Learn from My Mistakes: When a CPA is Worth It

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Some years ago, I was teetering between working for a company and earning money on the side through websites I had created. I also dipped into freelance writing. When it came to tax time, I really didn’t have much of an issue because my main job covered the brunt of the taxes and whatever I made from the side-projects were easily included thanks to W2’s and 1099’s.

It wasn’t until I began making more than my normal work and deciding to leave the position that things started to get shaky in terms of finances and taxes. I was so focused on the money-making part that I neglected to plan for the taxes and by the time April 15th rolled around I was looking at owing quite a bit of money to the government (uh-oh).

I made it a point that I’d learn that lesson only once.

The problem I had was compounded due to my ignorance:

·  I didn’t fully understand what I could claim as business expenses

·  I went with one of the popular tax filing companies that just rushed me through the system

·  I wasn’t withholding enough money

After all was said and done I was facing well over $2,500+ in owed taxes which was quite a bit considering that I was still just getting started on my own in business. Every dollar counted because I needed it to help grow (and pay the normal bills).

Turns out that one of the other up-and-coming entrepreneurs within my circle happened to be a CPA for their day job so I got a hold of him on Skype and talked about the benefits of going with one. After about an hour I finally had a solid understanding of what I did wrong, what I need to do next time, and why I really needed to stick to a CPA from that point out.

Here are the main things I learned when talking to this individual about taxes and doing business:

A. Find someone local – As much as I wanted to just hire the guy on the spot, it would have been a pain overall because he lived so far away. I’m in the Central Florida area so I made a list of every CPA Orlando has to offer. I found one and having them so close made it very easy to do taxes the next year because I could fax over the documents, swing by to discuss any issues, have them walk me through it step-by-step, and also help me find ways to add deductions.

B. Frequency is better – We are all used to doing our taxes when it comes tax time because we have this love for one giant check. When you’re doing a business it’s far better to do your taxes quarterly so you won’t get caught off guard by a major hit if you did something wrong during that year. You can easily handle smaller taxes every few months than having it slam on you at the end of the year.

C. Deductions & Withholding – I thought I knew what I could claim as deductions that first year of doing taxes independently but boy was I wrong (it resulted in an audit). A CPA is trained in all of this and can answer your questions; they can help you fully understand what and what not to claim. Working with one that really knows the tax laws can help you save thousands and prevent you from making an “oversight” that could lead to potential tax fraud.

D. Retention – A CPA (or the firm) is going to keep all the files you’ve submitted on record. Compare this to the big envelop you receive or online account (which you forgot) and you see the benefits. If the IRS suddenly digs up something from a few years ago and you’ve been going to the same CPA you can bet that they’ll put in the effort to find the documents and fight back.

These days it’s all about keeping good records. I learned my mistakes early on (at least I’m thankful for that). Taxes aren’t that big a problem anymore and business is booming. In the end I would recommend a CPA to anyone that is out there on their own trying to build something from scratch; it’ll save you a ton of headaches and money.

3 Key Benefits of a Personal Pension

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Wondering what to do about your pension? You’re not alone. Many people are put off the idea of having their own personal pension, as the process can often seem overly complicated – but it doesn’t have to be. There are many articles and resources online that can help you along the process. For example, Nutmeg offer an online pension pot calculator that can help you plan and predict for your future goals.

Check out our three key benefits of having a personal pension, and start working on your future today.

  1. Simple and easy

If you are looking for a simple and easy pension that you don’t have to worry about, a stakeholder pension might be the best bet for you. These pension options are simple and straightforward, and can be drawn from age 55 onwards with a tax-free lump sum of up to 25% taken immediately.

If you are under age 75 you can pay into a stakeholder pension, and you can invest up to £3,600 each year.

  1. Low cost

It doesn’t cost that much at all to have your own personal pension – and this is particularly true with stakeholder pensions. These schemes don’t impose penalties if you change or stop contributions, or if you transfer to a different scheme.

As well as this, paying into a personal pension ensures you get tax relief. This is true even if you don’t pay tax. The tax relief forms part of your annual limit, and higher rate taxpayers can claim extra tax relief based on what they pay into their pensions.

  1. Smart investment

If you’re looking for a pension that has the potential to grow and you don’t mind taking on some risk, you may be more interested in a SIPP. Stakeholder pensions are designed to be simple, so as a result they include low to medium risk investments, meaning low returns as a result. However, a SIPP offers more flexibility, but with that comes more risk. If you are comfortable with that, then a SIPP could be a great option for you.

SIPPs can come in a variety of different shapes and sizes, so it’s important to do you research on any potential SIPP before you decide where you want to put your money. However, as more low-cost SIPPs make their way onto the market, they are becoming an increasingly affordable option for those who are not interested in the low returns offered by stakeholder pensions.

No matter which pension option you choose, the security in knowing that you have a personal pension goes a long way towards ensuring that you are prepared for the future.

How to Save Money on Higher Education

How to Save Money on Higher Education

Considering how many obligations they have, it is very difficult for students to focus on saving money while they are in college. Even with a part-time job, a student can hardly manage to pay for everything he needs. Things such as courses and books can be very expensive and it is very important to try to save as much money as possible. Even though some parents try to save up for their children’s education from the moment they are born, in today’s market, it is difficult to know when you’ll need to use up some of the money you have set aside. We give you a few ideas on how to save up some money while in college.

Living in dorms or getting a roommate

Most universities offer their students a chance to live in a dorm and save big amounts of money they would otherwise spend on renting apartments. Students today need the use of the Internet for their studies and most dorms are equipped with it. This way, students do not have to spend their own money on internet bills. Most campuses also offer students free cable TV. For those who cannot or do not want to live in a dorm, getting a roommate can be a very interesting idea. Sharing the rent with someone is one of the best ways to save your money while you are in college. It is also a great idea for roommates to check if their families have any old appliances that they can use in their apartment instead of buying new ones. You can also buy some used furniture or kitchenware at yard sales, and splitting the food bill will also greatly help your finances.

Walking or biking to class

Most campuses allow bikes and this is a much cheaper option than driving yourself to campus every day. When you are driving to college you have to think about the price of gas, parking passes and possible tickets. Walking or riding a bike to campus can be a very practical means of transportation for students. These two ways of getting to class are also cheaper than riding on the subway every day. Besides saving the money, walking and biking are a form of some much-needed exercise for students.

Buying used textbooks

Students usually spend big amounts of money on the textbooks they ought to have. Instead of getting new ones, students can try to find a bookstore where they would be able to buy used textbooks and save some money. These bookstores can usually be found within the campuses. Students can also try to look on the Internet and find the textbooks online. Another way is to ask around and check if anyone who has attended the same course in the past has the textbooks and is ready to sell them.

Applying for funding programs

There are certain programs which provide money and support for students during their time in college. For a big number of students, this is a great way to raise money for their studies. Students can apply for some of the programs that are subsidized by the government and can help them with paying for the courses they attend. Students can benefit much from the programs like this, as they will have a load taken off their shoulders, thus allowing them to focus more on their studies.

Most of the ways mentioned above can save a lot of money and time, the two things that students are usually lacking during their time at college. College life can be very expensive and students can easily spend big amounts of money without them even noticing it.It is very important for them to pay attention on the ways they can save money during their college years. Any money students manage to save on things like transportation and books can be used as the means for paying for the courses they attend. This will also allow their parents time to recover from tuition fees, and give the entire family a little more room to breathe.