Conquer your financial clutter

Disorganization usually spells disaster in most scenarios. This is especially true for finances. It’s time to get your bills, paycheck stubs, tax returns and bank statements in order.

Financial records are notorious for being messy. Bills, paycheck stubs, tax returns and bank statements have a way of getting tucked into random places. Luckily, there are a few pretty painless ways to organize your important documents.

Put all your financial records in one dedicated spot

To ensure that bills are paid on time, bank statements are reconciled and important documents are properly filed, set aside a specific location in your home for financial tasks. It may be a place where you keep a computer or filing cabinets. Once that area’s set aside, pick a time each week to pay bills, enter financial information into check registers and organize documents.

Organize in a way that makes sense to you

Many people use a computer program to track everyday spending and bank accounts. Others use a pencil and paper. The key is to use whatever system makes sense to you and helps you maintain your finances with a reasonable amount of effort.

Protect the important stuff

Don’t leave your only copies of wills, tax returns, stock certificates or emergency contacts in a pile on the desk. Such documents should be put in a safe deposit box or home safe. Ask your attorney or financial advisor to store the signed copy of your will in a secure location.

Get rid of the documents you don’t need anymore

Many papers (such as regular household bills) can be shredded soon after receipt. Other documents, such as those supporting the cost of investments and real estate, should be retained longer for tax purposes. A general rule for tax returns (and documents that support the returns) is seven years. When it’s time to discard those old pieces of paper, fire up the shredder.

Not sure about what financial records you need for your taxes? Call us up – we’ll talk you through it.


Posted in business, corporate income tax, deductions, finance advisor, Income Tax, personal finance, social security, tax return | Leave a comment

Employee meals: 50 or 100 percent deductible?

Your business tax return could look a lot different depending on the circumstances of employee meals. Find out why and what you can do to get the most bang for your tax buck.

Everyone loves a free meal – especially employees. However, your business tax return will be affected differently depending on the circumstances of the mealtime experience.

While you can generally deduct only half the cost of meals related to your business activities, the tax code includes specific exceptions that allow a deduction of 100 percent of what you spend on food and beverages in certain situations. Here are three examples:

  • Social gatherings and parties. That once-a-year holiday party qualifies for 100 percent deductibility as long as it is primarily for the benefit of all your employees.
  • Food with nominal cost. Do you supply morning-meeting donuts, meals for overtime work or special occasion treats for your staff? “De minimis” employee benefits — those small items your business pays for that are not considered taxable income to your employees— are typically 100 percent deductible.
  • Employees on emergency calls. If you provide food for your employees during working hours so they can be available for emergency calls, the meals will likely be able to be deducted 100 percent.

Remember that you’ll still need to keep detailed records to substantiate your deductions for meals and food served under these exceptions.

We’ll be happy to help you review your expenses and set up a system to account for items that qualify for a more generous deduction.


Posted in business, deductions, employees, finance advisor, Income Tax, personal finance | Leave a comment

Employer company stock: risky or worth it?

Do you have too much of your employer’s company stock in your 401(k) or other retirement plan? It’s time to find out if you’ve made a smart or risky move.

Employees often have too much of their employer’s company stock in their 401(k) or other retirement plan. That’s because employees tend to feel like they know their companies best. Here’s the problem: they may be overlooking the risks of having too much of an investment in any one company.

Here are some of the risks of loading up on your employer’s stock:

  • The safe-haven effect. Overweighting investment holdings in any company minimizes diversification, exposing your portfolio to increased risk. The belief that employer shares are less risky is an illusion.
  • The one-two punch. No company is protected from economic downturns. If your company’s performance weakens, you may lose your job at the same time as its declining stock harms your retirement portfolio.
  • Lock-up periods. Some companies prohibit employees from converting the employer retirement match contributions in company stock into other investments until after a number of years. In this case, use your own contributions to diversify your holdings.
  • Forgetting risk. As you move closer to retirement, you may forget the riskiness of your employer’s stock to your portfolio. At the same time, contributions of company stock may be growing, based on higher benefit matches — just when portfolio reallocation is becoming more important.

Your goal should be to create a well-balanced portfolio that suits your age (investment horizon) and your risk tolerance. Call us for help reviewing your retirement situation.

Posted in business, corporate income tax, deductions, employees, finance advisor, payroll tax, personal finance | Leave a comment