The major difference between business and financial risks lies in where there is a shortfall. Business risk exists when there is not enough cash to meet the day-to-day operating expenses of the business, but financial risk involves the lack of cash necessary to pay creditors. One type of risk sometimes occurs in the absence of the other, or they may both happen simultaneously but independent of each other.Continue Reading
According to the Houston Chronicle, business risk has nothing to do with the amount of money a business owes the bank or those who invest in the business. It deals exclusively with not having enough money to pay the rent on a building, wages to the employees or suppliers of good to be sold. It even includes not being able to pay light and telephone bills or taxes. Systematic business risk occurs when the economy is bad, affecting most businesses. Unsystematic business risk applies to a specific company or type of company that is struggling.
Financial risk, on the other hand, deals solely with the lack of income to pay back borrowed money. Often when a business gets behind financially, the owner borrows the money to pay daily expenses. If business does not improve, he not only does not have the money to pay those expenses when they occur again, but now he has a financial obligation to a creditor he is unable to fulfill.Learn more about Financial Planning
Differences between a 401(k) retirement plan and an individual retirement account include eligibility for participation, maximum contributions allowed and investment options, according to Investopedia. Differences in eligibility and tax treatment also exist between the two types of IRA accounts, traditional and Roth, notes U.S. News & World Report.Full Answer >
The main differences between 401(k) and 403(b) accounts are that 403(b) accounts offer no profit sharing, usually feature lower employer contributions, and often have more restricted investment options, Investopedia explains. This is due to the fact that for-profit entities sponsor 401(k) accounts, while nonprofit and government entities sponsor 403(b) accounts.Full Answer >
The owner of a revocable trust can change or revoke it, whereas the owner of an irrevocable trust is powerless to change or cancel it, as stated by the Federal Deposit Insurance Corporation. A revocable trust remains the owner's asset, but irrevocable trusts become property of the beneficiary, reports About.com.Full Answer >
With a Roth IRA, the account holder pays taxes when the account is first opened, as opposed to paying them whenever he withdraws money from a traditional IRA, notes CNN Money. There are also income limits for Roth IRA accounts that don't apply to traditional IRAs.Full Answer >