Monthly Archives: August 2017

Financial Considerations for High-Income

If you find yourself in the camp of high-income, high-debt professionals, consider the following four steps to manage your finances, pay down your obligations and pave the way to a confident financial future.

1. Spend wisely

The income you earn today may seem staggering compared to what you were accustomed to in the years before receiving your degree. Before you increase your spending, it’s important to take a step back and consider how to tackle multiple financial goals at once. Start by earmarking part of each paycheck for your future goals. Knowing you have dedicated savings for future purchases like a new home or sending your kids to college can help you have confidence in your everyday finances – including an occasional splurge. However, until you have your other debts paid off or dramatically reduced, it may not be prudent to take on a large mortgage or a loan for an expensive vehicle.

2. Manage your debt effectively

Keep up on student debt and if you can, consider accelerating your payments. Paying extra will not help you eliminate the debt sooner, but will reduce the total amount you pay in interest. Refinancing the debt to ease your monthly payment schedule may be an option, but given your likely cash flow, it may not be necessary. If you have accrued other debts such as car loans or credit card borrowing, repay them as quickly as possible. Make it a priority to reduce the impact that debt has on your monthly budget.

3. Start saving for retirement

A good rule of thumb for any young professional is to try to save 10 percent (and more, if possible) of their income in accounts designed to build wealth for the long run. While the idea of retirement may seem a lifetime away, starting to accumulate money in a retirement account as soon as possible can be especially effective. Those who begin saving for retirement in their 20s or early 30s can most effectively leverage the power of compounding interest. At this age, you have time on your side and the ability for your investments to grow over the decades to come.

4. Keep it all in perspective

You’ve worked hard to get where you are, and earning a big paycheck is a justifiable reward. Your professional and financial journey is just beginning, so treat your financial life as a marathon, not a sprint. At the very least, focus on living within your means. To the extent you are able, try to live even more modestly with the goal of paying down debts as quickly as possible. You never know what the future holds and what opportunities may arise. Your income level could change, either by your own choice or due to unavoidable circumstances. Take advantage of your good fortune today to strengthen your financial future.

Benefits of Donating IRA Distributions

One tax-efficient way to make charitable contributions is through a Qualified Charitable Distribution (QCD). A QCD is directing your IRA custodian to make a direct transfer of funds from your traditional IRA to a qualified charity. The amount transferred from your IRA as a QCD is not included in your taxable income.

Multiple tax benefits

Making a direct distribution to a qualified charity from your IRA is an option limited to those who have reached age 70-1/2. An individual can direct up to $100,000 tax-free per year from their traditional IRAs (for a married couple, the $100,000 annual limit applies to each spouse, for a total of $200,000). The distribution must come from an individual IRA or rollover IRA. The option is not available for workplace retirement plans or an active SEP or SIMPLE IRA.

The QCD approach creates a variety of potential tax benefits, including:

  1. Avoiding limits on charitable contributions. The qualified charitable distribution allows you to direct up to $100,000 to be paid directly by the custodian, regardless of your adjusted gross income (AGI) in a given tax year.
  2. Using a standard deduction. Because the QCD excludes income from the IRA distribution, it frees up the standard deduction to offset other taxable income.
  3. Retaining the full benefit of itemized deductions and personal exemptions. If you make a charitable contribution, a QCD allows you to avoid having to take a large IRA donation as income because you are donating it. Therefore, you won’t inflate your income to higher levels that could impact your ability to itemize deductions and personal exemptions. In 2017, that threshold begins at $261,500 for a single tax filer and $313,800 for a married couple filing a joint return.
  4. Other tax benefits. Keeping your income lower through direct distributions from IRAs to charities also may help you:
  • Reduce taxes you might have to pay on a portion of your Social Security benefits;
  •  Avoid paying higher Medicare Part B premiums;
  • Potentially limit state income taxes;
  • Claim other deductions (medical expenses or miscellaneous itemized deductions) that can only be declared when your expenses exceed a percentage of your adjusted gross income.

Benefits of Outsourcing Your Bookkeeping Operations

Nowadays doing online business has made us more connected to each other, moreover it has become an important tool in bringing people closer in doing day to day work as well as backend business. Online community has made a difference in bookkeeping. It is like a tedious task which no one wants to do but avoiding it can produce serious repercussions. Thus the business owners want to hire someone who could do bookkeeping for them. Instead of doing it by themselves or doing it in house, business owners are finding it more advantageous by outsourcing it. Below mentioned are its top five benefits:

  • More Time

Outsourcing this service can save a lot of time that can be put into other works. Back end operations can take a lot of time and can be a distraction too.

  • Saving money

Outsourcing saves time as there is no need to hire an employee and pay him full time or part time wages. By outsourcing it you pay what is needed not more and not less.

  • Expertise on your side

Outsourcing helps in having full time knowledge of the team without having to know them by having them round the clock.

  • Access to top systems

Outsourcing also ensures more and better access to the top tools in the industry. Often most businesses are unable to afford extremely expensive bookkeeping programs. It is also time consuming to keep abreast with the changing laws and regulations. Outsourcing this task resolves this specific problem. In addition to this, nightly backups are created by these top systems to keep records and books organized for years ensuring that you are prepared for unexpected audits by IRS anytime.

  • Scalability options

Whether you wish to expand the horizons of your business or cut down on spending, outsourcing this service allows you to do this in the blink of an eye. The flexibility provided by outsourcing is unprecedented with in-house bookkeepers.

Since the advent of online version of the popular QuickBooks reporting software in 2000, business owners are struggling with one question – which version should I go for? Now, the 1990s QuickBooks Desktop users have a common question in their minds i.e. whether to switch to QuickBooks Online. A novice to QuickBooks is often baffled by the choices in front of him. This might lead to spending unnecessary money on the version that you don’t need. To help you out in clearing this confusion and providing a better understanding, we have gathered some key differences between QuickBooks Online and QuickBooks Pro. This will help you choose the right version for you and your business.

Sales Tricks

1. The Probe
On your first contact with any salesperson, they’ll usually ask you a few questions. These have two main goals. Most obviously, they’re trying find out what you’re looking for. But they’re also aimed at finding out how serious you are about buying.

2. The Psychology Test
To be successful in selling to you, a seller must quickly work out what kind of a person you are so they can adjust their sales pitch to appeal to someone like you. If you’re a positive, extrovert, glass-half-full person, then they’ll probably try to sell the dream – stress how what they’re selling will improve your life. But if you’re more of a glass-half-empty worrier, then the seller will sell security – focus more on the features and performance of what’s being sold.

3. The Make-a-Friend
Sellers will have many tricks to make us like them as the more we like someone, the more likely we are to buy from them. One of the most frequently used techniques is called active listening. With active listening the seller will use all kinds of non-verbal gestures such as leaning forward, inclining their head slightly to one side, widening their eyes, pursing their lips thoughtfully and stroking their chin to show their interest in us. Some sellers even sit in front of the mirror at home practising their active listening skills.

4. The Trust Me
Many salespeople are trained to portray themselves as trusted advisers helping us make the right buying decision rather than being seen as commission-hungry vultures slavering to get hold of our money. One of many ways of achieving this is the same side of the table. Rather than standing or sitting opposite the customer creating a situation where the seller and buyer are like adversaries facing each other, the seller changes their position so they’re standing or sitting almost beside the customer as if they’re working together with the customer to solve the customer’s problem – which house, car, TV, phone or insurance to buy.

5. The Persuaders
Having managed to get us interested in buying something, the seller then needs to get us to make the decision to move ahead. To put pressure on us, they might try the closing door – suggest there’s only a limited time to get the deal they’re offering; or the phantom buyer tell us there are other people interested in buying what we want even if this isn’t true; auction fever use other real or phantom buyers to make us feel we have to offer a higher price if we’re to get what we want; or even the deliberate mistake when adding up the price of something, they deliberately forget some small part so that the buyer, thinking they’re smarter than the seller, rushes to complete the deal.