Tag Archives: Retirement

How To Reduce Your Tax Liability

Photo Credit: enciktepstudio/Shutterstock.com

Photo Credit: enciktepstudio/Shutterstock.com

Reducing your tax liability also provides the added benefit of improving your retirement planning. It is time to be proactive in paying less income tax than you are required to pay and putting more money into tax-deferred savings investment accounts or savings plans. This article offers some excellent strategies to help you accomplish this.

1. Increase Your Retirement Contributions In Tax Deferred Accounts

You can deduct more from your taxable income than you may realize because you may not be aware of the maximum annual individual contribution to your 401(k) plan. The allowable deduction is $18,000 for 2015 and 2016. You can also put $5,500 into an IRA. If you are 50 years old or older, you can contribute an additional $5,500 into your 401(k) and $1,000 more into your IRA this year.

You can make contributions now and apply them retroactively to 2015 if you do so by April 15. You will be able to take advantage of compound interest and a larger amount of savings growth by depositing money that would otherwise be taxed. The tax advantage savings plans will get you closer to your retirement goal. If you haven’t started one of these plans, then consider doing so even if you can only deposit a few dollars monthly.

2. Organize Your Accounts For The Best Tax Advantage

You can keep more of your money working for you if you put your money into a plan that offers the maximum tax advantage. This is not to say that tax savings should be your only guide in selecting investments, but once your savings goals are established, you can allocate your funds among accounts that will meet your objectives and minimize your tax obligations. There are different tax implications for equities, bonds, REITs and commodities. Put the investments that have greater tax implications into your tax-advantaged accounts.

3. Practice Tax Smart Investing

Account activities that generate short-term gains are more likely to generate taxable income. This is apt to happen when your investments in mutual funds are frequently traded resulting in a short-term capital gains tax liability and unnecessary commissions. This is a double hit on your investment returns.

Your best chance of reducing your tax liability is investing in passively managed funds such as EFTs or index mutual funds.

4. Seek Professional Help

Our firm has experienced advisers who can help you navigate the complicated taxation waters and save you money by identifying the tax advantages available to you. Every person’s situation is different, but we can assist you maximize your investments and reduces your tax obligation.

Does Your Company Need a Bookkeeper?

Photo Credit: Syda Productions/Shutterstock.com

Photo Credit: Syda Productions/Shutterstock.com

Every company needs a bookkeeper. A competent bookkeeper using a good bookkeeping or accounting system can enable the owner to concentrate on the company’s core business, and this is one of the most important answers to the question often asked: Does your company need a bookkeeper? There are many other reasons that justify a bookkeeper position in your business. Our company can provide bookkeeping services, and we can also provide part-time bookkeeping services. We can also provide the best systems that will be easy to use, and easy to extract reports from.

A bookkeeper will organize the business transactions to provide the necessary reports on the financial aspects of the business operations. These reports are essential for helping the owner to understand whether their business is making or losing money. Reports can be generated to create inventory turnover ratios and the aging of accounts receivables as well as invoices that are due to be paid. The bookkeeping position will be the one to focus the owner’s attention on areas causing potential financial problems.

A bookkeeper can formalize budgets and report actual performance to the budgets on any frequency the owner needs. Cash forecasts are another essential function that will keep the business from running out of cash, or these will help the owner realize when they need to borrow money for operating expenses.

Keeping track of employee hours worked, preparing the payroll and making the required payments to the governments on the due dates will save the business penalties, fines, interest and a lot of trouble. Maintaining compliance with the state and federal tax reporting requirements is absolutely necessary. However, many businesses without a bookkeeper find this to be a tough task. Preparing year-end payroll forms and reports for the insurance companies is a job for the bookkeeper.

A good bookkeeping system will enable the bookkeeper to record all revenue and expenses properly. Recording these items in the accounts that will be used by the accountant to prepare the tax liability of the business is another way the business can save money. If the accountant does not learn about tax deductible or tax credit items, then these will likely not be used to the advantage of the owner.

Correctly posting financial data to the appropriate accounts will ensure that the accountant and the CPA will be able to get an entirely accurate picture of the financial health of the business. The data posted to the accounts will enable the creation of important financial statements such as a balance sheet and a profit and loss statement. The accountant or the CPA will be able to offer operational changes to improve sales and profits.

Lenders will not view a business in a good light if the business does not have a bookkeeper and an accounting system.

For more information regarding Clark & Company and their services, visit their website or Facebook page!

Top 10 Ways To Prepare For Retirement

Photo Credit: David Franklin/Shutterstock.com

Photo Credit: David Franklin/Shutterstock.com

The average retiree in America will live 20 years after they retire. Many experts believe that you will need a monthly income equal to 70 percent of your current take-home pay. It is never too early or too late to begin saving money for your retirement years. Keep in mind that today’s dollar will be worth a lot less when you retire, so you might want to get an inflation estimate chart and determine how much money you will need. For example, assuming inflation is 3% annually over the next 20 years one dollar will be worth 60 cents in today’s purchasing power. This will give you an idea about the funds you will need if you plan to retire in 20 years. Charts are available on the internet to help you make other calculations. Here is a list of 10 ways to prepare for retirement:

#1: Start A Savings Plan and Stick To It
Develop a plan that will enable you to save the amount of money you will need by the time you retire. Obviously, this may be difficult at first, but continue to strive toward your goal.

#2: Determine Your Retirement Income Requirement
Keep in mind any unusual medical expenses you may have and any travel plans you might want to make. Try to anticipate your lifestyle expenses as best you can.

#3: Contribute To Your Employer’s Retirement Plan
If your employer offers a retirement savings plan, then sign up and contribute all you can. You will not pay income taxes on the money you contribute. Therefore, your money will grow faster.

#4: Study Your Employer Provided Pension Plan
If your employer provides such a plan, then learn all you can about it and determine how its benefits will fit into your overall goal.

#5: Start Your Own Individual Retirement Account
You can contribute up to $5,500 a year into an IRA, and you can contribute even more if you are over 50. You may receive favorable tax treatment depending on the type of plan you choose.

#6: Find Out what Your Social Security Benefits Will Be
You can use an online estimator provided by the Social Security Administration’s website to estimate your benefits.

#7: Consider Investment Strategies
It is important to save, and it is more important to invest some or even all of your savings in secure investments. Don’t hesitate to seek professional advice.

#8: Don’t Touch Your Retirement Savings
Avoid the temptation to withdraw money from your retirement savings. You will lose more in the long term than you withdrew.

#9: Consider The Magic Of Compounding
If you invested $5,000 a year at 7% annually, you would have $316,245 in 25 years. You can do even better with the right investment advice.

#10: Find A Financial Adviser
You will be much farther ahead if you don’t try to plan for your retirement all by yourself. Seek professional help and don’t hesitate to ask questions.

For more information regarding Clark & Company and their services, visit their website or Facebook page!