Bookkeeping, Small Business services, Financial, Accounting, Accounting Software, QuickBooks, Remote Bookkeeping, Theresa Cruz, Consulting Services, Reconciliations, accounts payable, accounts receivable, payroll, Fremont, invoices, deposits, expense reports, budget, cash flow

10 Keys to Financial Success

Although making resolutions to improve your financial situation is a good thing to do at any time of year, many people find it easier at the beginning of a new year, which is almost here. Regardless of when you begin, the basics remain the same. Here are the top ten keys to getting ahead financially.

 

1. Get Paid What You’re Worth and Spend Less Than You Earn – It sounds simplistic, but many people struggle with this first basic rule. Make sure you know what your job is worth in the marketplace, by conducting an evaluation of your skills, productivity, job tasks, contribution to the company, and the going rate, both inside and outside the company, for what you do. Being underpaid even a thousand dollars a year can have a significant cumulative effect over the course of your working life. No matter how much or how little you’re paid, you’ll never get ahead if you spend more than you earn. Often it’s easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can result in big savings. It doesn’t always have to involve making big sacrifices.

 

2. Stick to a Budget – One of my favorite subjects: budgeting. It’s not a four-letter word. How can you know where your money is going if you don’t budget? How can you set spending and saving goals if you don’t know where your money is going? You need a budget whether you make thousands or hundreds of thousands of dollars a year.

 

3. Pay Off Credit Card Debt – Credit card debt is the number one obstacle to getting ahead financially. Those little pieces of plastic are so easy to use, and it’s so easy to forget that it’s real money we’re dealing with when we whip them out to pay for a purchase, large or small. Despite our good resolves to pay the balance off quickly, the reality is that we often don’t, and end up paying far more for things than we would have paid if we had used cash.

 

4. Contribute to a Retirement Plan – If your employer has a 401(k) plan and you don’t contribute to it, you’re walking away from one of the best deals out there. Ask your employer if they have a 401(k) plan (or similar plan), and sign up today. If you’re already contributing, try to increase your contribution. If your employer doesn’t offer a retirement plan, consider an IRA.

 

5. Have a Savings Plan – You’ve heard it before: Pay yourself first! If you wait until you’ve met all your other financial obligations before seeing what’s left over for saving, chances are you’ll never have a healthy savings account or investments. Resolve to set aside a minimum of 5% to 10% of your salary for savings BEFORE you start paying your bills. Better yet, have money automatically deducted from your paycheck and deposited into a separate account.

 

6. Invest! – If you’re contributing to a retirement plan and a savings account and you can still manage to put some money into other investments, all the better.

 

7. Maximize Your Employment Benefits – Employment benefits like a 401(k) plan, flexible spending accounts, medical and dental insurance, etc., are worth big bucks. Make sure you’re maximizing yours and taking advantage of the ones that can save you money by reducing taxes or out-of-pocket expenses.

 

8. Review Your Insurance Coverages – Too many people are talked into paying too much for life and disability insurance, whether it’s by adding these coverages to car loans, buying whole-life insurance policies when term-life makes more sense, or buying life insurance when you have no dependents. On the other hand, it’s important that you have enough insurance to protect your dependents and your income in the case of death or disability.

 

9. Update Your Will – 70% of Americans don’t have a will. If you have dependents, no matter how little or how much you own, you need a will. If your situation isn’t too complicated you can even do your own with software like WillMaker from Nolo Press. Protect your loved ones. Write a will.

 

10. Keep Good Records – If you don’t keep good records, you’re probably not claiming all your allowable income tax deductions and credits. Set up a system now and use it all year. It’s much easier than scrambling to find everything at tax time, only to miss items that might have saved you money.

 

Reality Check – How are you doing on the top ten list? If you’re not doing at least six of the ten, resolve to make improvements. Choose one area at a time and set a goal for incorporating all ten into your lifestyle.

Feel free to email or call of you have further questions regarding your financial success – I’m available to help you work through these steps to gain control of your finances. 510.404.0054 or Theresa.Cru@gmail.com.

 

Source: http://financialplan.about.com/ 

bookkeeping tips, Bookkeeping, Small Business services, Financial, Accounting, Accounting Software, QuickBooks, Remote Bookkeeping, Theresa Cruz, Consulting Services, Reconciliations, accounts payable, accounts receivable, payroll, Fremont, invoices, deposits, expense reports, budget, cash flow

Five Bookkeeping Tips for Business Owners

Adopting some good habits can help stave off costly errors when it comes to record keeping.

Entrepreneurs keep a lot of the financial details of their business in their heads. Doing so has its advantages: No new software to learn, no danger of a system crash that loses all your data, and you can tweak your budget as often as you need without sitting down at a desk. 

But when you don’t have a system and some processes in place, unpleasant surprises can pop up, goals can be easily missed and important paperwork forgotten. Getting a better handle on your money can help you to make and keep long-term goals, smooth out the seasonal ups and downs of your cash flow and maybe improve your profits. It can also help you to stay out of trouble with the Internal Revenue Service. 

Here are five bookkeeping tips for entrepreneurs.

1. Plan for major expenses.

Why it’s helpful: You’re less likely to miss business opportunities or have to scramble for a loan when the expenses become unavoidable.

What to do: Put events like a major computer upgrade on the calendar a year in advance or, ideally, three to five years ahead. Acknowledge the seasonal ups and downs, something many entrepreneurs are reluctant to do.

“This helps you to be honest about the fact that it’s coming and plan for it,” says James LeMay, a director with the accounting firm Daigle & Associates in Boston.

You’ll avoid taking money out of the company during the flush periods only to find yourself short in the slower months, when costly projects like upgrading computers or replacing factory components usually happen. 

2. Track expenses.

Why it’s helpful: You otherwise might some miss tax write-offs and may lose out on others.

What to do: A credit card that you use solely for business can be a basic accounting system, says Raffaele Mari, an accountant in Newport Beach, Calif., who teaches a financial course for entrepreneurs at Pepperdine University.

Most card statements categorize expenses, so you can see which outlays relate to which business activities. If you always use your business credit card for business expenses, you’re less likely to pay cash at, say, Staples and lose the receipts, forfeiting tax-time write-offs. Pens and printer paper can add up.

Additionally, Mari says, routinely jot down business trips, lunches, coffee dates and other events with cash outlays in your electronic or paper day planner. This habit can go a long way toward substantiating those items for your tax records in the event of an audit.

“Often on tax returns, those numbers are too round. No one drives exactly 5,000 miles for business in a year, so the IRS knows this is an estimate,” Mari says. “In an audit, if you can’t substantiate those numbers, the whole category [of write-offs] can get thrown out.”

One of his clients provides a link to a Google map for each trip instead of trying to remember to note the mileage for every trip he takes on his odometer. That data, along with a day planner recording the trip, are usually enough record keeping to satisfy the IRS, Mari says.

3. Record deposits correctly.

Why it’s helpful: You may be less likely to pay taxes on money that isn’t income.

What to do: Adopt a system for keeping your financial activities straight, whether it’s a notebook you use consistently, an Excel spreadsheet or software such as Quickbooks. Business owners typically make a variety of deposits into their bank account through the year, including loans, revenue from sales and cash infusions from their personal savings. The trouble, Mari says, is that at the end of the year, you or your bookkeeper might erroneously record some deposits as income, and consequently pay taxes on more money than you’ve actually made.

4. Set aside money for paying taxes.

Why it’s helpful: The IRS can levy penalties and interest for not filing quarterly tax returns on time.

What to do: Systematically put a portion of money aside throughout the year for taxes. Then note tax deadlines on your calendar, along with prep time if you need it, to make sure you actually make payments when they’re due.

Payroll taxes that go unpaid can be especially problematic, Mari says. He often sees cash-crunched entrepreneurs get through a down cycle by dipping into employee withholdings that they should have sent to the IRS.

“If you mess with [payroll taxes], you have a two-fold problem,” Mari says. “You haven’t paid taxes due and you’ve taken money that the IRS sees as belonging to your employees. They can be very unforgiving about that.”

5. Keep a close eye on your invoices.

Why it’s helpful: Late and unpaid bills hurt your cash flow.

What to do: Assign someone in your organizations to track your billing. Then put a process in place for issuing a second invoice, making a phone call and perhaps levying penalties such as extra fees at certain deadlines.

“You want to have a plan for what happens if they’re 30, 60 or 90 days late,” Mari says.

Some entrepreneurs believe that once they’ve sent out an invoice, they’ve taken care of billing. Not so, Mari says. “Every late payment is an interest-free loan and hurts your cash flow.”

Business owners are always busy handling numerous aspects of their business. Let me help you handle the bookkeeping, so you can focus on what you do best.  510.404.0054 or Theresa.Cru@gmail.com.

 

Source: http://www.entrepreneur.com/