Category Archives: Budgeting

Budgeting

Do You Want A Tax Refund?

Every year there are a lot of people who end up being very happy because they’re getting refunds from both state and federal tax returns. This allows people to plan different ways of spending all that newly found money; who wouldn’t want to do that?

Actually, there are a lot of people who purposely try to minimize their tax refund, to the point that if they can break even they feel like they’ve maximized their money all year. What are they possibly thinking?

If you get a big refund, it means you paid more tax than you needed to. In essence, you’ve allowed the government to use your money to grow their own instead of you being able to enjoy it or even invest it yourself so that you could benefit from the fruits of your labor.

Being able to spend extra money during the year might sound like a lot of fun. Investing that extra money makes a lot more sense.

Think about it like this. Say your refund is $500. If you invested that instead of allowing the government to use it or you spending it on your own, and you were able to get it into an investing that paid 5% on the year, you’d earn around $25 or so. That doesn’t sound like a lot of money, but stick with us.

Not only would you have started growing your own money but you don’t pay taxes on the money you’ve invested as long as you allow it to stay where it is. That wouldn’t be a major discount on what you’d pay in taxes, but it would bring what you owe down a little bit. And, if you continued adding that same $500 a year, your growth would be around $6,700 in 10 years, all nontaxable.

Of course the idea is that you’re actually investing more money than just that $500, but it all helps an it’s all tax free growth.

It’s something to think about, although if you’re using your refund for that Caribbean cruise you’ve dreamed about all summer it’s probably a tougher choice to make than it should be.

Budgeting

Buying Capital Equipment On Black Friday

This might seem like a strange type of article to be on the blog of an accountant. However, since we’re talking about Black Friday as it applies to business expenses and capital equipment, it seems like fair game from our perspective.

Reading about the crunchpad on my own pad.
Steve Paine via Compfight

Of course everybody knows what Black Friday is. For those that don’t, it’s the day after Thanksgiving when many companies across the country decide to have major sales of some of their products. Some companies even so go so far as to start on Thanksgiving itself, but not all that many.

What you see happening for some items is people actually leaving their house early afternoon on Thanksgiving and then waiting outside of whatever establishment has the item they want so that they can be one of the first people in there. The reason they do that is because, at a lot of these stores, the deal is only good as long as they have the product. Once they run out of the product, that particular sale is over and it leaves a lot of people disappointed.

You’re in business though. Unless your business is a restaurant that has a lot of games or an internet cafe, it’s probably not likely that you’ll be standing in line waiting to get the new Xbox or whatever product is out there. Still, looking for a deal as it applies to equipment your business might need for the next year is never a bad thing.

What you need to be doing is a little bit of research. Right now, it’s hoped that a lot of people know how much things they’re hoping to buy actually cost. It is not uncommon for some retailers to do some tricky math and offer something at a 35% discount that just three weeks earlier was that exact same price.

Of course, not all items that are needed by businesses will be on sale during shopping days like this. But there will be some things that will be on sale that businesses might need. For instance, if you need technology like computers, laptops or tablets, those will definitely be on sale. If you need items for communication like phone systems or smartphones, those types of items will be on sale. Maybe you’ll need something small like a new shredder; trust me, those will also be on sale.

It behooves the savvy owner to try to get whatever works for their business at the best price possible. It’s true that you can write all that stuff off your taxes, but it’s better to save money up front than try to beat the system by writing things off later on. Still, the smartest thing is to be diligent in your research to make sure you’re not being taken advantage of by any retailer.
 

Budgeting

4 Business Financial Considerations

As we head into the last quarter of the year, most business owners will start pulling together some of their receipts for the year and other items to give to their accountants (while some will wait until the last minute next March; which one are you? lol). That’s pretty important, but it’s more reactionary than progressive thinking when it comes to working on the financial stability of one’s business.

We like to talk about the process of budgeting when it comes to managing money. Most of the time it’s all about paying bills. For businesses, it’s a much different thing. It comes down to 4 specific financial considerations businesses should be looking at so they can plan their future.

1. Receivables

What we’re calling receivables you might just be calling “pay”. It all depends on whether you collect your money up front or if you bill people and they pay you later. You need to budget this for three reasons. One, it tells you how much money you’ve made. Two, it helps you figure out how much money you want to make the next year. Three, if you haven’t been paid by some of your clients it lets you know who they are, who to follow up with, and who you might not want to work with in the future.

2. Liabilities

Liabilities for business are different than just thinking about bills that need to be paid. Liabilities in this case are those things that are pretty much set in stone where, if you don’t pay them you could lose something as far as it concerns your business. If you’re paying for your office space monthly, that’s included here. If you’re paying for insurance for your employees, or a company to handle your payroll, it all goes here.

3. Expenses

Expenses are those things where the value changes from month to month, as well as being something you might be able to control and reduce. Mileage is one of those things that changes monthly. General supply costs such as paper, pens and other things like that are another. When things are tough financially this one could spell the difference between shutting down or monitoring costs for better efficiency.

4. Capital Equipment

Many businesses will try to buy equipment for their business before year end. If it’s budgeted for the previous year, you might be able to buy that equipment whenever your needs hit because you know how much you’ve going to make and how much you’re already paying out. Things like computers, printers, or other equipment that’s costly and that you can write off should be a part of the process, especially if there’s something you need to purchase once a year.
 

Budgeting

Why The Greece Story Is An Important Lesson For All Of Us

By now you have probably heard about the problems with the country of Greece (stated for our New York readers since there’s a Greece about 90 minutes away from Syracuse). In essence, they’re close to defaulting on debt they can’t pay because of years of spending money they didn’t have and never adopting any austerity principles to help the country take care of itself.

Greece might end up lucky in some way. It’s looking like, after a lot of chest thumping, they’re about to accept a deal they were actually offered months ago. This will include having to set up ways to generate more money (increase taxes) and reduce spending (budget) drastically.

Does this sound familiar? Every day, people spend more money than they make. They don’t know it because they ignore it, the “I’d rather not know” syndrome. That’s understandable because it’s scary. Unfortunately, one can’t hide from the eventual realization that all isn’t rosy.

Accountants can’t help anyone who doesn’t ask for it. Sometimes, if things are critical enough, even an accountant might not be able to get you out of trouble. In those cases you might have to do some things you don’t want to do.

Maybe it’s Consumer Credit Counseling, which many communities around the country have. They’re wonderful at what they do, but they’re not the answer for everyone.

Maybe you can get a consolidation loan of some kind, pulling all your bills together and getting them paid off so you only have to pay the bank. That might work… unless you don’t start controlling your spending, putting together a budget so you can pay down your debt and still live your life comfortably.

Then again, you might not qualify for that either, in which case you might have to do the ultimate sacrifice – bankruptcy. The problems with that are many, including having a negative action on your credit report for 7 years. However, what’s even worse is that there are debts that aren’t excluded just because you filed bankruptcy. If you owe on a college loan or back taxes… you still have to figure out how to deal with those things.

Our position has always been that it’s better to know where you stand so you can address it. If you’re not in deep trouble, we can help. If you’re in minor trouble we might be able to help. If you’re in major trouble, we can offer you guidance.

Addressing potential financial issues might be scary, but the truth is that the sooner you know, the sooner you’ll gain peace and perspective and can be on the road to serenity.
 

Budgeting

Have You Started Budgeting Yet?

One of the earliest posts we wrote on this blog concerned budgeting. We started with the topic The Basics Of Budgeting as a baseline on how to get started. It’s still a pretty big deal to us, as it should be for you, which is why we’re revisiting the topic again.

20140822_210041

Our bet, if you did start back then, is threefold:

* your bills are under control

* you have more money in your checking or savings account

* you have more peace of mind because you’re not as worried about paying your bills
Continue reading Have You Started Budgeting Yet? →