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What Are Slush Funds And Why Do You Need Them?

What Are Slush Funds And Why Do You Need Them?

Harrison Butler February 15, 2022

Are you a business owner who has just come up with the idea of launching your own business? Then, a slush fund may interest you!



In this blog, we will discuss the funds for your business and whether they are truly necessary for you to succeed.

What Are Slush Funds?

Slush funds are sums of money that are set aside as reserves. In accounting, a slush fund is an account of commingled funds that do not have a specific use.

On one hand, drug dealers and other criminal organizations often use these funds as “straw” accounts. And in politics and business, it often has a negative connotation.

This refers to secretly raised capital. This may be something that comes from an illegitimate source or will be used primarily for unethical or illicit purposes.

Small and Medium businesses consider the funds useful tools for investments. These include real estate investors who don’t want their business partners to know what kind of cash they have available for investment purposes.

A slush fund is essentially an investment fund with no accountability. The fund manager does not need to disclose what he/she invested the money into.



What Do Businesses Use Slush Funds For?

It is common for businesses to use slush funds for things like client parties, incidentals, and other forms of entertainment in order to win new clients. Additionally, a slush fund might be used for corporate perks such as executive cars, bonuses, team outings, and lunches for employees.

Of course, they also have a much seedier side. The use of slush funds has been used for bribing labor representatives, siphoning funds from pension funds, and hiding profits. Which will later flatten earnings. Thus, companies hardly ever properly account for the funds. Or they are kept off the official books entirely.

How to Build Slush Funds?

One of the best things you can do for your business is to make an emergency fund to secure your future.

Therefore, set aside money in a fund to pay off any credit card debt you might have accumulated over time.

Slush funds are an informal pool of money that individuals or companies use for their own purposes without reporting it to the authorities.

Countries like China and Russia are rapidly encouraging their citizens to invest in these funds. However, entrepreneurs often use the fund money to buy influence from politicians and bureaucrats.




What Is A Business’s Hazard Insurance?

Hazard Insurance

Business hazard insurance is a sort of small business insurance that covers the building in which your company is located, whether it is owned or rented. It also safeguards the equipment you employ to conduct your business. Business property insurance is another name for this coverage.

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