August 15, 2016
If you're in your 40s, you are at a time in your life when you should be doing financial planning for your future and your family's future. Many people in their 40s say they need to be saving for college tuition for their kids, putting money into a retirement account and at the same time buying a house or saving for a down payment. Financial planning experts can help you see where your savings should be going. Not having a financial plan is worse than having a bad plan! These financial planning tips are meant to help people in their 40's find balance in their lives with spending and debt.
Establish an Emergency Fun
You should have three to six months of income in an account that's safe and liquid. You should also have in that account savings for planned expenses. For instance, if you know you will go on vacation next year, you should be setting aside money for that in your savings account. There's no right or wrong answer about how much cash to have on hand, but you need to be prepared in case your engine goes out or you lose your job.
Eliminate Credit Card Debt, Student Loans and Medical Bills
If you have credit card debt, you need to pay that down as quickly as you can. If you have student loan debt, then you should first look to see if it's tax-deductible based on your tax bracket. If not, then you should pay that off as soon as possible. In addition to financial planning, you should check the interest rates on your credit cards & student loans to see if you can get lower rates. If you have a lot of debt, you should be using all available funds to pay it off. If you have a little bit of debt you should use one-third to pay down that debt, and then use the rest for retirement savings.
Max Your Employers 401K Match
In your 40s, you should at least be saving as much in your 401(k) as your employer matches. Even if you weren't making any profit on that investment, your money doubles just because of the employer match. Every employer has a different retirement plan, you should find out how much you can contribute, and maximize your contributions up to that limit. People in their 40s can contribute up to $18,000 in a tax-deferred 401(k) in 2015.
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July 29, 2016
Do you picture yourself owning a new home, starting a business, or retiring comfortably? These are a few of the financial goals that may be important to you, and each comes with a price tag attached.
That's where financial planning comes in. Financial planning is a process that can help you target your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources.
Why is financial planning important?
A comprehensive financial plan serves as a framework for organizing the pieces of your financial picture. With a financial plan in place, you'll be better able to focus on your goals and understand what it will take to reach them.
*There is no assurance that working with a financial professional will improve investment results.
Common financial goals
- Saving and investing for retirement
- Saving and investing for college
- Establishing an emergency fund
- Providing for your family in the event of your death
- Minimizing income or estate taxes
One of the main benefits of having a financial plan is that it can help you balance competing financial priorities. A financial plan will clearly show you how your financial goals are related--for example, how saving for your children's college education might impact your ability to save for retirement. Then you can use the information you've gleaned to decide how to prioritize your goals, implement specific strategies, and choose suitable products or services. Best of all, you'll know that your financial life is headed in the right direction.
The financial planning process
Creating and implementing a comprehensive financial plan generally involves working with financial professionals to:
- Develop a clear picture of your current financial situation by reviewing your income, assets, and liabilities, and evaluating your insurance coverage, your investment portfolio, your tax exposure, and your estate plan
- Establish and prioritize financial goals and time frames for achieving these goals
- Implement strategies that address your current financial weaknesses and build on your financial strengths
- Choose specific products and services that are tailored to help meet your financial objectives*
- Monitor your plan, making adjustments as your goals, time frames, or circumstances change
Some members of the team
The financial planning process can involve a number of professionals.
Financial planners typically play a central role in the process, focusing on your overall financial plan, and often coordinating the activities of other professionals who have expertise in specific areas.
Accountants or tax attorneys provide advice on federal and state tax issues.
Estate planning attorneys help you plan your estate and give advice on transferring and managing your assets before and after your death.
Insurance professionals evaluate insurance needs and recommend appropriate products and strategies. Investment advisors provide advice about investment
June 27, 2016 Page 1 of 2, see disclaimer on final page
options and asset allocation, and can help you plan a strategy to manage your investment portfolio.
The most important member of the team, however, is you. Your needs and objectives drive the team, and once you've carefully considered any recommendations, all decisions lie in your hands.
Why can't I do it myself?
You can, if you have enough time and knowledge, but developing a comprehensive financial plan may require expertise in several areas. A financial professional can give you objective information and help you weigh your alternatives, saving you time and ensuring that all angles of your financial picture are covered.
Staying on track
The financial planning process doesn't end once your initial plan has been created. Your plan should generally be reviewed at least once a year to make sure that it's up-to-date. It's also possible that you'll need to modify your plan due to changes in your personal circumstances or the economy. Here are some of the events that might trigger a review of your financial plan:
- Your goals or time horizons change
- You experience a life-changing event such as marriage, the birth of a child, health problems, or a job loss
- You have a specific or immediate financial planning need (e.g., drafting a will, managing a distribution from a retirement account, paying long-term care expenses)
- Your income or expenses substantially increase or decrease
- Your portfolio hasn't performed as expected
- You're affected by changes to the economy or tax laws
Common questions about financial planning
What if I'm too busy?
Don't wait until you're in the midst of a financial crisis before beginning the planning process. The sooner you start, the more options you may have.
Is the financial planning process complicated?
Each financial plan is tailored to the needs of the individual, so how complicated the process will be depends on your individual circumstances. But no matter what type of help you need, a financial professional will work hard to make the process as easy as possible, and will gladly answer all of your questions.
What if my spouse and I disagree?
A financial professional is trained to listen to your concerns, identify any underlying issues, and help you find common ground.
Can I still control my own finances?
Financial planning professionals make recommendations, not decisions. You retain control over your finances. Recommendations will be based on your needs, values, goals, and time frames. You decide which recommendations to follow, then work with a financial professional to implement them.
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July 14, 2016
Student Loan Debt: We Can Provide the Decision-Making Details You Need
Did you know that the average student loan balance is $24,803? Student debt is taking a heavy toll on borrowers, according to an American Institute of CPAs survey, which found that 75% of respondents or their children had made personal or financial sacrifices because of monthly student loan payments. Sacrifices included putting off saving for retirement (41%); delaying car purchases (40%); postponing a home purchase (29%); and even waiting on marriage (15%).
Among the most troubling findings were that only 39% fully understood the burden that student loan debt would place on their future and 60% had at least some regrets about their decisions on financing their education. That’s why it’s always critical to understand the full potential impact of all your financial choices. The good news is that your CPA can help. Contact us with all your financial questions and we’ll provide the knowledge and insights you need to make the best decisions for you.
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July 12, 2016
When an emergency happens, you don't want to scrape money from your piggy bank. If you already have a financial safety plan in place, then your protected from your next financial emergency. Setting up a cash reserve of readily available money will help you get through the toughest emergency.
How Much Money Should I Save For Emergencies?
Most financial planners recommend saving three to six months of living expenses set aside for an emergency cash reserve. The amount of money you save is different for every household and it should be based on your living circumstances. A few questions you should ask yourself are: Do you have a mortgage on your home or do you owe money on other loans? Do you have any long-term or short-term disability insurance? Are you making any payments to your child's orthodontics? Are you making monthly car payments? Some other factors you should consider include your job security, health issues, and your current income. If you don’t have an emergency fund for disasters, then it will be financially devastating.
How To Start A Cash Reserve For Emergencies?
If you don't have a cash reserve or if your cash reserve is insufficient, then you should follow these simple steps to get started:
- Aggressively save your money, by using payroll deductions at work or add a savings plan to your household budget.
- Cut back on eating out, going to the movies, buying lottery tickets and other splurges that you don’t really need.
- Use existing assets or liquid assets (e.g., cash on hand or assets that convert to cash within a year, such as a short-term bank certificate)
- Utilize earnings from other investments (e.g., mutual funds, stocks or bonds)
- Check into other resources you might already have. (e.g., Do you have an insurance policy with a cash value that you can borrow money from?)
A reminder: You could use your credit line as another source of funds for an emergency. However, when you borrow money it must be paid back. Usually, high interest rates are added to the borrowed money. Financial planners do not recommend using lenders as your primary resource for cash reserve.
Where Do I Keep My Cash Reserve?
Make sure your cash reserve is readily obtainable for emergencies or disasters. Most people think an FDIC-insured savings account that doesn’t accumulate much interest is their only option. However, there are several outstanding options and they all have different advantages. If you look into money markets and short-term bank CD’s it typically offers higher interest rates with little risk compared to low interest savings accounts.
A word of caution: Do not get money market mutual funds confused with money market deposit accounts. Money market mutual funds are not insured by the FDIC. Although the mutual fund seeks to preserve the value of your investment you could still lose the money, when you invest in a mutual fund.
If you’re considering a money market mutual fund, then don’t forget to read the small print from the fund’s pamphlet or brochure. Ask your financial advisor for the brochure that outlines the fund’s investment objectives such as the risks, fees and expenses. Read all the objectives, before you invest you money into these funds.
CD’s will return your principal plus interest by a certain date, but they will also impose a large penalty if you withdraw it before maturity. If you plan on using a fixed-term investment for a cash reserve, then it is wise to stagger the maturity dates in a short period of time. The recommend time period to stagger maturity dates is between two to five months. Staggering maturity dates will ensure the availability of funds so you won’t receive a penalty for early withdrawal.
Evaluate Your Cash Reserve Often
We all know that our personal and financial situations change year to year. A new baby or a new home will increase your expenses. Most financial consultants advise their clients to review their finances annually. Your cash reserve should be your protection against financial devastation.
Financial Planning Services are best done by someone who knows what they are doing and has done it for years!
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March 5, 2016
Looking for Financial Help? Call BIG
Have you thought about opening your own business or buying an existing company?
While the idea may have crossed your mind, you may be a bit hesitant for any number of reasons. Among those reasons may be worries over finances, taxes and cash flow.
If you’re contemplating a trip on that bumpy road, you’ll need someone who you trust that has a road map. That’s where BIG Financial and Advisory Services can help you. They’re located at 8043 Corporate Circle, Suite 2 in North Royalton.
BIG can help you get your business off the ground.
Or if your small or medium sized business is drowning in a sea of red ink, they can help you to right the ship.
Co-founders Jim Bonvissuto and Patti Sours, both CPAs, had a vision when they started the company in 2002. “We wanted to bring our executive level of expertise in working for Fortune 500 companies, large firms and private concerns, to small and medium-sized businesses at a reasonable price. But it wasn’t easy in the beginning. We started off marketing traditional CPA and tax services to individuals and businesses.
We found a niche in turn-arounds and courtappointed receiverships for businesses in financial trouble. That led to a client base.
Working with the owners of these businesses also led us to a service offering of tax and financial planning to individuals and businesses” said Jim.
BIG helps long-standing businesses with finances and taxes, but Jim and Patti can help the entrepreneur get started. They utilize their experience from starting their own business 14 years ago, as well as the knowledge they gained working with many startup businesses, to help the new entrepreneur avoid some common start up problems.
“While the entrepreneur is developing a market, selling his or her services, we can handle the financial side of things,” said Jim.
“We’ve been where the business owner has been, as an employee, as a manager, as an owner and as a consultant. We’re able to pair that with both operational and technical knowledge. We can put systems in place to help companies in trouble or to those just getting started,” Bonvissuto said.
Jim has been in this part of Cuyahoga County for many years. He graduated from Parma High School. He did his undergraduate work at Cleveland State and got his MBA from Baldwin-Wallace.
He was involved in building homes in this part of the County and liked this area so much he decided to open his business in North Royalton.
Another important part of Jim and Patti’s business is helping businesses and individuals with financial and estate planning plus income tax preparation and planning services. Patti is also a Personal Financial Specialist (CPA/PFS) “Depending upon your age, there are different financial goals to consider. For example, in your 30s you may consider saving for a home, or getting your kids set up for school. If you are in your 50s, you may look at preparing for your retirement. It seems that every 10 years or so, our financial goals seem to change. We can help you with all of those choices,” said Jim. For Jim Bonvissuto, terms like honesty and trust are not just words, but are at the core of his business. “Those words are important in every client relationship that we have,” said Jim. “Our steadiness and voice of reason is of utmost important to all of our clients.”
BIG Founders, Jim Bonvissuto and Patti Sours, bring executive level of expertise in working for Fortune 500 companies, large firms and private concerns, to small and medium-sized businesses at a reasonable price.
To get a hold of Jim Bonvissuto or Patti Sours, you can e-mail them at firstname.lastname@example.org or email@example.com. Their phone number is 440-884-1400.
You can also fill out the “Contact” page on their website www.bizimprove.com.
Originally Published in the Royalton Recorder of North Royalton, Ohio.
March 4, 2016
PAY LESS TAXES TODAY WHILE SAVING FOR RETIREMENT
“The more money I make, the more taxes I have to pay, so how can I save for retirement?!”
YES you can pay lower taxes and save for retirement at the same time for example through income deferral and tax-free income generating “vehicles”.
Sheltering your earned income involves employing one or more tools to minimize your current federal tax burden. There are different types of income, but earned income may be defined as wages, salaries, tips, and other employee compensation, plus net earnings from self-employment. Although numerous opportunities exist to shelter earned income from taxes, the more widely used methods include making contributions to traditional deductible IRAs and participating in employer-sponsored retirement plans. By contributing to retirement “vehicles”,
you lower your current taxable income.
Although income is usually taxable, there are a number of vehicles that can produce taxfree or nontaxable income. You may be able to enjoy some portion of your income, tax free, by switching some of your investment money to these vehicles. Vehicles to consider include Roth IRAs and tax-exempt bonds.
How much income do I need for retirement?
It’s common to discuss desired annual retirement income as a percentage of your current income. Depending on who you’re talking to, that percentage could be anywhere from 60 to 90 percent, or even more.
Calculate the gap.
Once you have estimated your retirement income needs, take stock of your estimated fu- ture assets and income. These may come from Social Security, a retirement plan at work, a part-time job, and other sources. If estimates show that your future assets and income will fall short of what you need, the rest will have to come from additional personal retirement savings.
What works for one person isn’t always the best for another.
Every individual and family has different goals and circumstances to be considered. The cliché of “one size fits all” isn’t the right solu- tion when you’re talking about your financial future. With all the options out there: Traditional IRA; Roth IRA; Employer plans such as 401(k), 403(b), 457(b); Annuities, Life Insur- ance, Mutual Funds, etc., how do you know what is right for you?
We are happy to help determine the best way for you to meet your goals for retirement planning, tax planning, and small business ac- counting. We are currently offering a 20% discount for tax preparation services to new clients, both individual and business. Call 440-884-1400 today for more information.
Originally Published by the Gazette Newspaper in Brecksville, Ohio.
February 23, 2016
What are the tax brackets from 2015?
Wondering what you are expected to pay based on the Tax Bracket you were in for 2015? Check it out here.
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February 9, 2016
Stop Tax Identity Theft in Its Tracks
Imagine after sending in your annual tax return, you receive a notice from the Internal Revenue Service saying that another return has already been filed using your name and Social Security number—and claiming a refund. Sound impossible? It can happen if you become one of a growing number of victims of tax return identity theft. According to one estimate, tax-related identity theft cases have soared more than 650% since 2008. At the least, this crime can lead to a delay in your refund, but the consequences may be much more serious. In addition, you may face a larger problem with identify theft if the scammer is also running up credit card debt or taking out loans in your name.
To avoid becoming a victim, we recommend steps such as safeguarding your Social Security number and other financial information, keeping an eye on changes to your credit ratings and taking precautions with electronic transfers of confidential information. Be sure to contact us if you believe you have been a victim of identity theft or would like advice on the best ways to secure your financial information.
January 31, 2016
1. Do Your Homework
Whether you are planning on starting a business or are already running one, be sure to do your research. It’s important to understand the different tax forms, write-offs, laws, licensing and other requirements that apply to your business. An awareness of these policies will help protect and stabilize your business in the long run.
2. Open an Account
Creating a separate account for your business from your personal checking makes it easier for you to keep track of your business’s income and makes it simpler for you to do taxes. Start with a simple business checking account and add a savings accounts if necessary. Also consider the benefits of having a business credit card to help you start building credit.
3. Keep Track of All Expenses
It is critical to the maintenance of your accounts and to the success of your business that you collect and track your expenses. This can be done by gathering receipts and recording payments. Even the infrequent meal expenses or travel costs need to be documented and handled correctly. Failing to maintain these accounts can prevent you from being able to build a reliable financial statement or prepare trustworthy reports on your tax returns. It also becomes difficult to monitor the expenses or growth of your business.
Accurate bookkeeping is necessary in order to compile clear and precise reports as well as determine how your business is doing. In that light, be sure to research your bookkeeping options thoroughly to ensure optimal maintenance of your accounts.
A DIY route requires tracking all of your expenses and meticulously documenting them in a spreadsheet. Then, it must be interpreted to produce clear data and exact reports. For many business owners, this option simply asks too much of them, as they have limited time that should be spent on moving their business forward, rather than on tedious accounting work.
A good option is to outsource your bookkeeping and accounting. For those that already have too much on their plate, this is the best option.
5. Establish Payroll
Whether you have your own employees or independent contractors, they all have to be paid for their services. Abiding by a payroll schedule and withholding the appropriate taxes are also steps that can complicate this process. Our services can help you check this item off your list so you and your employees can move on to bigger and better things.
6. Pay Taxes
It’s important to understand the ramifications of tax expenses, deductions and payment plans when organizing your business finances. The type of business that you have will determine the kinds of tax expenses you need to anticipate. Keeping track of various tax requirements as well as deductions that you can qualify for can be difficult. Not only that, but filing taxes can be a tedious process. Our services at Your Balance Sheet can help you accurately fulfill your tax requirements.
7. Gross Margin
The term “gross margin” simply refers to the difference between the cost of the goods you sell subtracted from the revenue that you generate from the sale of those goods. This figure is a helpful determining factor to keep your eye on as your business progresses forward in future months and years.
However, in order to keep tabs on this figure, you must have consistent and organized accounting practices working in the background. At Your Balance Sheet, we’re able to provide those services and provide you with consistent reports so that you can see a snapshot of your business at a moment’s notice. Our accounting tips for small businesses can help you manage your business better.
These are critical and what we recommend to all of our customers who use our CPA Services in North Royalton and Cleveland Ohio.
January 23, 2016
A lot of work goes into getting a small business off the ground. While finding your niche, developing and executing a business plan, and hitting the sales path hard are all extremely important, entrepreneurs
shouldn’t forget about the accounting side of the business.
Jim Bonvissuto, president of BIG Financial & Advisory Services, took time recently to answer a few questions related to the initial accounting steps all business owners should keep in mind during the launch of their business.
Question: When an entrepreneur starts a business, what should they do first?
Bonvissuto: The fi rst step is to consult with a CPA. It is critical that a business has not only the appropriate accounting methodology in place day 1, but almost more importantly is the tax structure regarding entity selection, business registration, and all the federal, state and local payroll withholding tax registrations be set up properly. The second step is planning the ongoing management of the accounting and tax reporting/remittance that is required.
Question: Are there different types of entities and does it matter what type is selected?
Bonvissuto: A key issue that a startup business has to answer is what type of organization structure they want to form. A business can form as an S-Corp., C-Corp., Partnership, Sole Proprietor, and LLC. Each of these entities have diff erent tax pros and cons. The LLC structure is not recognized by the IRS and still requires you to fi le a form with the IRS to determine what type of entity you will be taxed as (S-Corp., C-Corp., Partnership, or Sole Proprietor). The entity selected for tax purposes could impact you personally anywhere from 10% to 35%.
Question: How does a business owner know when it’s right to outsource accounting, or take care of it in house?
Bonvissuto: A business owner’s primary focus is the day to day operations and growing the business. The accounting for the business also needs to be a priority. If there are not enough hours in the day for the owner to also handle the accounting, or they do not have the expertise in house to do so daily, they should outsource.
Question: What common mistakes do new entrepreneurs typically make when it comes to accounting? How can those mistakes be avoided?
Bonvissuto: New entrepreneurs mistake accounting as only a means to filing a tax return annually in April. Accurate and timely accounting is the key tool to a successful business. It will provide the business owner the information to make informed strategic decisions in order to avoid issues and sustain profi table growth. A few examples are: avoiding cash timing issues of when to pay bills and collect from customers, determining the best timing of advertising/marketing for a cyclical business, determining ways to increase profitability, determining whether one can afford to expand or rather should be cutting back. If the business owner does not have the accounting expertise and/or the appropriate staff in place, a CPA has the expertise to guide you in the right direction.
For more information on Tax Services in North Royalton give us a call!