Tag: cash

How Americans Spend their Tax Refunds

The numbers are huge! Just a few days before the tax deadline, almost 120 million tax returns had been filed. More than 70% of those tax returns resulted in refunds back to the taxpayers totaling almost $243.6 billion. The average refund check or direct deposit amount was $2,831, slightly larger than last tax season.

 

So how do American’s spend their tax refunds?

 

GOBankingRates, a financial information and resources website, recently polled American taxpayers about how they planned to spend their tax refunds. The results were encouraging for money folks who preach fiscal responsibility. Here’s the full article. It’s an interesting read.

 

Per the survey, the five top ways that Americans spend their tax refunds are:

 

  1. Put into Savings – Forty-three percent of the survey respondents said they will put their refunds into savings. The survey was not specific about the type of savings. Let’s hope that savings includes an emergency fund for immediate needs and retirement contributions to meet long term goals.

 

  1. Pay Off Debt – Thirty-six percent said they will use the money to pay off debt. If that’s your situation, too, start by paying debt with the highest interest rate, like a credit card balance. More debt to pay after your refund is all used? Shift the amount you were paying on the paid-off balance to the next largest debt to get it paid off more quickly.

 

  1. Pay Toward a Vacation – Ten percent set aside their refund to pay for a vacation. Seems like a nice reward for getting through the year and filing that tax return. If your vacation funding choices are limited to putting it on a credit card or waiting for your tax refund, the refund “wins” every time – unless you can pay the card balance off each month.

 

  1. Splurge on a Luxury Item – Six percent go out and buy themselves a gift, whatever their heart desires. The bigger the refund, the bigger the splurge – jewelry, car, latest “bright, shiny object”. Let’s hope that these folks feel okay doing this because they already saved an emergency fund and maximized their retirement contributions.

 

  1. Necessary Major Purchase – Five percent need to use their refund for a major necessary purchase, like a home repair or appliance. Waiting to buy something you really need can be stressful, or even unsafe. Setting aside funds for emergencies and maintaining good credit are two ways taxpayers can avoid waiting for major purchases.

 

What about getting no refund?  The GOBankingRates survey found that 36 percent of those polled this year didn’t expect to receive a tax refund. Why is that a smart move? Well, you’ll have to check back and read my next blog to find out.

Looking to Outsource?

Whoever said, “If you want something done right, you have to do it yourself,” wasn’t a business owner. It’s impossible for a business owner to do everything herself. Sure, at the beginning, limited cash flow means DIY for some tasks. But as soon as possible, it’s time to outsource tasks that don’t make money, or are best left to a pro, like IT and accounting.

 

When you start looking to outsource, your business needs reliable vendors that address your business needs, deliver as promised, and don’t create headaches. So where are those reliable vendors, and how do you find them?

 

Follow these four steps to get the right vendor and stop the DIY:

 

  1. Check and Compare

Talk to other business owners about vendors that they use. Look on industry association and Chamber of Commerce websites for preferred or endorsed vendors. Selecting a vendor based on the lowest cost could end up costing more. Develop a Vendor Selection Scorecard to help compare terms, services, and other performance factors. Consider checking on prospective vendors’ financial soundness to make sure they will still be in business when you need them.

 

  1. Define Expectations

Documenting expectations helps to hold the vendor accountable and avoid misunderstandings. Agreements should include how the vendor will address deadlines, quality, and other essential success factors for your business. Be sure to document your business’ responsibilities, too, such as providing necessary information and approving deliverables. Nailing all this down can also help you figure out all the details you might not have thought through before.

 

  1. Get Updates

Vendors should provide periodic work status updates or statements so you can track their progress against the agreement, budget, or project plan. Vendor invoices are another update opportunity. Invoices should include enough details to show what was being billed, the price, and any other terms that impact the total amount. Verify that purchased goods and services were received as expected before paying the invoice.

 

  1. Track Performance

Use agreement terms to develop a simple Vendor Performance Scorecard. Follow-up if performance starts to trend below acceptable limits. Status updates and scorecards don’t replace direct communication. If something changes or doesn’t seem “right”, ask what’s going on and why. Follow-up if the answer doesn’t make sense. Ignoring red flags could cost you money and your reputation.

 

Tired of DIY and looking to outsource? These four steps will get your business on track to find reliable vendors to address its needs, without the headaches.

 

NEED A MID-YEAR TAX CHECK-UP?

Anything you meant to do before Labor Day, but didn’t? Was one of those things checking your tax withholdings to avoid a nasty surprise when you file your 2016 tax returns? This year, more than before, it’s important to consider a mid-year tax withholding checkup.

 

Early tax filers who traditionally depend on getting their tax refunds early in the filing season could be disappointed in 2017. Several new factors implemented by the Internal Revenue Service to reduce identity theft and increase refund fraud protections could delay tax refunds, so it’s even more important than ever to perform a mid-year tax withholding checkup.

 

So what is changing?

 

  1. A new law effective in 2017 requires the IRS to hold refunds until at least February 15 for tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). The IRS holds the entire refund to provide time to detect and prevent refund fraud, not just even the portion associated with the EITC and ACTC.

 

  1. The IRS and state tax administrators continue to strengthen identity theft and refund fraud protections which means some tax returns could face additional review time next year to protect against fraud.

 

As in the past, the IRS will begin accepting and processing tax returns once the filing season begins. The IRS says that in spite of the new law and steps to prevent refund fraud, most refunds will still be issued within the normal 21-day timeframe after being accepted for processing.

 

All these changes mean it’s even more essential to check on your tax withholding and plan ahead for next tax season. It’s your personal choice whether you want to have extra money withheld to get a bigger tax refund. It’s great to know how long you’ll have to wait for that big refund “pay day.”

Are your People a Cybersecurity Risk?

Even after investing tons of money in technology and security for data protection, organizations still fall victim to data breaches. Why? Because security doesn’t work if people don’t use systems securely. Recent news events and surveys of IT security professionals reveal that the biggest cybersecurity risk comes from people.

 

A prime example is when a system administrator fails to change the manufacturer’s default password. The door to that system is wide open to unauthorized access. Phishing e-mails are a popular mechanism for exposing systems to attack.

 

Traditional methods, like training and documentation, make people aware of cyber threats and vulnerabilities. Another way to drive home the risks and costs of a data breach is to hear about real life techniques used by hackers to manipulate people inside your organization.

 

If you think your business isn’t at risk, a few scary, true stories about accessing and stealing sensitive data will change your mind. One of my IT referral partners, Envision Consulting, is hosting a workshop where participants will hear from the World’s Most Famous Hacker – LIVE!

 

A top cybersecurity expert, once on the FBI’s most wanted list and now a trusted, worldwide security consultant, is the main speaker at Envision Consulting’s “Top Business Executive Cybersecurity Workshop of 2016” on October 19th. His experiences demonstrate why people are the weakest security link and how easily they can be manipulated into handing over the keys to the kingdom. Registration and details: http://bit.ly/29yV0yx

 

Walk away with concrete ideas and techniques to adopt immediately in your business to lower the chances of becoming the victim of the next high-profile cybersecurity attack. Your people may be your greatest cybersecurity risk. Attending this workshop could be the greatest investment you make to mitigate that risk.

 

 

Tired of Bootstrapping your Nonprofit Accounting?

Nonprofits promise donors to use funds to deliver programs in support the mission. Those same nonprofits also strive to keep expenses low, especially in non-program areas. But the cost of bootstrapping non-program areas, like accounting, can be huge – and invisible.

 

Nonprofits have a legal responsibility to protect and account for their funds. Using reliable and effective systems and processes are part of fulfilling that legal responsibility. Investing in accounting infrastructure is essential. Knowing WHY accounting is essential helps nonprofits talk to stakeholders about funding infrastructure investments.

 

Three benefits that nonprofits get from reliable, effective accounting systems and processes are:

 

  1. Clear, Accurate View of Finances

Manual or disjointed processes make it difficult to get accurate, up-to-date financial information. The Board, executive director, and program managers don’t get the information they need to make good decisions for the organization. Investing in qualified staff, efficient systems, and standard processes helps nonprofits control and safeguard finances.

 

  1. Fewer Errors and “Do-overs”

A lack of clear, coordinated, and complete processes results in mistakes. Correcting errors and re-doing tasks eat up time that could be spent doing something else. Automating processes reduces the chances of a human error. Coordinating processes between people, roles, and responsibilities increases the chances of getting things done right the first time.

 

  1. Time Savings for All

Not all accounting processes are performed by the accountant or bookkeeper. Program managers and others provide receipts, timesheets, and other information that impact the accounting records. Manual or inadequate processes to collect and record information from the organization pose a challenge to maintaining accurate and complete financial information. Everyone gets time back in her or his day when processes and systems are coordinated with the rest of the organization.

 

Knowing the benefits of reliable, effective accounting systems and processes can help nonprofits explain the importance of infrastructure investments to their stakeholders. Explaining WHY will result in donors understanding that nonprofits cannot afford to keep bootstrapping their accounting.

 

Finding a Tax Preparer Who is Prepared

Last week, I took an IRS exam to earn the Enrolled Agent (EA) credential. Being an EA will allow me to represent clients or interact on their behalf with the IRS. That’s on top of preparing income tax returns for businesses, individuals, estates, and nonprofit information returns.

 

The EA or other tax credential is one thing to look for to find a qualified tax preparer. Clients need to know that a knowledgeable tax professional is helping them follow the tax laws and take allowable deductions.

 

So what other experience or background should tax payers look for when “shopping” for a tax preparer? Other than getting referrals from colleagues, family and friends, taxpayers should ask prospective tax preparers these three questions:

 

  1. How Do You Keep Up with Changing Tax Laws?

Tax laws are constantly changing so it’s important to work with a tax professional who keeps up, so you don’t have to. Your tax preparer should describe attending conferences, webinars, or other methods she or he uses to stay current.

 

  1. What are Your Experience and Credentials?

Tax preparation is an unregulated industry where anyone can participate. Get examples of tax situations, client types, and complex issues where the tax preparer has experience. Her or his answers will indicate if she or he will be able to address your needs.

 

  1. How Do You Communicate with your Clients?

Does the tax preparer you are interviewing meet regularly with clients? Are meetings in person? Is the person available for you if a tax-related question or issue comes up? Make sure you feel comfortable with the tax professional’s style, manner and process.

 

It’s important to have a qualified tax preparer that is prepared to meet your needs. Feeling confident and comfortable with the answers to these three questions is a good sign that your taxes will be prepared accurately and consider allowable deductions.

Two Years in Business!

This week, my business is two years old! Anniversaries are cause for celebration and reflection — a good time to check your progress and feel great about your accomplishments.

 

Looking back on my business from its start to its Second Anniversary, growth and success depend on these four important activities:

Continue reading “Two Years in Business!” →