How To Invest Your Money

Investing Your Money

Where to invest your hard earned money in the coming years?

3 Key Reasons a Business Needs to Keep Books

by Stephanie
(California)

Reasons For Bookkeeping

What are the main reasons a business needs to keep books?

If I were to have to narrow it down in level of importance, I would have to say the 3 key reasons for bookkeeping are:

1) One of the main reasons a business needs to keep books is so that the business owner has an accurate record of the totals of all income and expenses of the year for the reporting of annual income taxes.

It is extremely important to maintain good accounting records in case of an audit. Unfortunately, audits do occasionally happen whether you are doing what you're supposed to or not. However, there is no need to fear an audit if you are maintaining good daily records.

2) Another reason for bookkeeping is in order to help determine where the company may be able to cut back on expenditures in order to increase it's cash flow. More money anyone?

Indeed, increasing cash flow is always a high priority and a very good thing in any business! It is good practice to review monthly business financial statements such as the balance sheet and profit and loss statement and take a good hard look at any excessive spending that can be reduced.

3) Finally, a business may need to keep books for bank reconciliations and knowing how much money the business has at any given time in order to be able to stay current on accounts payable.

If you don't know how much money you have at any given moment, how are you supposed to be able to maintain being able to pay your vendors in a timely manner?

Please consider the above 3 key reasons a business needs to keep books and be well in all your endeavors!

Increasing My Credit Score

Credit Score

My credit rating has taken a recent beating with all the changes in the economy recently. Do you have advice for how to increase my credit score?

7 Tricks for Saving Your Money and Stretching Your Dollar

Saving Money Tricks

From vacationing to kitchen decoration, from health plans to auto insurance, from bathroom decoration to web conference calls, everyone ranging from corporate houses to individuals like to do their best to stretch their dollars.

Here are some tricks on budgeting basics as each one of us wants to get as much as possible from a dollar.

Suppose you are going on a family vacation and you are traveling by road then it is advisable to stock up juices, bottled water, sandwiches cookies and chips.

This is because on your way if you them you need to fork out some extra bucks. Instead if you plan it well in advance and make a list you can get them purchased from Walmart, Costco or Sams.

If you don’t keep these stocks then as and when you stop by to refuel you will end up spending some $20 and by the end of the journey, if you add them you will find that your savings is up by minimum $200.

Again if you have your own house, then probably you can earn some extra bucks from renting out say a garage of your own home.

Again, to maintain your own home in proper condition, learn how the basic home maintenance requirements whenever there is a workshop or a free seminar on that so that you need not pay each time your tap is not working or your bulb needs replacement.

Save on your electricity bills by replacing 100-watt bulbs with 20 to 28-watt ones as they last longer too, besides saving. Turn off the lights when not in use.

Save few bucks on lunches too as you go out to office. Try taking lunch box from home it helps save few dollars a day and by the end of month it can be a good amount of savings.

Budget out your entertainment judiciously. If you are planning to take your friends out for dinner, choose a little less expensive restaurant or else organize for a potluck dinner at your home.

If you are the one who is a movie buff then instead of spending money by going to the theater frequently sign up with a movie channel and enjoy the pleasure of watching the movie at home.

Again, reduce your transportation costs if you avail car pooling facility, but yes you need to find out neighbors or friends going to the same destination. There are some cities that are creating sites to encourage people for car pool.

For beauty tips instead of buying face pack and scrubs homemade remedies are not only better but it helps save few dollars as well.

For example if you have an acne-prone or oily skin apply milk of magnesia on the face and leave it till it gets dried and then rinse off.

Again most shampoos are too concentrated, in this case you can pour half the bottle of shampoo into another bottle and fill it water.

Get the new bottle too filled with water. Turn each one so that it gets mixed well.

3 Common Tax Mistakes

(USA)

Common Mistakes

3 tax mistakes made every day

You probably don't mean to violate the law or invite hassles with the IRS, but ignoring simple, common-sense guidelines could get you into trouble.

Related content: taxes, tax audit, IRS, tax laws, deductions
By Robert W. Wood, Forbes.com

Harvey Silverglate's recent book, "Three Felonies a Day," argues that a combination of vague laws and changing technologies has led the average American unwittingly to break the law daily.

That got me thinking of an analog in the tax world: Most of us, I fear, mess up tax issues every day. No, these mistakes aren't felonies. But you don't want to end up on April 15 having logged 365 days of tax mistakes.

Here are three tax rules many of us break almost daily. Respect them, and you'll reduce the chance of coming to grief with the Internal Revenue Service.

1. Keep business and personal affairs separate
It might be overstated to say that never the twain shall meet. You might often do things with a dual motive -- say, having a pleasant lunch with a business colleague, going on vacation with your best client or buying a vacation home that you also intend as an investment.

However, you'll be better off if you can separate your tax life into business and personal categories. That might sound radical, but it's really just following the tax code.

As I look back over a 30-year career as a tax lawyer, I can think of many big, messy and expensive tax disputes that came down to a violation of this fundamental divide.

More from MSN Money and Forbes.com:
The 19 most-overlooked tax deductions
10 ways to audit-proof your tax return
Should you do your own taxes?

In pictures: 10 tips for taming the tax cops
Tax preparation tips and tools
How to cheat like a pro
The person who forgets this rule and tries to morph personal matters into business is asking for trouble. I'm thinking of people who:

Try to deduct the cost of their divorce because their business is at risk.
Taxes for the self-employed
Try to deduct a miserable vacation with a client.
Claim that a hobby is a business.

Sure, there are many provisions in the tax law that explicitly recognize the dual purposes many of us have in pursuing activities and purchases. Still, try to avoid such dual-purpose goals, and do your best to categorize things appropriately. I think you'll make your tax life easier. (For more, see "5 tax myths that can cost you money.")

2. Keep good records

Most of us at one time or another violate this edict. You might think keeping good records is something that can help you only if you actually end up in a tax controversy.

Yet believe it or not, there is something about keeping good records that can keep you out of tax trouble in the first place. Maybe it's karma.

Moreover, this rule isn't just for people who run businesses. For example, recreational gamblers, even retirees playing the slots, need to keep a diary or other record of how much they bet and lose on each visit.

That's because your occasional big win will be reported to the IRS by the casino. You can use gambling losses to offset your winnings. But if you don't keep good records, you could end up a two-time loser -- once at the tables and once to Uncle Sam.

Taxes: Fixing mistakes

Another example is charitable donations. Put a $20 check instead of a $20 bill in the collection plate. The law requires you to have paper proof of every donation you deduct. (For more, read "Give and grow rich with charitable deductions.")

Does the IRS really care about this sort of record keeping? Yes. Most of the audits conducted on ordinary, law-abiding folks -- meaning wage earners without undisclosed offshore accounts -- are so-called correspondence audits. In such audits -- you might be picked for one if you deduct a lot of contributions -- taxpayers are told their deductions will be disallowed unless they promptly mail back records substantiating them. (Also see "Tax records you can toss.")

3. Respect and keep those 1099s

This might sound like an April 15-only item. In fact, how you handle third-party "information returns," such as 1099s, year-round will influence how easy or hard a time you have when you file your return and interact with the IRS thereafter.

Whether you are a payee or a payer, you need a system to record and track information returns. That's exactly what the IRS does.

A lot of what goes on at the IRS is computer matching -- the endless correlation of taxpayer identification numbers and payments.

Even a small mismatch between what's on these forms and what you report on your tax return will be caught and could result in months of hassles with the IRS. Much of what the IRS does, when it comes to monitoring taxpayers, is information return matching.

There are different forms for miscellaneous income -- Form 1099-MISC (.pdf file) -- for interest -- Form 1099-INT (.pdf file) -- and so on. There are also a few information returns you might receive showing how much you paid.

For example, if you have a home mortgage and make mortgage payments, you should receive a Form 1098 (.pdf file) from your lender reporting how much interest you paid during the year. (See "Home: The mother of all tax shelters.")

When you deduct interest on your tax return, the IRS will match your return to this form to make sure you haven't overstated your deduction. Another common information form is a Form W-2, issued to employees reporting wages.

Pay attention to these forms as they arrive. Confusingly, these days you might get a statement from your bank that looks like your regular statement but says somewhere it is a 1099. When you get your 1099s, don't just stick them in a drawer.

Look at them. Payers are required to mail all 1099s to payees no later than Jan. 31. Then the payer has until Feb. 28 to send all 1099s to the IRS. This one-month lag means that if you receive a 1099 you know is wrong, there might be time to correct it before the IRS receives a copy.

If you receive an incorrect 1099 -- this is common -- contact the payer as soon as you receive the errant form. Explain the error and ask whether the payer has already sent a copy of the 1099 to the IRS.

The best corrections are done this way, with the payer simply destroying the old form and issuing a correct one.

It's a good idea to keep a record of such communications, since you might end up ensnarled in a reporting mess later on. If the payer has already sent a copy of the erroneous form to the IRS, you can still ask for a correction.

In that event, the payer should issue a corrected 1099 (there's a box on the form to check for this).

Taxes for the self-employed

If you are a partner in a partnership, a member of a limited liability corporation or a shareholder of an S corporation, you also should receive a Schedule K-1 (.pdf file) for each year, reporting how much gain, loss or income is being attributed to you.

Normally, it must be mailed to partners or shareholders no later than March 15, giving them one month to meet their own April 15 deadline.

But some entities are notorious for mailing out K-1 forms late. You might find yourself unable to file your personal tax return until you receive just one more K-1.

If it doesn't come, file a request for an extension. It's easy, and the IRS will grant it automatically.

6 Tips for Avoiding an Audit

(USA)

Audit

6 ways to avoid an audit

It may not be due to something you did wrong. It may even be triggered by an IRS error. But there are ways to reduce the chances of getting that dreaded letter.

Related content: taxes, tax audit, IRS, cut taxes, Jeff Schnepper
By Jeff Schnepper
MSN Money

There's no sure way to avoid a tax audit. Well, actually, there may be, but I don't recommend it.

I know a preparer who suggests avoiding an audit by underpaying income tax by $10. While those dollars are outstanding, the return goes to collections, which minimizes, according to him, the opportunity for the audit division to focus on your return. The penalties and interest on the $10 owed are considered minimal insurance to shrink your exposure.

Most audited tax returns are selected for review either because the filer is part of a target group or because a computer program selects the return.

The computer system selects many returns randomly, but there are red flags that will draw the Internal Revenue Service's attention.

The key is to minimize your exposure. Here are some things you should try to avoid:

1. Math mistakes

The biggest reason people receive letters from the IRS is addition or subtraction goofs. Fortunately, math errors rarely lead to a full audit. Still, double-check your math before you send in your return.


And if you receive a letter from the IRS saying you owe money, check your numbers first. Sometimes, an IRS employee misreads one of your numbers, or the number is keyed incorrectly into the IRS computer system.

If the agency is wrong, send a letter with a printout of your calculations.

2. Mismatched interest and dividend reporting

If the amounts reported in supporting documents don't match the amounts on your return, you will get a letter.

There are lots of possible errors here. Sometimes, the IRS will enter Form 1099 information (investment, interest and other nonwage income) into its computers and erroneously key in the income amount or the Social Security number of the recipient.

If the income isn't yours, get a letter from the bank or other payer and forward that letter to the IRS. If the amount is incorrect, send a copy of the Form 1099 mailed to you by the payer.

3. You're on the IRS hit list

Those who receive much of their income in cash are traditionally on the radar screen of IRS agents looking for unreported income. Recently, the agency has also pinpointed small-business owners and the self-employed.

Never brag about how you put one over on the IRS.

Internal Revenue Service whistle-blowers can earn rewards of 15% to 30% of the additional tax collected, including fines, penalties and interest. Scofflaws can be reported by filing Form 211 (.pdf file) or calling the IRS hotline at 1-800-829-0433.

Everyone else: Zip it. Keep your accounting strategies to yourself.

5. You're exceptional

An IRS computer program compares your deductions with others in your income bracket and weighs the differences.

This secret IRS formula, called the DIF Score, is used to select returns with the highest probability of generating additional revenue through audits.

Use TurboTax's deduction finder to make sure you're getting all the savings you deserve.

6. You have the wrong preparer

Let's face it: Some tax preparers are less than professional. Some, unfortunately, are crooks. If your preparer promises you a refund before checking all of your paperwork, run as fast as you can.

That preparer is going to be taking illegal or inflated deductions, and, when the IRS finds out, you're going to be the one who pays the bill, plus interest and penalties.

Make sure you're withholding the right amount using TurboTax's paycheck analyzer.

If the IRS is coming . . .
If you are facing an audit, don't panic. An audit is merely a process in which the IRS asks you to substantiate the numbers on your tax return.

Here are three survival strategies:

Call your tax professional. Or get one. If the audit is simple -- to prove your charitable and interest deductions, for example -- you can do it yourself by mailing in copies of your substantiation.

For all in-person audits, I strongly suggest professional representation.
Plan your taxes to pre-empt an audit. If, say, you have a huge medical deduction that you feel would increase your chances of being audited, attach copies of your medical bills to your return.

The IRS computer might still kick out your return, but when a real person looks at it, the reviewer will recognize that you know the rules. This may actually reduce your odds of a full audit.

Keep records for three years. Normally, the IRS can audit you for three years after you file your return. In reality, however, most returns are audited within 18 months.

This gives the IRS time to do the review and request the appropriate substantiation before the statute of limitations (usually the three-year period) ends.

Advice for Business Owners on How to Avoid an IRS Audit

by Stephanie

Advice On Avoiding An Audit

Here is some advice for business owners to help them avoid an IRS audit.

Business owners of all sizes often do not realize that they may be putting themselves at risk by only just punching numbers into a tax preparation software program, without giving any thought to audit triggors.

The result is that the business owner may either miss deductions and in effect pay too much in taxes. Or they may also misrepresent their deductions and pay too little in taxes.

Neither of which is a benefit to the owner, while the latter puts them at risk for an audit.

Many CPA firms advise business owners on ways to help defend against an audit. Here is the top advice for business owners on how to avoid an IRS audit:

1. It is important to use accounting or bookkeeping software to input all financial transactions on a daily basis.

It also important to use two separate databases for business transactions vs. personal transactions. Co-mingling of business and personal transactions is a no-no and doesn't hold up well in an audit.

2. If you are using a tax preparer to do your taxes, make sure they are licensed. Ask if they are specialized in exceptions for businesses.

3. Your tax preparer should give you a list of questions to get any missing information and should be able to prove that proper review and analysis is being conducted.

4. Larger deductions should be substantiated with copies of all documents received from banks and vendors, with the balances matching to the tax return in order to help in an audit.

5. A list of any adjusting journal entries made by the tax preparer to the financial database should be provided to the business owner.

Once the tax return is prepared, the owner or their bookkeeper should add the adjusting journal entries to their own database so that all financial statements match to the tax return.

Preparing for a tax audit in advance allows business owners to take the maximum number of tax deductions allowed by retaining the proof needed in case the tax return is ever audited.

An audit isn't a problem when all deductions are substantiated in advance. All of this in turn gives the business owner peace of mind.

Improve Employee Satisfaction

Employee-Satisfaction

7 Ways to Improve Employee Satisfaction
Good managers know that happy employees are loyal, productive employees. Below are seven areas to improve employee satisfaction.

By April Shetrone | May 18, 2011

Employee attitudes typically reflect the moral of the company. In areas of customer service and sales, happy employees are extremely important because they represent the company to the public. Satisfaction, however, is not linked solely to compensation. Sure, a raise or benefits will probably improve employee contentment, at least temporarily, but small, inexpensive changes can have a long-term impact.

Zappos.com CEO Tony Hsieh's book Delivering Happiness suggests that employers should follow the science of happiness. The book stresses the importance of happy employees. Since the publication of this New York Times Best Seller, Hsieh has expanded his message from to a bus tour to an entire movement.

On her happiness project blog, Gretchen Rubin, author of The Happiness Project, identifies seven areas to improve happiness in the workplace. While employees can tweak their habits to improve happiness, employers can also make small changes to the seven categories. A little bit of effort can lead to happy, efficient, and loyal employees.

7 Ways to Improve Employee Satisfaction: Give Employees More Control

"Happiness is affected by employee's sense of control over their lives," says Rubin.

Employers should look for ways to give employees more control over their schedules, environment, and/or work habits. For instance, employers could offer alternative work schedules such as flextime or telecommuting. Today's employees have demanding schedules outside of work, and many workers appreciate a boss who considers work-life balance. Because every person's obligations outside of work are different, customized schedules are a great way to improve employee satisfaction.

Employers should also encourage employees to customize their workstations. This could include décor and/or equipment. This not only gives employees control over their work environments, but it can ease personal barriers such as back pain or eyestrain. In addition, studies show that certain colors or décor can improve happiness. Employees will be able to create a place they enjoy working in rather than being stuck in a bland office cubicle.

Another way to give employees a sense of control is to create employee-driven competitions such as sales competitions. These activities put employees in control of their success. Each employee can set personal goals, and they will feel a sense of accomplishment rather than obligation.

Dig Deeper: How To Implement a Four-Day Workweek


7 Ways to Improve Employee Satisfaction: Ease Commuting Stress

According to the U.S. Census Bureau, 86.5% of workers over the age of 16 drive to work, whether carpooling or driving alone.

"Bad commutes are a major source of unhappiness. People feel frustrated, powerless, and stressed," states Rubin.

Employers should consider ways to decrease commuting stress. For instance, employers could stagger work times to avoid heavy traffic. Review beginning and ending times and determine if the specific times or the amount of people arriving at each time can be adjusted. In addition, review late arrival policies. If employees are severely reprimanded for arriving late, they will be much more stressed during a bad commute and will arrive at the office miserable.

Another possibility is to offer telecommuting options. This eliminates the necessity of commuting and allows employees to work where they are most comfortable. Telecommuting also has a variety of benefits for the employer such as reduced costs.

Dig Deeper: Telecommuting By Numbers


7 Ways to Improve Employee Satisfaction: Stop Wasting Time

Tight deadlines are another major sources of stress for many employees. Employers can ease this stress by freeing up more time. For instance, employers can make meetings shorter and more efficient. Consider tricks that sound silly but are actually effective such as having a meeting with no chairs. People will be more likely to stick to the necessary agenda when they have to stand the entire meeting.

Whenever possible, substitute conference calls for meetings. To reduce unnecessary chitchat, make calls before lunchtime or at the end of the day. People will want to cut to the chase, so they can go to lunch or get home.

Another idea is to create organizational systems that improve efficiency. Clutter and confusion are major time zappers. Organized offices and systems ease stress, save time, and increase productivity.

Dig Deeper: Time Management Tips


7 Ways to Improve Employee Satisfaction: Encourage Social Connections

Socialization is a key component of happiness. "Interacting with others gives people a boost in mood – surprisingly, this is true even for introverts," writes Rubin.

Employers should find ways to encourage social relations. Consider an office arrangement that fosters communication. Arrange workstations so employees can see each other and talk.

Employers can also encourage office celebrations for holidays and birthdays. These celebrations do not need to be expensive. It can be as simple as asking everyone to bring in a covered dish. Even when there is no reason to celebrate, encourage employees to eat lunch together. Provide a comfortable eating area.

Socialization is not limited to office hours. Encourage out of office socialization such as volunteer programs. This gives employees a change to develop relationships outside of the office while promoting the company in a positive way. Community service is a great way to build a positive reputation, and it is a happiness booster for employees.

"Those who work to further causes they value tend to be happier and healthier, experience fewer aches and pains, and even live longer," says Rubin.

Setting Goals

by Stephanie
(Rohnert Park, CA, USA)

Setting Goals

Many of my clients have been complaining of feeling overwhelmed by the events influencing their lives right now. Of course there are far too many factors that are beyond our control that are contributing our feeling overwhelmed, like job dis-satisfaction, the recession, the lack of money in our bank and retirement accounts, lack of value in our homes and so on. Therefore, I have been offering ways to help relieve the overwhelming sensation.

The first thing I suggest doing is to work on a positive vision of what you want your life to be like, in addition to setting a clear plan on how you can get there. It is interesting how many times I hear the answer, "I don't know." when asking clients about their goals for the future.

It is easy to wander through just letting life happen to you, all the while wishing that your dreams will come true. But is that really how goals are achieved?

Why should we sit back letting life just happen as it will, when we have the power to set our own goals and the ability to make our goals a reality? Setting goals puts you in control of your own life, and that in turn will help you to change your feeling of being overwhelmed to feeling empowered!

As such, I have decided to share a few simple tricks that I have found to be very helpful in making goal setting even easier and more successful.

1. Write you goals down every day. Just the physical act of writing a goal on paper will help to anchor it firm in your mind. Make sure to concentrate on goals that center on you and not someone else.

2. Make sure your goals are written in positive words. This way your statements will attract only positive things your way. For example, "I will" is preferable to "I will not."

3. It has been noted that the subconscious will only understands things in present time. Therefore, if you concentrate on goals that are going to happen in the future, the subconscious will keep those goals in the future. Because of this, you should always write your goals as if they are already happening or have already happened. You should also prioritize your goals so your subconscious knows what is most important to you now.

4. Be clear and precise when writing your goals so that the subconscious know EXACTLY what you (not someone else) want. Use strong words that will induce emotion. Also, commanding action will help to bring you the energy needed to move forward.

5. Lastly, and most importantly, when writing down your goals, make sure to imagine yourself already doing, being or having the goals that you are setting. This will help to anchor your goals on your subconscious.

I hope that these tips on setting goals, will help to make your dreams a reality. It may take some practice and patience, and you may need to adjust your goals from time to time, but I feel confident that you can and will achieve the goals you set for yourself!

Tips on Avoiding Foreclosure

Foreclosure Tips

With today’s financial market, there is no wonder why more and more people are in the need to know how to avoid foreclosure. When someone wants to avoid foreclosure, the most obvious from someone may be that they just need to make their payments on time without ever being late.

While in a perfect world that is the most obvious response, it is important to know that there are things that will happen in the lives of people that can make that basically impossible.

To avoid foreclosure can sometimes be a little trickier then that and there are things that have to be considered.

If you find that you are due for a couple of payments but have not yet been thrown into the foreclosure process, there may still be a way out.

A good thing to do is to make contact with your mortgage company to see what they may be able to do to get your account back to good standing. If they are unwilling to accept a payment arrangement then there is still something that you can do to avoid foreclosure.

Often times, it is simply the collector that you have on the phone that is requesting you pay everything all at once to bring it up to date. If you simply mail in or send in a payment via western union, you may be able to hold off further action, such as foreclosure for another month.

Other Ways To Make It Work

There are a lot of program out there that can help you avoid foreclosure. These are often times government or non-profit organizations that can help you get everything in order.

There is nothing wrong with going this route, as it is a great thing to do if you have no other option. You will have to call around to different places though as not everyone is going to be able help you avoid foreclosure.

But do not give up just because a few places tell you that they cannot help you. This does not mean that all places are going to tell you that they cannot help you avoid foreclosure so you are just going to have to keep looking.

You could always ask for help from your friends or family in order to avoid foreclosure. While this may be somewhat of an awkward situation, if it means that you get to keep your family home then it may be worth it. J

ust ask for help to avoid foreclosure as the worst thing that can happen is that they tell you that they are not able to help. You will certainly be no worse off then you were before and then you will know that you need to look elsewhere for help to avoid foreclosure.

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