“Nobody owes any public duty to pay more than the law demands: taxes are enforced exaction, not voluntary contributions.” - Judge Learned Hand, 2nd Circuit U.S. Court of Appeals
Tax time… Few people look forward to it, but for most it is an inevitability. I am here to tell you that it doesn’t have to be hard. We can help you meet your tax obligations while legally maximizing your deductions and income deferrals. However, effectively reducing your tax liability is not accomplished when preparing and filing a tax return. It is accomplished through proper tax planning.
Tax Planning starts now. Taking steps to reduce your tax liability should be done prior to year-end and should be a part of your long-term, on-going financial plan. By maintaining consistent communication with your tax adviser, you can be more aware of your options and prevent nasty surprises at tax time. The more complex your financial and tax situation is, the more important your tax planning strategy becomes. However, even “simple” tax returns can offer tax planning opportunities.
Tax Planning also helps with overall financial organization. Understanding your income and expenses as they related to your tax return can also lend to better decision making for saving, budgeting, and investment. Individuals and businesses can benefit from managing their finances more wisely and not only through savings.
A good tax planning strategy can also help prevent unnecessary penalties, interest, and fines. Changes in your income also lead to changes in tax liability. Failing to account for these changes and missing estimated tax payments can lead to under-payment penalties. This can exacerbate an already difficult tax situation and lead to a cycle of “playing catch-up” and never getting ahead.
Here are a few quick tips to begin your tax plan:
- Inform your tax adviser of any changes in employment or income situation.
- Consult with your tax adviser prior to sales or purchases of major assets.
- Consult with your tax adviser prior to withdrawing from retirement accounts (401K, IRA, 403b, etc.)
- Ask your tax adviser for a tax projection.
- Call us to see how we can help!
We understand that this is already a lot of information, and every taxpayer has a unique tax situation. Don’t wait until the last minute to start your tax plan. Contact us. We look forward to hearing from you!
Accounting/Bookkeeping isn’t just for businesses. A lot of people don’t realize how much they are spending on subscriptions, restaurants, interest, etc. that they could be saving. Knowing how your money is being spent can be a big step towards building wealth, which is more important than ever when thinking about your long-term future finances.
Managing your monthly budget is a task that requires keen attention to detail and planning. We know how challenging and time consuming it is to get your financial accounts in order! That’s why the team here at Kyle Nichols CPA offer on-going financial and accounting services that help our clients aware of how they are spending their money.
Here are 5 accounting tips from the professionals here at Kyle Nichols CPA, LLC to consider
Budgeting your money seems like a simple idea but it can pose a challenge for some, especially if you are not on salaried income. Budgeting involves making sure you know what you can spend on utilities/mortgage/rent, what you can save, and what you can spend leisurely. Easy right? Not always!
You need to first understand your income before you can set a budget for yourself. If you work on hourly, tips, or commission, you will need to calculate an average income over a period of a few months.
Next, you need to understand what your priorities are—things like rent/mortgage, car insurance, groceries, and other monthly bills are essentials and need to be paid first. Having a savings account is important not only for the future but for unexpected costs that may arise. Any excess left over you can spend on shopping/activities.
Starting with small goals will help you create a budget if you are just starting out. TOP TIP One of the most common financial goals is to stop eating out as much! You would be amazed by how much money you can save by just cooking your favorite meals at home. Try to cook at home a couple days a week to start out with, then gradually move towards cooking on the weekdays. If you find yourself struggling, you can always reassess your goals. It is all about what works for you.
Creating a budget spreadsheet is a great way to stay on top of your financial situation. A budget spreadsheet keeps a record of your bills, expenses, and transactions. The team here at Kyle Nichols CPA can perform this service for you, if you need some support. Getting an accountant is a great idea if you are busy and need extra help in this area.
3. Unnecessary Expenses
Make sure you are proactive in cutting out unnecessary expenses. Monthly subscriptions such as streaming services or apps you do not use often can add up to a huge expense! Have you visited that gym lately that you pay a membership each month? You may need to pause or end that monthly cost, too, and make the choice to work out from home. Unnecessary expenses are unique to each individual, so evaluate your hobbies and activities and make sure you are proactive.
4. Automatic Bill Pay
Setting up automatic bill pay once you establish your budget is also a great way to stay organized with your finances. Accounting for you bills first by using autopay will help you avoid late fees by making sure your bill gets paid on time.
5. Tailored Accounts
Make sure you are taking advantage of all possible account types that you think would benefit you. Checking, savings, and investment accounts are three common account types that most people have or aim to have.
An accounting term “bucketing” refers to multiple different savings accounts for different things. For example, one savings account can be strictly for emergency, while another savings account can be to pay for vacation.
We hope you found these tips helpful! If you think now is the time to enlist the help of an accountant, the team at Kyle Nichols CPA would be happy to take a look at your finances.
Contact us today to find out how we can tailor our accounting services to your unique situation.