Early Bird Gets the Worm: Planning for Retirement in Your Twenties
Posted on | February 20, 2012 | No Comments
Thinking about the time when you give up work can never start too early. When you’ve just hit twenty and you’ve been given your first job, thinking about the end of your career is the furthest thing from your mind. Contemplating the end, however, will allow you to take a proactive role in planning for retirement. And maybe allow you to be a grooving granny with cash to burn.
How to go about planning for your retirement
There are certain points that you will need to consider when implementing a plan to cover yourself later in life.
Firstly, before you can even begin to think about embarking on any form of retirement savings plan, you need to have a sufficient emergency savings funds. Do you have three-six months worth of salaries saved up in a secure savings account? If not then you need to take care of that. It is the preamble before planning for retirement. It isn’t a strength of the young to look to the future, but setting up a totally secure reserve that you can dip into when life take’s an unexpected turn for the worse will ultimately help you weather those times. Save you some Botox?
For those that have their unassailable savings taken care of, you can now start ploughing your extra money into a form of retirement savings. Unless you’re one of the fortunate few that fall into the high-income tax bracket, you are advised to set up a ROTH IRA account. In this case, you won’t exceed the income eligibility threshold and you will be able to put away up to 3000 pounds a year. This could significantly fatten your retirement funds. Thailand here you come!
Once you’ve set up your ROTH IRA account there are a few other retirement planning tips to be had. Firstly, keep in mind that investing in stocks is a good idea if you’re thinking about long-term growth. Investing money with the hope that you’ll achieve high returns over long periods always comes with a bit of risk but deserves to be looked into.
Never rely too heavily on your bond, even in retirement. Inflation can easily wear away the purchasing power of your bond’s interest payment.
Lastly, if you invest your time in the right company, you can benefit from pension schemes that supplement your savings. The office you choose could potentially be the place that increases your nest-egg and help you to plan ahead. If you start implementing some of these retirement planning guides now, you’ll determine your own fate in more ways than one.
In the working world, many business people tend to look ahead in terms of their careers, their office space, and their progression. Planning for your retirement is a means to an end, and a good one at that. You could be playing bingo and soaking up the sun in the Caribbean if you start saving now!
Bella Gray is busy planning her retirement at her executive suites New York. She likes to share the tips she picks up while looking for new investment opportunities. Impressed by her return on investment from her serviced offices Victoria, Bella now recommends serviced offices to all of her business partners and friends.
Related articles
- Planning For Early Retirement (2010tax.org)
- 8 Tips to Prepare for Retirement (2008taxes.org)
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Tags: Caribbean > investment > New York > Registered Retirement Savings Plan > retirement > Retirement planning > Roth IRA > Saving
Common Bookkeeping Mistakes That Weigh Down On Business Profits
Posted on | February 16, 2012 | 4 Comments
Bookkeeping serves as a foundation for sound financial decision making and planning and therefore it is essential that financial records are kept up-to-date. Some businesses procrastinate the mundane process of maintaining financial records because it involves a lot of time and effort. When this happens, it is better to find a bookkeeper so that you can get more time to concentrate on core business activities. Some common bookkeeping mistakes that can be avoided by paying more attention are as follows:
Inaccurate Record Keeping
Business managers can lose important receipts or ignore small expenses that seem insignificant to them and this can hinder proper maintenance of records. When its time to file tax returns or close accounts at the end of the financial year, it results in a loss of both time and money. In case of an IRS audit, you will not have the necessary documentation required for proper tax measures and this can result in fines and other expenditures when dealing with the auditor.
Wrong Categorization of Expenditures
For those of you who are not aware of bookkeeping methods and procedures, it easy to feed the wrong amounts into wrong accounts. When this happens, it is likely that income and expense accounts have the wrong balances and this could result in overvalued or undervalued profits and tax payments.
Mismanaging Liabilities and Receivables
Account receivables and payables must be properly recognized and dealt with otherwise they can result in inaccurate profit figures that depict poor cash flow planning. Separate accounts should be created for credit sales and prepaid expenses for proper tallying of accounts at closing.
Transactions Recorded In the Wrong Period
Sometimes lack of bookkeeping experience results in current transactions entered into previous reporting periods after financial statements have been generated. The resulting errors can complicate reconciliations and create a false picture of the financial position of a business.
Ignoring Bank Reconciliations
When you are engaged in a business, it is essential that personal accounts and bank accounts are kept separate to avoid confusions. Moreover, financial records should be updated and reconciled with any external records such as bank statements on a regular basis. If this is not done, it results in errors and chances of fraudulent practices rise.
Not Keeping Data Backups
Businesses rely heavily on technology in today’s world and with software and privacy issues on the rise, it is essential that backup is maintained of all the important information related to the business. System failures or crashes can result in a loss of important information which can be deleterious to your business’s health. It is better to be prepared for such unfortunate circumstances by keeping updated backups on an offsite location.
Keeping Employee Categories Separate
With increased dependence on contractual employees, it is essential that separate records are maintained for different employee categories. With accurate classifications and cost allocations, workers’ compensation, insurance payments and tax payments will not be wrongly computed.
Petty Cash Mismanagement
All businesses have small amounts of cash that have no ‘attached’ explanations. This petty cash can be properly managed when there is a system in place to keep track of cash transactions.
Losing track of Reimbursable Expenses
Sometimes, business owners pay for certain expenses out of their personal funds but fail to record them because of a lack of such a system. This can accumulate to profit losses and tax deductions that would otherwise have not happened. With a proper company policy to keep track of legitimate business expense claims, these expense claims can be reimbursed.
Find a bookkeeper who can prevent such mistakes so that you can effectively and successfully manage your business.
Anthony Azevedo, CPA is the managing member of EZCFO a bookkeeping company specializing in human resource, payroll, and employer solutions.
Related articles
- Proper Bookkeeping for a Solid Business Future (2008taxes.org)
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Tags: Accountancy > Accounting > Bookkeeping > Business > Employment > Finance > Financial statement > Small business
Discharging Tax Debt Through Bankruptcy
Posted on | February 15, 2012 | 1 Comment
Filing for bankruptcy can be an effective way to get out of debt and get started rebuilding your financial life. While bankruptcy can provide quicker relief than other options such as debt settlement or credit counseling, some debts are ineligible for discharge. When dealing with tax debt, it can be difficult to get a discharge for it through bankruptcy. While it is possible, you’ll have to make sure that you meet certain standards. Otherwise, your tax debts may remain even after you file for bankruptcy.
Tax debts are subject to specific rules that must be met before they can be discharged in any kind of bankruptcy. The tax debt in question must be at least 36 months old in order to be eligible. When you need to discharge a tax debt, the return associated with that debt must have been filed at least 24 months ago as well. In addition to filing the return more than 24 months ago, you also have to make sure that the tax assessment is at least eight months old. The tax return that you file also has to be legitimate and cannot be fraudulent. You also cannot simply file for bankruptcy so that you can get out of paying taxes. This is considered tax evasion and is against the law.
If you want to qualify for bankruptcy discharge with your tax debt, you also have to prove that you have filed your last previous four tax returns with the Internal Revenue Service. Without having proof of filing those returns, you will not be eligible to have the debt discharged through the bankruptcy process.
While it is possible to get your tax debt discharged in bankruptcy, it is not very likely. In order to get part of your tax debt discharged, you have to prove that it is at least three years old. In most cases, the Internal Revenue Service will start contacting you almost immediately after your tax debt is not paid. The chances of you being able to hold out for more than three years without having anything done by the IRS are not good. The Internal Revenue Service has many ways that they can try to get you to pay your tax debt. For example, the IRS can file a tax lien on your property and make it difficult to sell any of your property without paying back the debt. In some cases, the IRS also has the right to seize your property such as your house, your vehicle, jewelry, securities and money from your bank account. If you do not pay the debt in the appropriate amount of time, the IRS will start trying to collect this money from you.
If you are having trouble repaying your tax debt, you may want to explore some other options besides trying to wait out the three year period for filing bankruptcy. For example, you could try to set up an installment agreement with the IRS or use an offer in compromise to settle your tax debt for less than you owe. The IRS will evaluate your proposal and decide if it is worth accepting.
Related articles
- Can You Discharge Your Tax Debts In Bankruptcy Court (2008taxes.org)
- How Does The IRS Choose Who To Audit? (2012taxes.org)
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Tags: bankruptcy > Bankruptcy discharge > Debt > internalrevenueservice > irs > Offer in compromise > tax > tax return
Some Weird Small Business Deductions
Posted on | February 8, 2012 | No Comments
So, the holidays are over and you’re adding up your books (you’d BETTER be adding up your books-tax time is coming!). You know full well to add up your monthly income and common deductions like EI and CPP for your employees. But what are some deductions that you may have missed that could be costing hundreds of dollars? Here are some weird small business/self employed deductions that may never have occurred to you.
- Cost of replacing materials. If you’re a writer/artist/photographer, etc and you need to buy new equipment, you can claim the new piece as a tax deduction. Even repairs can be deducted! Feel a little better about that new laptop now? (I know I do!)
- Utilities/Telephone. If you work at home, you can claim a small percentage of your utility bills as business expenses (after all, you need power, heat and phone or internet to work!) Keep track of each bill because you may see a bit of it coming back to you.
- Pet food. Did you know that if your animal is a service animal or are outdoor animals which guard your livelihood in some way, you may be able to deduct the cost of feeding the animals?
- Child care. Even if you work at home and farm out the little monkey to a daycare or babysitter, you may be able to deduct the costs as a business expense so long as you worked while the kid was away.
- Trips. If you headed off to a convention on entrepreneurship or on something related to your business, you may be able to deduct a good portion of your costs.
- Transit passes. Don’t drive to see your clients but take the bus instead? Buy monthly passes, keep the receipts and claim them. Anyone can take advantage of this green friendly deductions, not just business owners.
- Charity. Donating to others not only feels good, but can give you a good deduction come tax time.
- Home maintenance. If you put in a new office for your business, new furniture, new plumbing, new power or something else that improves your business, you will be able to claim the expenses on your taxes. Neat huh?
- Moving. If you’re moving to get closer to business opportunities, you can claim the move as a deduction. And don’t forget your pets! You can also claim expenses related to them such as pet carriers, vaccinations and having to pay deposits on hotel rooms
- Erm… enhancements. That’s right, if you work in the… entertainment… business, you may be able to deduct a fairly busty amount from your taxes. But you have to show that the enhancements actually helped your work.
In short, keep receipts from anything even remotely related to your small or self-employed because you just never know when a small pile of minor expenses can add up to a solid deduction on your taxes this spring! If you’re unsure, you could always ask a qualified Canadian accountant or even get more specialized and search through specialty regional websites for the exact thing you want such as Halifax tax planning.
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Tags: Business > Cost > Expense > Internal Revenue Service > Small business > tax > Tax deduction > TurboTax
Chris Christie And 2012 Taxes Panacea Or A Pandora’s Box
Posted on | January 27, 2012 | No Comments
The Governor of New Jersey, Chris Christie has 2012 Taxes in mind with his ten percent income tax for the people of his state. Christie is also proposing that his tax plan can be applied to the Nation. The 2012 election is in November, and he is setting his sights on the 2016 presidential elections.
Chris Christie has deemed himself an economic architect who has the blueprint ready to rebuild New Jersey’s sagging economic foundation. He is so confident in this strategy that he feels strongly that this plan can bolster this country’s economy and restore consumer confidence. His flat tax rate of ten percent is a stark contrast to the governors of New York, Illinois and California. In all three of these states they have raised taxes and they have been proactive in increasing the tax rates for the most affluent individuals. He has claimed that his economic strategy gives back to the lawmakers and taxpaying citizens, who have sacrificed to help New Jersey’s economy. His image as a fiscal conservative has been further established by substantially cutting state spending. While he has lowered taxes for the wealthiest in his constituency, he wants to reinstate an earned tax credit for those with the lowest incomes, a program he had cut in 2010. His sweeping tax cuts would increase the state’s high deficit.
Chris Christie has a dramatic tax plan, but the downside is who will pay for these cuts. Time will be the judge if a ten percent flat tax will work.
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Tags: California > Chris Christie > Economic > Illinois > New Jersey > tax > TurboTax > United State
There’s an App for That: Taxes from Your Phone
Posted on | January 25, 2012 | No Comments
We do pretty much everything from our phones these days, turns out, taxes are no different. Accountants and techies are combining forces as new ways develop for those who choose to file from their phone. From an easier way to track and report expenses to hand-held glossaries and customer service, exploring ways to file from your phone will change the way taxes get done.
Tracking Expenses
Deducting expenses is essential for businesses owners or the self-employed. Keeping track of those expenses however can be incredibly cumbersome. Travel, meals, supplies, and mileage really add up and the ability to immediately input related data and transfer that information to taxes can keep things clear and easy when the time comes to report.
- iXpenseIt offers password protected expense tracking which can be programmed and stored in customizable categories.
- ShoeBoxed integrates snap technology and expense reporting into one package. The app allows users to snap photos of receipts and upload them into an organizationally customizable online platform.
- TripCubby provides the ability to track and record mileage and other travel data. The data collected can be exported into Excel using email or automatically added into deduction categories in the app itself.
Estimates
Mobile devices are especially handy for retrieving pertinent information for those who need an estimated income tax return but lack the actual W-2. Tax Caster by Turbo Tax doesn’t require exact figures to calculate return estimates which enable users to fulfill tax-based qualifications or anticipate amounts of returns without having to retrieve the actual tax information this includes more in-depth tax issues such as deductions related to family size, properties, alimony, and vehicles.
Much like expense reporting for businesses, keeping track of personal donations and other charitable activities is essential. A group of accountants created the iDonatedIt app which generates an itemized list of donated items, values and the date and location at which they were dropped off. Additionally, the app supports snapped photos of the donations which can be uploaded via email.
Questions and Support
Taxes can get confusing, particularly for those with more tax materials than the basic W-2. H&R Block has created the Tax Answers app which allows for a chat-based Q&A with their representatives. The app also provides FAQ categories and checklists as well as a handy glossary.
- Internal Revenue Code (IRC) app by LawToGo.net is aimed at professionals or filers with complex returns and contains a searchable database of the various codes determined by the IRS.
- TaxMama is an app which generates a costume tax calendar to suit various filing needs for those with different tax forms which carry different deadlines.
- IRS2Go, produced by the IRS allows users to check the status of their filed tax return and refund while also providing information on pertinent updates.
- MyTaxRefund by Turbo Tax can also track tax refund status, determine whether the return was accepted or rejected by the IRS and produce the expected date of refund arrival.
Filing
Phones have turned actual filing into a snap. Particularly with SnapTax which fills out the 1040EZ form using a snapped photo of a W-2. The information is filled automatically and can be filed after review. However, SnapTax is currently available only for Californian 1040EZ filers.
Katei Cranford is a freelance writer and tech lover who insists on filing taxes properly and helping others do the same.
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Tags: internalrevenueservice > irs > IRS tax forms > SnapTax > tax > Tax refund > tax return > tax returns > TurboTax
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