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The various reference links and calculators will provide you with food for thought. Any computations you arrive at with these sources should be considered rough estimates. If you are looking for numbers you can rely on, please call us for assistance.

We do not endorse any of the businesses, products, or services you may find on connected links. We have provided such links as a convenience for you to see what the Internet has to offer.

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Financial Planning

Start planning and stop worrying!
In a recent Gallup poll, 60% of those surveyed said they worried about their financial future.

There are a few simple steps you can take to help reduce your worries:

  • Put aside some amount regularly in savings or other investments. The compounding of earnings can be substantial. The longer your investment period, the greater the beneficial effect of compounding.

  • Invest in what you know. The better informed you are, the better your investment decisions will be. If you don't want to learn about investments, consider hiring a money manager and paying him or her to do your investing for you.

  • Diversify your investments. Have some of your money in an investment that is easily converted to cash in case of emergencies. The old adage "don't put all your eggs in one basket" is good advice when it comes to your investments.

  • Prepare an annual balance sheet (a list of all your assets minus all your debts) to determine your net worth. A comparison of your annual balance sheets will reveal your success at growing your retirement funds.

  • Plan where you want to be financially by retirement age. The calculators listed below will help you determine your savings requirements. Once you know how much you need to save, put your plan into action. Over 90% of Americans must rely on the government or others for assistance during retirement. With proper planning and diligence, you can be among those who can retire in comfort.

  • Don't use credit to purchase consumption items. Wait until you can pay cash for things which decrease in value. Borrowing money to purchase a home is usually a sound idea. Using credit to purchase household furnishings is not.

  • Pay off your credit card balance every month. Your credit card should be for the convenience of purchasing, not a source of permanent finance. The interest rates are much too high.

  • Monitor your investments to maximize your after-tax return. Use the calculator below to compare the long-term results of different interest rates. The difference that a 2% greater return can make in the growth of your investments is dramatic.

  • Have your insurance agent do at least an annual review of your insurance needs to determine that you are neither under- nor over-insured. Be sure to contact your agent when you buy or sell any property.


The Magic of Compounding!
If you could have one of the following as your pay for thirty days' work, which would you choose? (A) $10,000, or (B) a penny the first day, two cents the second day, four cents the third day, eight cents the fourth day, and so on, with each day doubling on out to thirty days.

The $10,000 sounds very attractive, but the fact is that the penny doubled each day for thirty days adds up to over five million dollars. Of course, that is 100% interest compounded daily, a rate not available to most of us working folk. Nevertheless, this example shows you the power of compounding on your investment earnings.

Here are some easy-to-use calculators.
Do you know how much you need to set aside to fund a college education for your child? Education Funding Calculator
How much must you save each month for your retirement? Retirement Calculator
What will your Individual Retirement Account (IRA) be worth when you get ready to start drawing on it?
Retirement - How much to save and how long will it last?

You can get rough answers to these and other questions very quickly by using the following calculators and making a few estimates on your part. If we can be of help or answer questions for you, please call us.


Recordkeeping for Taxes

What to Keep and How Long
Tax records should be kept on a year-round basis, not hastily assembled just for your annual tax appointment. Without tax records, you can lose valuable deductions by forgetting them on your tax return, or you may have unsubstantiated items disallowed if you are audited.

Generally, returns can be audited for up to three years after filing. However, the IRS may audit for up to six years if there is substantial unreported income. The three and six year limits start with the filing of a tax return; if no return is filed, the time limit never starts to run.

Which records are important?

  • Records of income received
  • Expense items, especially work-related
  • Home improvements, sales, and refinances (for homes with profit potential of $250,000 or more)
  • Investment purchases and sales information
  • The documents for inherited property
  • Medical expenses Charitable contributions (records vary with value of gift)
  • Interest and taxes paid
  • Records on nondeductible IRA contributions

How long should records be kept?
Just how long you should keep records is partly a matter of judgment and a combination of state and federal statutes of limitations. Federal tax returns can be audited for up to three years after filing (six years if underreported income is involved). It is a good idea to keep most records for six years after the return filing date.

There are some records worth keeping permanently, partly due to long-term needs and partly because they take up very little room. Consider permanently retaining a copy of each year's tax return. Contracts, real estate buy/sell records, and records of property improvements should be retained for seven years after the property is sold.

If you are in business, your record requirements are more extensive. Please call us; we will be happy to assist you with a system of record retention.


Business Problem Solving

Approximately one million new businesses are started every year in the United States. About 80 percent of all new businesses will fail within five years.

As the manager of a small business, you must wear several hats. Never stop investigating new ideas to improve all areas of your business. The astute manager will gather information to assist him or her in making the changes necessary to stay profitable in a competitive business world.

Here are some tips to improve your profits:

  • Listen to your customers. You are not really selling products or services; you are selling customer satisfaction. Satisfied customers return to spend more money and are likely to refer new customers to you.

  • It is estimated to cost ten times as much to acquire a new customer as it does to retain a current customer through good customer service.

  • If your company runs well now in your absence, it will run well in the event of your disability or death. If you are currently indispensable, start training people now. One of the most rewarding forms of retirement is to own your own company and to be absent as much as you like.

  • The word ability spelled "A.B.I.L.ity" could stand for Accountant, Banker, Insurance Agent, and Lawyer. These professionals handle a variety of business problems every day. They make excellent sounding boards for proposed transactions. Consulting with them before you conclude any deals can save you many problems. You can be your own best business troubleshooter.

  • Consider arranging a trip to visit a half dozen businesses just like yours, but outside your trade area. Discuss products or services, customer relations, vendors, physical plant and equipment, and financial statement information with these noncompeting colleagues. Arrange a five- to ten-day trip. Take your financial statements, a copy of your floor plan, your camera, and a long list of questions. When you return, you will be able to inform your staff of all you learned. This trip is especially beneficial if you are not affiliated with a franchise business.

  • Every business should operate from a budget. Your last year's financial reports serve as an excellent guide to setting this year's budget. Since it is designed with the best information you have available at the outset, the variances from the budget figures may give you valuable information in preparing the next year's game plan.

  • Before you start a new business, be sure the community can support such a business. Some areas are not large enough to warrant certain specialty shops. A bicycle shop, for example, may take a population base of 50,000 people to make it profitable. A grocery store, on the other hand, can be profitable in a town of only a few thousand.

  • Is it necessary or profitable to have accounts receivable? Credit is necessary to attract some business, and it is profitable if properly managed. For example, a construction company finds it impractical to issue credit cards to all its employees and inconvenient to use a check for every purchase. In exchange for the courtesy of an open account, such a customer should be willing to pay immediately upon receipt of a billing statement.

  • Business deals and special franchises which sound too good to be true usually are. We will gladly assist you in reviewing any new purchase or business proposal.

  • Business partnerships (marriages) seldom have the same courtship afforded most marriages. In the absence of this courtship, you should have your attorney draft a well-written partnership agreement. It is also important for family partnerships.

  • Don't incorporate your business without first checking the long-range tax and nontax considerations. There are many small corporations that would have been better off operating in some other legal form.

  • Some businesses receive penalties for late payroll tax deposits. To avoid such problems, don't sign payroll checks unless the first check in the stack is the payroll deposit to your bank. This may have you paying deposits earlier than required, but you will not be receiving penalties.



Estate and Gift Planning

A little planning can save thousands of dollars!

You can't take it with you, but failing to plan for your estate can mean that the government, rather than your heirs, may get the major portion of your hard-earned money. Why? Because the top estate tax rate is a whopping 50%!

You may be aware of the $1,000,000 lifetime exclusion in 2002 for gifts and estates. But the amount over that may be taxed at rates starting at 41% and going as high as 50%. You may be surprised what your estate is worth. Add up the value of all your assets. Don't forget life insurance which may fall into your estate. If your total value exceeds the exclusion, you should look into what a few simple planning techniques can save your family at estate time.

In addition, there are some very effective estate planning ideas that can also cut your current income tax bill.

Some planning possibilities:

  • Current tax law allows you to give away $11,000 per year per recipient. Your spouse may join in the gift even if he or she is not an owner in the transferred asset. This means that you could transfer up to $22,000 per year to each of your heirs. To double the annual exclusion yet again, you may want to include spouses of your children. The person receiving the gift does not need to be related to you. These annual gifts do not reduce your once-in-a-lifetime exclusion.

  • If you have property which is not needed for your retirement, maybe it is a candidate for transferring during your lifetime. If it is a large income-producer, the future income will be taxed to the new owner and not to you, plus the property will be out of your estate.

  • You can make unlimited transfers to your spouse either during your lifetime or through your estate. There are no taxes on spousal transfers, regardless of size. But leaving everything to your spouse may not be a good idea, since doing so fails to utilize the lifetime exclusion amount in the estate of the first spouse to die. Planning will allow you to use the exclusion in both estates, and you'll be able to transfer twice as much to your heirs free of estate tax.

  • With proper planning, certain life insurance proceeds can be kept out of your estate.