Taking the time to learn about the 2020 pandemic tax changes may make a difference. Some laws have extensions into 2021 for eligible tax credits and deductions. Here is a tax planning list for small-business owners preparing for year-end tax filings. Incorporating these tips into monthly, quarterly, and annual tax planning routines may prevent errors, could help you avoid delays and may help to manage stress levels for small-business owners.

Get Organized

Early tax planning may help integrate monitoring and reporting practices that authenticate small business year-end tax liability. Small businesses that qualified for one of the federal assistance programs must ensure that the information complied is accurate to take advantage of the tax credits.

Reconcile All Business, Credit, and Bank Accounts

Following the end of each month, these reports should support the final tax reports and the entity’s financial statements. Start by cross-referencing and reviewing expense classifications. Deductible expenses may be forgotten or incorrectly classified.

The process gives an overview of an entity’s taxes and financial condition — valuable information for possibly making good business decisions.

Payroll Tax, Credits, and Deductions

Payroll data reports sent to federal, state, and local agencies need to be verified and accurate. Submissions include withholding information for each employee used for computing a company’s tax obligations. Depending on the state of residence, states have specific payroll form numbers, filing frequency and due dates. Be sure to check the submission dates to remain compliant. Late or inaccurate reporting may come with penalties.

IRS submission schedules are quarterly. Small businesses must report income, Social Security, wages and workers’ compensation, unemployment and Medicare taxes.

In 2020, Form W-4 changes were enforced for new and current employees withholding revisions. 2020 also brought changes for non-employee compensation requiring FORM 1099-NEC to report paid services of $600 or more. Not to be confused with the Form 1099-MISC that reports other paid income.

2021 Pandemic Tax Credits

The Taxpayer Certainty and Disaster Tax Relief Act, enacted December 7, 2020, changed employee retention tax credits for small-business owners. Under the Coronavirus Aid, Relief and Economic Security Act, the Employee Retention Credit extended benefits into the first two quarters of 2021.

Eligible employers should have received the allowable tax credits on payroll liabilities for the first two quarters of 2021 as a refundable tax credit against the employer’s share of Social Security payments equal to “70% of the qualified wages they paid to employees after Dec. 31 2020, through June 30 2021.” The Internal Revenue Service says, “qualified wages are limited to $10,000 per employee per calendar quarter in 2021. Thus, the maximum ERC amount available is $7,000 per employee per calendar quarter, for a total of $14,000 in 2021.”

A second tax credit program for eligible employers is the American Rescue Plan Act, enacted in March 2021 for ERC wages paid during the third and fourth quarters of 2021. ARPA guidelines are available from the Department of the Treasury and the IRS.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

LPL Tracking # 1-05188522

Sources:

Depositing and Reporting Employment Taxes | Internal Revenue Service (irs.gov)
https://www.irs.gov/businesses/small-businesses-self-employed/depositing-and-reporting-employment-taxes

New law extends COVID tax credit for employers who keep workers on payroll | Internal Revenue Service (irs.gov)
https://www.irs.gov/newsroom/new-law-extends-covid-tax-credit-for-employers-who-keep-workers-on-payroll

IRS provides guidance for employers claiming the Employee Retention Credit for first two quarters of 2021 | Internal Revenue Service
https://www.irs.gov/newsroom/irs-provides-guidance-for-employers-claiming-the-employee-retention-credit-for-first-two-quarters-of-2021

Treasury, IRS provide additional guidance to employers claiming the employee retention credit, including for the third and fourth quarters of 2021 | Internal Revenue Service
https://www.irs.gov/newsroom/treasury-irs-provide-additional-guidance-to-employers-claiming-the-employee-retention-credit-including-for-the-third-and-fourth-quarters-of-2021

The post 4 Year-End Tax Planning Tips for Small-Business Owners  appeared first on Tribox Private Wealth.

Now, let’s flip the script for a moment and talk about something just as important, if not more so – your business. How much time do you invest in planning, strategizing, and calculating the moves that will take your small business to the next level?

Velocity of Money in Fantasy Football

In economics, the concept of the “velocity of money” refers to how fast money changes hands in an economy, stimulating growth and prosperity. The quicker money circulates, the better it is for the economy. Similarly, in fantasy football, the more quickly you adapt and change your roster according to the situation, the more points you generate.

Velocity of Money in Business

Now let’s apply that concept to your business. The time you spend planning and strategizing for your business increases the “velocity” of growth. This means, the quicker you act on opportunities, make changes, or even pivot if something isn’t working, the more your business benefits. And just like in fantasy football, you have to be agile, alert, and responsive to the changing market conditions.

Time Investment Multiplier

Consider this: what if the 4 hours a week you spend analyzing player stats, trade possibilities, and match-ups in fantasy football were directed towards enhancing your business strategy? That’s about 208 hours a year! Imagine the projects you could launch, the marketing strategies you could develop, or even the additional clients you could reach.

Time is the one resource that, once spent, you can’t get back. The question then becomes: How are you dividing your time to generate the best returns? You don’t necessarily have to give up on your passion for fantasy football, but a little balance could tip the scales in favor of your business success.

This fantasy football season, let’s also kick start a season of planning, growth, and success for our businesses.

Important Disclosures:

Securities offered through LPL Financial. Member FINRA/SIPC. Investment advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. NewEdge Advisors, LLC and Tribox Private Wealth are separate entities from LPL Financial.

LPL Tracking #478364

The post Fantasy Football vs Business Planning: The Velocity of Time & Money appeared first on Tribox Private Wealth.

Loneliness May Affect Your Financial Health Along With Your Physical Health

The American Psychological Association has made correlations between loneliness and increased levels of inflammation in the body and stress hormones. This may lead to adverse effects, such as an increased risk of cardiac disease and arthritis. Poor health may lead to more costly medical expenses and more time off of work. This expense increase and a loss of work time may eventually lead to problems with your finances.¹

Your Social Circle May Lead to Increased Spending

Sometimes an active social life may lead to increased spending, sometimes even more than you can comfortably afford. If your social circle is comprised of friends that constantly spend outside of their means, you may find yourself mimicking their behavior. This may include making large purchases on impulse that may affect your future financial goals.²

Social Pressure May Lead to Poor Financial Decisions

No matter your social circle, fitting in may seem like the most important thing. Unfortunately, trying to impress friends by spending more than you have or making an investment you know may not be ideal may lead to poor financial choices and consequences. Instead of putting yourself under financial strain to fit in with a specific group, it may be better to reevaluate the relationship.¹

Having a Strong, Supportive, Social Circle May Help Improve Your Finances

While some aspects of your social life may lead to possible negative consequences, there are some instances where your social life may improve your financial outlook. Being part of a supportive social circle and having friends that you depend on will improve your quality of life and may also improve your financial health. Supportive friends will likely provide you with time and other resources that may help you spend less. This could include lending you money at a lower interest rate or letting you borrow tools, or helping you complete a project instead of paying to have it done.¹

Your social life may affect your financial goals in a way that you may not have considered. Take a good look at your social circle and lifestyle to see if it benefits your financial future or if maybe now is a good time to make some changes to prevent it from negatively affecting your financial goals.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #1-05370165

Footnotes:

¹ Financial Well-Being and Social Relationships Closely Linked, Gallup, https://news.gallup.com/poll/187616/financial-social-relationships-closely-linked.aspx

² Americans unhappy with family, social or financial life are more likely to say they feel lonely, Pew Research Center, https://www.pewresearch.org/fact-tank/2018/12/03/americans-unhappy-with-family-social-or-financial-life-are-more-likely-to-say-they-feel-lonely/

The post Get to Know the Rich Relationship Between Your Financial and Social Life  appeared first on Tribox Private Wealth.

STEP 1: Evaluate Your Net Income, Income Sources, and Review Your Spending Habits

Do you know your net income? After all the benefits, social security, and taxes are deducted from your paycheck; you are left with your net income. This can be an eye-opener for some people. Say somebody gets hired at $60,000 per year. You will not be bringing $60,000 home. Hypothetically speaking, if you live in South Carolina, you pay federal income taxes, state income taxes, social security, and Medicare which amounts to over $14,200. That $60,000 just became a little more than $45,500.

Don’t forget: you also have to consider how much you pay for health insurance, vision, dental, and possibly life insurance if you have it. Knowing your net income is important because you have to be aware of how much money you bring in (income source) and, conversely, how much is going out. There are monthly bills, food, gas, entertainment, childcare, and more.

STEP 2: Recognize How Rising Inflation and Interest Rates Will Affect You

The inflation rate has not been this high in nearly half a century. Interest rates are also rising. Because the cost of living is noticeably going up, there are a few things you can do to soften the burden on your wallet. Understanding your daily, weekly, and monthly spending habits and sticking to a budget may help you better manage your financial situation while you adjust to current inflation and interest rates.

According to a survey by The Penny Hoarder, over 55 percent of Americans do not use a budget to manage their income, and 56 percent of respondents said they didn’t know how much money they spent last month. [i]That is a big difference. Here are a few tricks to help you manage your money and your spending habits:

• Review your account statements and list the amount of money coming in.
• List the weekly and monthly expenses, including groceries, gas, entertainment, debts owed, and bills. Money can seemingly disappear if you are not taking account of your expenses, if you are not spending wisely, or if you are spending more than you are earning.
• If extra money is in your bank account, consider saving and investing it.
• In today’s technologically advanced world, there are even “apps” available that can be uploaded to help you monitor your spending and offer budgeting tips.
• Work on eliminating unnecessary expenses. Be honest with yourself about where the money is going.
• Consult with a financial professional to help you develop a financial plan that is appropriate for you and your specific situation.

STEP 3: Consider Investing

Investing is a way of taking money that you have saved and potentially growing your wealth over time. It is essential to understand the value of careful and knowledgeable investing instead of keeping your cash locked up solely in bank accounts that typically generate minimal returns and is tempting to spend. The real benefit of investing is the preservation and growth of your wealth. There are a few ways that you can invest. Having a diversified portfolio, especially in an unpredictable market, is wise in case one segment of the market falls harder than other industries. A few ways to invest include:

• Stocks – Buying stock is having ownership in a company. When you purchase, say, five shares of Amazon stock, you have now become a partial owner of Amazon, and if they do well and the stock increases, meaning it is worth more than when you bought it, and you sell it, you just made money which is called capital gains (though it is recommended to hold stocks with the intention of being a long-term investment. Day trading, buying and selling, hoping stocks go up and selling for small profits is extremely risky!). There are a variety of different stocks that you can buy including common, preferred, domestic, international, penny, and more. [ii]

• Mutual Funds – A mutual fund is an investment company that pools the money of many investors together and invests the money in different assets, including stocks, bonds, real estate, and more. Each mutual fund consists of multiple companies. As an investor, you buy shares in the mutual fund, meaning that you are buying ownership in multiple companies compared to a stock that is one company. This type of investment generates income in two ways; one of them is through capital gains which, again, means that the value (the price) of the shares increases compared to the price you bought them. If you sell it when it is higher than when you purchased it, you make money. The second way is through dividends. Dividends are distributions of a company’s earnings to its shareholders. [iii]

• Retirement Accounts – These are savings accounts with tax advantages that focus on long-term investing and saving. They can be either through your place of employment or personal. A few types include 401(k), Roth IRA, Traditional IRA, SEP IRA, Simple IRA and Simple 401(k), a Solo 401(k), and more. [iv]

• Other Ways to Invest – Bonds, Education Accounts, Exchange-Traded Funds, Custodial Accounts, Real Estate, and more.

STEP 4: Saving Enough Money for Emergencies in a Volatile Market

There is always the possibility of an unexpected financial emergency, whether a medical bill, car issue, income loss, or other unforeseen challenges. Setting up an emergency fund is essential to prepare yourself for financial obstacles. The general rule of thumb is to keep enough money in your savings account to cover three to six months’ expenses. [v]

STEP 5: Pay Down Your Debt

If you live an average life, it seems that accumulating some debt, whether a home mortgage, a car, or a personal loan, is just part of the equation. Some days it might seem like trying to climb Mount Everest in flip-flops, but there are techniques you can try that might help you gradually get ahead of the debt. These techniques include:

• Debt Avalanche Method
  • You make the minimum payment on each account where you owe money but pay as much as possible to the one with the highest interest rate until it gets paid off. Then you apply this method with the second highest interest rate, and so on.

• Debt Snowball Method –
  • You pay off the smallest balance first and then work up to the largest.

STEP 6: Keep Track of Your Credit Score

A solid credit score is essential in pursuing your financial goals. Many people do not regularly monitor their credit or even know what their current credit score is, but making regular payments on accounts you owe has the potential to impact it tremendously. If possible, you want to try and pay off any credit card or personal loan balances in full. Stay on top of it, even if you cannot pay in full at this moment in time.

STEP 7: Work With a Financial Professional

Trying to manage your finances and complete everything involved on your own can potentially be overwhelming. The hassle of collecting and organizing your financial information can be a nightmare by itself. Having an experienced financial professional in your corner may help you navigate the complexities of financial planning and you can work together to mitigate mistakes that could cost you in the long term. Take the time to research and consult with a financial professional so you can start planning today for you and your family’s future.

[i] These Budgeting Statistics Show Most of Us Don’t Track Our Spending (thepennyhoarder.com)

[ii] Types of Stocks: Understanding the Different Categories (fool.com)

[iii] Mutual Funds and ETFs (sec.gov)

[iv] Types of Retirement Plans | Internal Revenue Service (irs.gov)

[v] An essential guide to building an emergency fund | Consumer Financial Protection Bureau (consumerfinance.gov)

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.

Investing in mutual funds involves risk, including possible loss of principal.  The funds value will fluctuate with market conditions and may not achieve its investment objective. Upon redemption, the value of fund shares may be worth more or less than their original cost.

Dividends payments are not guaranteed and may be reduced or eliminated at any time by the company.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Inflation is the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by LPL Financial Marketing Solutions.

LPL Tracking #1-05335330

The post Worried About Your Financial Health? It May Be Time For A Checkup appeared first on Tribox Private Wealth.

If finances do not come naturally to you, you may quickly feel like you are in over your head. Fortunately, mastering these skills might be easier than it seems. Here are four key financial skills that all business owners need to learn.

Reading Financial Statements

Being able to read and understand your business’s financial statements is the only way to truly have a handle on your business’s overall financial health. These statements include:

• A balance sheet that measures your assets, liabilities, and equity.
• An income statement or profit-and-loss statement, which shows your business’s income, expenses, and profits.
• A cash flow statement, which reports all cash received and spent over a specific period.

Your balance sheet may help demonstrate your business’s financial health to lenders or forecast future revenue and expenses. Your income statement helps assess your ability to earn profits. And your cash flow statement determines whether you are able to maintain payroll and pay the bills and expenses that come from operating a business.

Budgeting Income and Expenses

How and when you spend business funds may directly impact your profitability, cash flow, and ability to expand. By setting spending limits and income goals, you may plan for future expenses and create savings to help you weather a down period. To make a budget, you need to know what you are spending. Tracking software may help you categorize and prioritize expenses to see what you might cut, what you might outsource, and what should rise to the top of the list.

Collecting Outstanding Balances

No matter how busy and popular your business is, it may fail if you cannot collect prompt payments for your services and products. You need a comprehensive invoicing strategy to timely recover payments, track and pursue late payments and send automatic reminders. Creating a website that allows customers to pay online may also help increase your collection rate.

Working on Your Business Credit

Nearly all businesses require some credit to expand, hire new employees, pursue new opportunities, and upgrade or maintain fixtures and facilities. Poor or nonexistent business credit may require you to dip into your pocket to fund your business, creating a financial strain and complicating your income taxes.

You may monitor your business credit score by accessing credit reports from reporting bureaus like Dun & Bradstreet. Check your business credit reports periodically to ensure that they contain accurate and up-to-date information. If you notice a dramatic dip in your credit score, look through your business’s financial documents to see what has changed.

You may also consider incorporating your business into a C-Corp, an S-Corp, or forming an LLC. These business structures help separate the company from your personal finances, limit your liability, might provide tax benefits, and may help boost your business credit.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual or business owner.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

This article was prepared by WriterAccess.

LPL Tracking #1-05359964

The post 4 Financial Skills All Business Owners Should Learn  appeared first on Tribox Private Wealth.