety of gadgets that demand electricity. On any given day you need to plug in kitchen appliances, home cleaning appliances, lights, computers, hand-held devices, entertainment systems, etc. And, if you leave these plugged in when not in use — and who doesn’t? — you’re allowing them to draw electricity even when you’re not at home. A smart power strip, which allows each outlet to be turned on and off separately, will allow you the convenience of having many things plugged in at once while also allowing you to save energy and therefore money.

A Coffee Machine

We already mentioned that Americans spend too much on bottled water each year. But that’s not even close to the amount that we spend on coffee. In 2012, it was reported that Americans spent about $1,000 a year on their morning coffee — fully half what they spent on lunches over a year. However, brewing coffee at home doesn’t cost much at all. If you’re one of the ones who make several trips a day to a cafe for to-go cappuccinos, it makes much better sense moneywise to splurge on an upmarket coffee machine and make your joe at home.

A High-Efficiency Washing Machine and Refrigerator

We discussed turning the electrical appliances in your home off at the outlet to save money. However, most of us never unplug our refrigerators or washing machines, for good reason. These appliances need to be plugged in, and will always draw electricity. If you invest in energy-efficient models of these appliances, you’ll save money on electricity and water usage. Depending on the rates in your area, it should be easy to see a return on these products in a few years’ of use.

A GPS

If you mostly use your car for familiar journeys to the store or the office, you probably already know the best and most efficient way to get from point A to point B. But, if you find yourself checking your position on a road map or on your smartphone’s map app regularly, it might help you save money to buy a GPS. Not only will GPS devices tell you the way to drive so that you spend less time trying to figure it out, but the units usually track the most efficient routes, helping you drive less miles between destinations and saving you money in wear and tear on your car and tires and money for gas.

Time with Experts

Another thing that is worth spending money on, with the idea of getting more money back later, is time spent seeking expert opinions. Though you can do your taxes by yourself, people usually find they get a better refund if they consult an accountant. Though you might be able to lose weight on your own, a physical trainer gets you on the right track faster. Learning new subjects, and motivating yourself to be a better, more successful person is always worth the money and will often pay you back before you expect.

About the Author: Maria Johnson is a counselor and financial planner who assists disadvantaged households considering bankruptcy.

 

When Your CPA Isn’t Enough: 5 Times You Need to Hire a Tax Attorney

    For most people, say the word “taxes” and the first thing that comes to mind is waiting for their refund after meeting with their accountant to file a return. The accountant fills out some forms, performs some calculations, and it’s done — and not thought of again until the next year.

However, there are some situations where a certified public accountant (CPA) or other tax professional doesn’t have the knowledge or experience to handle everything needing to be done. In those cases, an attorney who specializes in taxes and tax law is imperative to avoid hefty fines, penalties and other problems.

tax attorney

Some of the more common reasons people hire tax attorneys include:

You’re Starting a New Company

Starting a new company requires attending to a number of details, not the least of which is determining how to structure your business for tax purposes. For example, choosing to operate as a sole proprietor versus a limited liability corporation can have major implications for how you file taxes, your overall tax burden and your financial liability should things go awry. While a CPA can help you manage your books for the structure you’ve chosen, a tax attorney ensures you choose the correct structure in the first place and navigate the paperwork required for that designation.

You Have a Dispute With the IRS

Once you’ve filed and paid your taxes, receiving any communication from the IRS can be nerve-wracking. And when the IRS thinks you owe more money than you do or questions something on your return, you feel a bit like David versus Goliath. While you might think it’s easier to give the agency what they are asking for so they will go away, if they have incorrect information (and you can prove it) it’s in your best interests to dispute their claims. You do not want to go it alone, though. When you’re fighting the IRS, it’s best to have a qualified tax attorney who can communicate with the IRS and use the full force of the law on your behalf.

You’ve Committed Fraud — Either Knowingly or By Accident

Mistakes happen — we’re only human. But making a mistake on your taxes, whether it’s a simple mathematical error or more serious violation, can land you in hot water and bring with it hefty penalties and even prison time. If you realize you’ve committed fraud, your first step is to contact a tax attorney who can help you determine the best course of action and work with the IRS to keep the penalties as palatable as possible. While no tax attorney can promise you won’t face any consequences as a result of your actions, with a professional’s help the consequences won’t be as dire.

You Conduct Business Internationally

Navigating the international business arena is tricky before you bring taxes into it. Tax law relating to businesses that operate in multiple countries or for businesses that sell products and services overseas is complex. Unless your CPA is versed in international tax law and issues, you could face a large bill from the IRS — or worse. A tax attorney with experience in international business (like graduating from an online graduate tax program that offers an international specialization) can ensure your returns are correct and your international affairs are handled properly.

You’re Handling Estate Issues

When you’re the executor of a state, you have certain legal responsibilities, not the least of which is to determine how much tax — if any — is owed on the estate and whether the estate needs to go into probate. Since most people are not familiar with the laws and intricacies of making these determinations, a tax attorney is vital to ensuring everything is handled legally and the necessary taxes are paid.

There are other times when a tax attorney can be beneficial, such as when you owe a significant amount of money to the IRS  — over $10,000 — and need to negotiate a settlement, or when you receive a notice from the IRS you do not understand. If you’re in doubt, contact an attorney to discuss your situation and determine what you need to do.

 About the Author: Elaine Morris is a Boston-based tax attorney. She blogs about tax law and tax-related issues, particularly those related to small-business owners, for a major legal site.

5 Things You Should Know About Personal Finance Before Graduating From College

    College is about more than just getting a degree. It’s also when you should be learning the skills you need to survive and thrive as an adult, including personal finance skills. Start practicing your personal finance skills while you’re still in college so you’ll have them mastered by the time you begin your professional life.

You may be a student working part time or not at all, but that doesn’t mean you can’t start developing your personal finance skills. Learn to create and stick to a realistic but reasonable budget, learn how to make financial goals and how to attain them, and learn how to manage your debt. It’s never too early to start saving, either. Even though retirement may seem far off, there’s still the possibility that an expensive emergency could break your bank account. Your parents may still claim you as a dependent on their taxes, but you’ll soon need to file your own taxes — learn how to do it now.

Personal Finance Before Graduating From College

Make and Keep a Budget

Budgeting is one of the hardest — and most essential — personal finance skills. The object of a budget is to make sure you don’t spend more than what you earn. Ideally, you want to spend less than what you earn, leaving some extra to go toward your emergency fund, long-term financial goals and retirement savings.

The first step toward making a budget is to form a picture of your expenses. Be realistic — budget for your entertainment, grooming and clothing costs in addition to your rent, utilities, school, food and transportation costs. You should also leave yourself a little spending money.

Track your spending for a month before creating your budget. This will give you an idea of how much you need to cover your basic expenses. It could also shed light on areas where you may need to cut back.

Set and Achieve Financial Goals

Financial goals are an important part of personal finance. They’re what help you save the money to take that semester abroad or buy a car.

When you set a financial goal, make sure it’s specific and attainable. If your goal is to buy a car, decide how much money you’ll be able to spend. Choose an amount you can realistically earn in a relatively brief period of time by setting aside a little extra money from each paycheck. Factor this savings plan into your budget.

Manage Your Debt

Chances are good you’ll graduate from college with some student loan debt. You’ll also need to take out loans throughout your life for major purchases, like cars and houses.

Manage your debt while you’re still in college by minimizing the amount you borrow — don’t borrow more than you absolutely need for school and living expenses. Take it easy on the credit cards — while using credit cards responsibly can help you build a good credit score, always pay off your balance in full each month to avoid high interest charges and always pay on time to avoid substantial late fees.

Don’t rely on your credit cards as an emergency fund. You should have emergency savings in your budget anyway.

When you finish college, concentrate on paying your debt off as fast as you can. Borrow as little money as you need to cover necessities like a car or house.

Always Try to Save

As a college student or new graduate, retirement may seem far off. However, it’s never too early to start saving for your twilight years. You’ll also want to set aside a little money each month for emergencies and for any future financial goals.

It’s OK to prioritize important goals like buying a house over saving for retirement, but begin saving for retirement by your mid-30s at the latest. Keep your saved funds accessible enough that you can get to them if you need them, but not so accessible that you’ll spend them on a whim.

Learn to File Your Taxes

While you’re a student, your parents will either claim you as a dependent or file your taxes for you. Prepare yourself for the day when you’ll need to file your taxes.

You can file your taxes for free online through IRS.gov. If you make less than $57,000 per year, you can use free filing software that will walk you through every step of the process. If you make less than $51,000 per year, you’ll also qualify for free tax help through the IRS Volunteer Income Tax Assistance Program.

Work on your personal finance skills while you’re still in college so you’ll have the habits and skills you need to succeed financially when you’re on your own. Even if you’re only working part time or depending financially on your parents, you can still use what money you have to practice your budgeting, saving, debt reduction and other skills.

About the Author: Contributing blogger Michael Der lives in California with his wife and daughters. He works for www.mybookbuyer.com. You can meet the team online as well as find out what your old textbooks are worth!

 

Workplace Energy Saving Guidelines

Many companies are now required to fill in a Corporate Social Responsibility report. This is an essential requirement for every company that is listed on the stock exchange. Any company that isn’t reducing its carbon emissions can be fined by the government. This is part of the government’s aim to make the UK carbon neutral by 2020. If you don’t want your company to be fined, you need to take action now.

The government are currently giving out heavy fines to companies who aren’t reducing their carbon emissions. These 12 steps will show you how to turn your company green.

1.       Use a reducedquantity of Paper– Save important documents on your computer of keeping a paper copy.Paper can also be recycled very easily, however 35% of the average company’s waste is paper. It is also advisable to print on both sides of the paper.

2.       Go Digital – PayPal can be used to send statements and payments digitally. Long documents can also be saved as PDFs and sent electronically. Software is also available to allow contracts to be signed digitally.

3.       Turn off Your PC – Before you leave the office, get into the routine of switching everything off. However, you can set your computer to switch itself off a pre-selected time each day. Some monitors switch themselves off after a few minutes of inactivity.

4.       Recycle – Putting a recycle bin next to the photocopier, should encourage your staff to recycle. Getting them into the routine of recycling will give them no reason not to do it. You can also produce fertiliser by composting any leftover food.

5.       Use Green Providers– When choosing business suppliers, look into their environmental policy.The carbon emissions they produce doing work for you will increase your company’s carbon emissions.

6.       Reprocess–Think if someone else may find your old stuff useful before throwing it out. Any unwanted items that are still in good condition will be welcome in any charity shop.

7.       Junk Letters– Request to be removed from any mailing list that you are receiving junk mail from.

8.       Green WorkplaceWhen you buy new things for your office, try to get items that are environmentally friendly.

9.       Dripping Taps – Make sure that taps are completely turned off before leaving the bathroom.A dripping tap can waste up to 10,000 litres of water per year.

10.   Teaching– Your staff will need to see what needs to be done before they can implement any of the changes.Don’t just assume that they know how to recycle.

11.   Label Light Switches – Have you ever switched a couple of light switches before you found the one that you need? Labelling the switches will make it easy when it comes to locking up time. This can help you save energy.

12.   Turn off Lights in Vacant Rooms and Then Connect Sensors – Any store rooms, photocopier rooms and kitchens in your office would benefit from sensor lighting. These lights have sensors so they can detect when someone is in the room and when someone has left.

This article was written by Brian Madden; SEO Planner at Red Diesel Deliveries.

5 Reasons Donating Your Car Will Improve Your Finances

5 Reasons Donating Your Car Will Improve Your Finances

car

If you’re looking to stretch your monthly budget and are living paycheck-to-paycheck, cutting back on gourmet coffees and eating out less often isn’t the type of financial advice you need to hear — you need a bigger change. You should be asking yourself, “Should I donate my car?” The answer is yes. Donating your vehicle may seem like taking a loss, but getting rid of your car will actually improve your finances in five tangible ways.

1. Qualifies You for a Tax Break

You donate your car instead of selling it. So how is that going to improve your finances, exactly? After all, donation means you won’t get any money for your car. Not true.Donating your vehicle could lead to a big tax break at the end of the year, meaning a bigger refund. If, however, you owe taxes, your donation will at least alleviate some of the burden by decreasing the amount of money you owe. That translates to real, spendable cash in your bank account.

When it comes to donating a car, the Kelley Blue Book value isn’t that important. You could wind up pocketing more in tax deduction dollars than you would get by selling your vehicle. Regardless, the car will be off your property and your financial situation will improve.

2. No More Gas and Maintenance

It’s hard to go without a car, especially in more rural areas. However, there are options, and if you’re looking to stretch a budget, not having to pay for the gas and maintenance costs of a vehicle can make a huge difference. According to Time, the average American household spends $4,155 on gas each year, and one visit to the mechanic can cost almost as much.

Opt for public transportation if at all possible. If you don’t live close enough to a bus, train or subway stop, consider bicycling, at least to the nearest stop. Alternatively, talk to your neighbors or co-workers and bring up the idea of carpooling. Chip in toward the cost of gas in exchange for not having to worry about car ownership.

3. No More Car Washing

In addition to not having to pay for gas, you won’t have to pay for car washes, either. The cost of car washes doesn’t add up to the cost of gas, but $10 here and $10 there does add up over time. While it is better to keep your car clear of grime that could cause rust, excessive car washing is not necessary and often becomes more about appearance than necessity. It’s true that you can save money washing your car yourself, but you waste a lot of water doing this, and there’s a good chance you could spend that time doing something more productive.

4. No More Car Insurance Payments

Whether you pay annually or every month, car insurance payments are a necessity, but often a waste of money. While it’s true that it’s better to pay for insurance and not need it, think of all the money you spend protecting yourself from something that may never happen. Car insurance costs hundreds if not thousands of dollars each year; this is money you could be saving or spending on something tangible. Insurance costs are especially high if you’re young or you’ve had an accident in the past. Turn the payment into zero dollars by forgoing your car altogether.

5. No More Car Loan Payments

Think of all of the bills you have to pay each month: rent or mortgage, school loans, phone bill, utilities and credit card debt. Maybe you have cable or Internet, health insurance and other bills, too. A car payment is another bill, but one that can easily be eliminated. You’ll still be paying for the car even as it depreciates in value, meaning that by the time you’ve paid off the car, it will be worth only a fraction of the amount you’ve spent.

If you’re able to sell your car and pocket a bit more cash, that’s an option, too. But if your car is more than just a couple of years old, chances are you’re not going to get much. For example, Forbes reports a depreciation of 56 percent after only five years on high-end vehicles. You’d probably get more via a tax break than you would by selling. Regardless of what you do with your car, unburden yourself from relying on your vehicle, and you’ll feel more financially secure.

Ford Escort image by IFCAR (Own work) [Public domain], via Wikimedia Commons

 

About the Author:Minnie Young is a financial advisor and frequent blogger. She often speaks on financial topics such as frugal living and stretching tight budgets.

The Importance of Good Communication in Fundraising

    Raising money for a good cause is a great thing, but people won’t know about it unless they are told. If they don’t know what you’re doing, they won’t be as excited about donating money. This is why it’s important that you have a way to deliver information to your target audience for your fundraiser. A marketing committee communicates what an organization does to help the community. Ensuring that there is a good communication between the organization and marketing committee is important for the following reasons.

Builds Awareness

Fundraising communications between an organization and marketing committee will ensure that the public understands the cause. When people understand the good that an organization is doing, they will be more likely to want to find out more, and tell other people.

The Importance of Good Communication in Fundraising

Helps Create Effective Fundraising Programs

When the organization’s mission is clear, the fundraising team can come up with programs that help achieve goals. The marketing committee communicates how the fundraiser will achieve the goals to the public. This clear message is what makes many people trust and feel good about donating.

Establishes a Brand Identity

Organizations often receive donations from past donors. The ones that have a better chance of receiving repeat donations are those that have established a brand identity. They have a clear message about their cause, and that comes from the good communication across the organization. Repeat donors aren’t hearing one thing and then another. They are confident in donating because they know exactly what their money will be used for by the organization.

Includes a Call to Action

People must be told what to do after they hear about what your organization is doing for the community. It’s important this call to action is communicated, or many people won’t have the urge to donate.

By having good communication between an organization and public, fundraisers are much more likely to be successful. Start practicing effective communication by discussing the points here with your fundraising and marketing teams today.

 

Summer Money Saving Tips

    Probably summer is such a season we all have been waiting for. And many of us plan vacations, entertainments and just want to have a good time. But there’s still a need to pay bills and manage expenses. How to get all the things done this summer and stay on a budget? Here are some easy tips which will help you to save money during the summer season.

Save Energy

When it’s hot outside many people turn on their air conditioners and try to stay away from the heat. But to save money and energy it’s worth to limit usage of your air conditioner. Use it only when it’s necessary, for example when it’s the hottest time of the day. When you’re relaxing and watching TV you can use a fan instead of AC because if you’re not active probably you don’t feel the heat so much. Turn it off when you don’t need it or when you’re leaving the house.

Summer Money Saving Tips

Cut Back Unnecessary Spending

In summer we like spending time outside and often buy cold water and ice coffee. Also many people like eating outside in a company of their friends. Count how much money you spend on such small things. Before going out take a bottle of water from home and avoid unnecessary spending. Don’t eat outside too often, better cook at home and invite your friends for a summer party in the yard.

Don’t Put All the Expenses on Plastic

Try to pay with cash to avoid a credit card debt. Some people put their expenses on plastic and then complain that they can’t get out of debt. Probably you think that nothing bad will happen in case you will buy a new swimsuit and will pay with the card. But think twice if it’s a necessary purchase and you can afford it. Use other financial options like payday loans online or money advances only if you’re in emergency. In summer season we all have some additional expenses but try to be frugal and make up a spending plan to stay on a budget.

Save Money for Vacation

It’s better to start planning your vacation already in winter or in spring because then you will have more time for saving money. In case you will spontaneously decide to go somewhere for rest then there’s a risk that you will get in debt to finance your trip. That’s why it’s important to practice financial planning and try to foresee your expenses. Also be realistic about an amount of money you can spend on a vacation. It’s not worth to choose an expensive resort and take out a loan to afford it. Time will pass really quickly, you will get back home with the debt and then it will be necessary to think how to find a space in your budget to pay it off.

It doesn’t matter whether it’s winter or summer, it’s still necessary to control your finances and use money saving tips to be happy with your financial life during all year.

4 Keys to Surviving a Tax Audit

    You’ve just received the dreaded letter from the IRS, which says that either your personal income taxes or your business taxes are about to be audited. The IRS will perform one of three types of audits: a correspondence audit, an IRS office audit or a field audit.

  1. A correspondence audit is conducted through the mail. The IRS is probably asking for specific documentation of a certain item on your tax return.
  2. An IRS office audit usually checks up on people who are either self-employed or own a small business. You may be asked to bring a list of items to a local IRS office, or you may be asked to stop by the IRS and explain your entire return.
  3. A field audit is the most comprehensive type of audit. In these cases, an IRS agent will come to your home or place of business to physically examine items deducted on your tax return.

4 Keys to Surviving a Tax Audit

In many cases, you should seek the assistance of someone who has completed either a traditional or online graduate tax program. Also, while you go through the process, keep these four keys to surviving an audit in mind.

Educate Yourself

The National Small Business Association suggests you prepare for your audit by reading IRS Publication 1, entitled “Your Rights as a Taxpayer.” Additionally, obtain a copy of Publication 556, “Examination of Returns, Appeal Rights and Claims for Refund.” Read any additional IRS publications that explain the specific tax issue that the agent wants to discuss.

You may know that the IRS wants to audit you because you’ve failed to pay the taxes that you owe. Navigate to the IRS website and click on the “Payments” tab at the top of the page. You’ll see information about how to pay and what to do if you if you can’t pay. Use the information to come up with a payment proposal, and bring your payment proposal to your audit.

Bring Only Necessary Documents

Avoid providing information that the agent hasn’t specifically requested. For example, don’t bring documents related to prior years’ returns. If documents or receipts related to your audit are missing, then you have the right to reconstruct that information by talking to others. For example, if you made a donation to charity but lost the receipt, you can ask the charity for a copy.

When you correspond with the IRS, keep every document that you receive from the agency. Take notes during all of your meetings, and use those notes to formulate a letter to the IRS. Explain what was said during the meeting and any agreements that were made in the letter, and mail it to the IRS so that the letter is in your file.

Milk the Schedule

As a taxpayer, you have the right to schedule your audit at the time and place of your convenience. If you need additional time to prepare documents, request a delay. You can request a recess at any time during the meeting if you need to consult a tax professional.

Although you can stretch certain aspects of the schedule, do not fail to meet IRS deadlines. If the IRS requests a response from you within 30 days, then you need to respond. The smartest thing you can do is either to respond immediately or give the correspondence to your tax professional. Avoid setting the correspondence in a drawer and forgetting about it.

Say Only What Is Required

Giving away too much information during an audit is not in your self-interest, but withholding information from the IRS will make matters worse. If you’ve made a mistake on your tax return for a certain year, then admit the mistake, but don’t volunteer information if you’ve made the same mistake during other years.

You have the right to limit the discussion and the scope of your audit to the issue brought forth by the IRS. However, remember to treat the agent with respect. Avoid speaking disrespectfully, and control your emotions. If the auditor mentions fraud at any time, then talk to a tax professional.

An IRS audit can seem both scary and highly inconvenient. Since noncompliance is unwise, you should cooperate with the agency. Remember your rights, and be honest without volunteering non-essential information. If you have any questions at all, consult a tax professional.

About the Author: Steven Harris is a tax professional who has published a number of articles and blogs related to income tax. He’s also an audit survivor.

Do You Know What Forex Trading Is?

If I would walk around downtown tomorrow and I asked random people the question, “What is Forex Trading?” How many of them do you think would have any clue what I was talking about? If I had to throw out a percentage, I would say that maybe 10% would have a general idea what forex trading is, and that guess might actually be on the high side.

If you don’t know what forex trading is, don’t feel bad. It’s not a term that you hear every day. Even if you watch a news channel on investing once in a while, you still might not have picked up on the term. The concept is actually very simple. In the world today, there are many different currencies in use. Sometimes our dollar becomes stronger vs. other currencies and sometimes it’s weaker. In other words, if we take our cash over to another country after our currency has weakened, that means that we can buy fewer goods with that same amount of money than we could have yesterday. Forex trading is merely the purchase of currencies against one another with the expectation that the currency will strengthen, which will then make your investment worth more money.

This, of course, is a very generalized explanation of forex trading, but it you’re interested in learning more details, it might serve you well to take a look at some forex guides. With these guides, you’ll not only get a more in depth understanding, but you may even decide to invest in some forex trades yourself.

Long Term Investing vs. Short Term

What do you think of when you think of long-term investments? Probably a 401(k) or a Roth IRA right? Let me ask you this. How exciting is it to invest in these retirement funds each month? It’s pretty dull isn’t it? Sure, they might increase 15% over the course of the year, which is excellent, but it still feels like your investments are rising extremely slowly in the first 10 years. Only in the later years do you earnings really start to gain momentum and get a little more exciting.

If you’re not a fan of being bored (and I don’t think any of us are), then perhaps you’d like to spice up your life with a faster paced investment in the short term. You could invest in individual small cap stocks or junk bonds and have a chance to make a killing, but these are often quite difficult to predict. With the forex market, there is often quite a wide variety of stories that contribute to the rise and fall of each currency. And, if you can sniff out the right story at the right time, you could set yourself up for some immediate earnings. As will any short term investment, there is definitely more risk, so make sure you ease your way into this investment type. Start slow and as you begin to learn the process, then you can start to make larger trades.

How to Calculate Breakeven Point?

People run business mainly to make profits and till the money which has been invested in the capital is got back whatever money that is earned till that point of time cannot be called as a profit. To calculate the point at which the investment is got back is known as the break-even point and any product sold from this point contributes towards to profit and not selling contributes to loss.

How to Calculate Breakeven Point

There are many online tools available to calculate breakeven point but before that the parameters involved should be known and then people can easily understand how to calculate breakeven point. Fixed costs and variable costs are the two main parameters involved in investment, where fixed cost is the initial investment towards business setup and variable cost is the working capital or operational expenses involved towards making each product and this happens only when a product is made.

For break even, when the money towards fixed cost is obtained through business earnings the breakeven point is attained, as for income obtained for each product manufactured and sold therefore shall contribute to profit alone.