Monthly Archives: January 2017

How You Can Save, Pay Down Debt, Retire And Spend

Every individual is bound to retire sometime, which makes retirement planning an essential attribute right from when you start to earn. This makes it vital to understand the few basics that can help to plan ahead in order to save, clear debt and spend as you wish.

It’s hard enough to stay on top of your finances when you are employed full time, and have an employee savings plan, automatic tax deductions, employee health insurance, a 401(k), etc. As an individual with irregular income, you have to handle everything on your own, and hence, you need to pay even greater attention to your financial matters.
These involve better managing your irregular income for future retirement savings, emergencies and probable expenditures, as well as avoiding late tax payments.
Here are some important tips and retirement savings options to consider as you manage your finances.

Emergency Savings for a Rainy Day
If you are someone with irregular income, chances are you might run out just when you really need funds, unless of course you’ve managed to save for future emergencies. It goes without saying that emergencies include all basic living expenses from utilities, groceries, rent and transport, as well as medical expenses.
It’s ideal to have easily accessible savings that can accommodate all possible emergency expenses for at least a year. Start with saving for six months of expenses, and put anything over that into an investment account. You must also have health and disability insurance to avoid running out of funds, especially considering the soaring costs of medical aid.

A Curveball Fund (Separate from Your Emergency Fund)
Ok, so you have saved up for emergencies, but what about the small hiccups that keep coming around? These could range from car trouble or a hole in the drainage pipe, to a sudden, once-in-a-lifetime travel opportunity with friends or family — you get the general drift, right?
A curveball fund acts as a reserve, for which you simply need to open up a savings account that can help you subdivide your funds for various goals, whether they’re curveballs or basics.

Retirement Savings Options
All financial experts advise that you start saving for retirement as early as possible. Individuals with irregular income must in general save at least a minimum of 10 percent (if not 20 percent) of their income as their future retirement savings. There are plenty of retirement savings options available, the most reliable of which are the IRA and 401(k).

Contributing the maximum of $5500 to an IRA ($6500 if you are above the age of 50) can help a great deal, for your investment is taxable in the now and not once the money is withdrawn post-retirement. As for those of you who earn fairly well and wish to invest more than $5500, a 401(k) is a better retirement savings option.

Debt Management
Even though it’s every individual’s dream to be debt-free at some point, it’s very likely that your debt will catch up with you. In the midst of a money crunch and piling-up debt, it is paramount that a large part of your income goes towards savings, to avoid further debt at higher interest rates.

No matter how much you hate having debt, think twice before using up all your income to pay it off. The best way to go about this is by making a list of debt with higher interest rates as compared to lower ones, and doing away with those first, since you can afford to hang on to the lower interest rate debt for longer periods of time.

Personal Expenditure
When it comes to irregular income, there is pretty much little to no room for lavish personal expenditure (unless you are bringing in the big bucks). Of course, this doesn’t mean that you can’t spend at all, just that you must prioritize your personal spending.

For some, travel is important and for others shopping, but remember to consider whether there’s something more important that can be done with the funds instead. Still, save a little pleasure reserve every month, so it doesn’t seem like mission impossible when you want to pamper yourself!

Ease Small Business Tax Season

Are you stressed about tax season? It certainly breeds its own intense levels of anxiety for many business owners. Whether you outsource your tax preparation to an accounting professional or handle your taxes in-house, it pays to be prepared. Preparing for tax season in the right way can save you valuable time and arm you with useful information that can enhance your business’s efficiency and success.

As you embark on this annual business exercise, here are some steps you can take to streamline tax-related jitters:

Take stock of your financial situation.
Make sure the information you have about your employees and contractors is current and correct. Did anyone move, get married or have children? For employees, double-check items, such as employee name, address, social security number, lived-in and worked-in jurisdictions, paid time-off information (to determine whether appropriate withholdings or deductions were applied), status (active, terminated or on leave of absence), filing status (exempt or non-exempt), number of exemptions, year-to-date wages and taxes, and pre-tax year-to-date amounts, such as contributions to 401(k) and benefits plans.

Confirm independent contractor classifications.
The misclassification of employees as independent contractors is a major area of enforcement for government agencies. If you already work with independent contractors, evaluate current relationships since they may have changed over time (You may want to refer to the Internal Revenue Service common law requirements). Double check contractors’ names, Taxpayer’s Identification Numbers (TIN) (which is either their social security number or Employer Identification Number), addresses, state and local work locations, and earnings totals for each jurisdiction. Double check wages paid to employees and contractors (Form W-2, Form W-3, and Form 1099) and compile rent or property documents, income and expenses. Finally, examine reimbursements to employees and contractors.

Organize your paperwork.
Keep your records organized so the preparation process can be more efficient. Should you be audited, you may not have to scramble to assemble your documentation. For your reference, this list includes forms that must be filed. It’s a good idea to check the websites for your applicable state or local guidelines:

Annually:
Employer’s Annual Federal Tax Return (Form 944); only file Form 944 annually if you do not file Form 941 quarterly
Employer’s Annual Federal Unemployment (FUTA) Tax Return (Form 940)
Federal Wage and Tax Statements (Form W-2)
Transmittal of Income and Tax Statements (Form W-3)
Federal 1099-MISC form
Federal 1096 form
Employer information about health care coverage enrollment for their employees, such as Forms 1095-C and 1094-C if you are an applicable large employer
One form for each employee to report health care coverage; provide Form 1095-C if you are an applicable large employer, or if you are self-insured, you will need to give your employee(s) Form 1095-B
Some states require income tax returns
Some states require unemployment tax returns
Form 943 if you are in the agriculture industry

Quarterly:

Employer’s Quarterly Federal Tax Return (Form 941)
Some states require income tax returns
Some states require unemployment tax returns
Most local income tax returns need to be filed quarterly
Clarify exemptions, deductions, and rebates.
View your employees’ 2016 earnings and deductions in your books. Bonuses are generally considered supplemental wages and are subject to federal taxes, as well as certain state taxes. In addition, you must account for certain fringe benefits, retirement plans and any other necessary adjustments to employee wage and tax amounts.

Think long term.
Make it a habit to follow these tips and remain organized. Understand your long-term business goals and make sure tax preparation reflects these goals by consistently updating your paperwork, tracking your employee and contractor base, and looking ahead to the next major milestone in business reporting. You may also want to consider including future leaders in the tax preparation process so they can familiarize themselves with exemptions, deductions and rebates when they take on a leadership role.

Don’t go it alone.
The regulations and paperwork surrounding tax preparation can be daunting. Don’t be afraid to ask for help or use additional resources to inform your decisions. Outside consultation can often be the easiest quickest option, and at the risk of misclassifying workers and incurring a penalty, sometimes more cost effective.

Devoting the time and resources necessary for tax preparation can help you start 2017 on the right foot. Organizing and evaluating the status of your business early will ensure that tax preparation runs smoothly and accurately.

Make Your Business Become More Profitable

Every business has a different set of goals. But increasing profits is a pretty universal objective for businesses of all sizes. There are plenty of different ways to go about working toward that goal. Members of our small business community shared some simple steps you can take in the list below.

Test Your Financial Literacy
To make sure that your business is on the right track financially, you’ll need to make sure that you’re financially literate enough to make that determination. This Sageworks post includes a quiz made to test out your financial literacy so that you’ll be better equipped to make those tough decisions.

Focus on Managing Your Payroll
Payroll management is part of running a business that can sometimes get neglected. But it’s incredibly important for you to have people dedicated to managing your payroll operations and transactions, even if you have set processes in place. Hmd Ali explains more in this post for The Raymond Solutions.

Form Habits That Lead to Long Term Success
Making a quick dollar is nice. But you’ll need to think differently if you want your business to actually succeed over the long run. That means you have to form habits that can actually lead to long term success, as Martin Zwilling shares here in the Startup Professionals Musings blog. You can also see conversation surrounding the post over on BizSugar.

Avoid These Usability Mistakes That Destroy Mobile Conversion Rates
If you want your business to make money in 2016, you need to be able to convert mobile customers. That means that your site or platform needs to actually be usable for people on mobile devices. So you need to avoid the usability mistakes outlined in this post by Jeremy Smith in the Jeremy Said blog.

Convert Blog Visitors Into Customers
Having a lot of blog readers or visitors can be great for your business. But that alone won’t necessarily make you any more profitable. Instead, you can check out this post by Neil Patel and work on converting all of those blog visitors into actual paying customers.

Understand That Your Products Are Commodities
No longer are products just products. In this Kexino post, Gee Ranasinha explains why businesses now create products that are also seen as commodities to consumers. And the BizSugar community also share thoughts on the post too.
Consider Changing Your Legal Structure for Tax Year 2016
If you got hit hard by taxes this year, you might want to consider changing your business’s tax structure for the coming year. In this CorpNet post, Nellie Akalp discusses some ways you might be able to change your business’s structure so that you could benefit come tax time.

Keep Track of Your Online Reputation
You already know that your reputation is important. But it can also have an impact on your business’s bottom line. This post by Rachel Strella of Strella Social Media includes some tips for tracking and managing your online reputation. And BizSugar members comment on the post here.

Follow These Investment Tips for Beginners
Investing can be a tricky game, whether you’re personally investing what you’ve made from your business or making investments specifically to help your business grow. But this Noobpreneur post by Ivan Widjaya includes some investment tips specifically aimed at beginners.

Use These CRM Tools to Skyrocket Your Success
Any business that wants to make money needs customers — and more specifically, loyal customers. If you want to keep your customers happy and engaged with your business, you’ll need some kind of CRM system. Apple Pineda shares some options in this post on the RightMix Marketing blog.