Retirement for you or college for your kids? Which financial goal should you focus on the most? Many parents feel conflicted because they want to help their kids get a good college education but know they need to save for their own retirement years. While it may not be easy to pull off, it’s important to tackle both goals at once and not put off saving for retirement.

High Stakes Battle

If your kids go to college before you retire, they’re going to need the money first. So it might seem like common sense to save for college first and then save for retirement after they’re done with school. However, that’s a risky approach.

It’s no secret that it costs a lot of money to go to college these days. And who knows how much tuitions will increase by the time your kids are ready to enroll. But even so, you’re probably going to need a lot more money for your retirement. Your retirement could last well over 20 years, inflation will likely increase your costs during that period, and your retirement health care costs could be significant. If you put saving for college first, you may not have enough time to save for retirement once the tuition bills are paid. Instead, set aside money for both college and retirement.

Your Plan Can Be Your Ally

Your employer’s retirement savings plan can help you to save for both goals. Since your plan contributions are deducted from your pay before you receive it, saving for retirement is convenient. You don’t owe federal income taxes on your pretax contributions or on any earnings from investing those funds until you withdraw money from the plan. And since you’re saving for retirement through your plan, you can focus your saving outside  the plan on future college costs.

Set Your Sights on Your Savings Goal

If you save, in 30 years you could accumulate:

• $68.92 a week — $300,000
• $137.84 a week — $600,000
• $206.76 a week — $900,000

Focus on Your Target

Even while you’re saving for your kids’ college costs, it’s important to save as much as possible for retirement. While your kids will have a number of potential sources of college funding, such as scholarships, grants, loans, and part-time employment, you may be on your own with limited resources for retirement. Your Social Security benefits probably won’t be enough to live on comfortably, and few employers offer pensions. Your plan account may be a very important source of retirement income.

Contributing more to your retirement plan may help you achieve your goals.

Is your business thinking of moving to a new location? No need to worry, we got you covered with some tips for the journey!

Why are you relocating?

It’s important that you first consider why it is necessary to change your location. If you’re certain about the move, you should be able to fully answer the following questions.

• Are you moving for a new market to give you more opportunity than your previous one?
• Are there lower costs to run a business in this new area? Following that, are there better tax rates in this new area?
• Do you intend to keep the same employees or hire new ones?
• Do you have access to a better hiring market for new employees?
• Will there be a better quality of life in the new area?

Create a Moving Plan 

1. Figure Out a Specific Location

You need to figure out a specific office location for where you want to move. This space should be considerate of the market of clients you want your business to reach. You also should be paying attention to the leasing options, given that you most likely will be renting space in a new area. It’s also important to consider how far away this new location would be for your employees. Are the employees still going to be able to commute or will you need to give relocation bonuses to incentivize employees to follow your business?

2. Create a Moving Budget

Moving isn’t going to be expense-free. It is crucial to figure out the logistics of the move and calculate the expected expenses in advance. This also includes choosing a reputable moving company to help you move as easily as possible. It’s important to ask for quotes ahead of time so you can properly plan your budget, as well as read reviews so you have the best movers.

3. Give a Heads-up

You must let people know that you are moving before you do so. Tell employees and clients that you are changing locations. Give as much notice as possible so everyone can manage this situation in their own way. Some people are going to part ways with your business because they can’t also change locations. Be mindful and respectful of their decisions.

4. Dealing with Equipment

Make sure to have a plan when moving your important servers and technical equipment. Having IT support professionals create a plan for your move is very important. They can help create an easy transition that otherwise could have been a nightmare. It’s also important to figure out if you need more equipment and to order that ahead of time. Determining storage needs is also important because you may not need as much equipment if moving to a smaller office area.

5. Update Location Online

Don’t forget to change your office location on Google and other local listings, as well as your social media profiles so customers will be able to find you after the move. You should update your company website and email signatures to reflect this. Another important aspect to consider is getting new business cards and signs to reflect your business move.

6. Final Details

Make sure your information is registered with the government so you have the correct tax information with the IRS. Also, be sure you understand the mailing situation with your new business location because you will get an influx of mail and shipments during the transition. 

Good luck with your new business location!

Investors should consider the advantages and potential risks before investing in money market mutual funds.

If you’re looking for a place to park money temporarily or if you’re simply trying to maintain a cash cushion, a money market mutual fund may be an investment to consider.1

Money market mutual funds typically invest in high-quality, short-term securities, such as U.S. Treasury securities, certificates of deposit, federal agency notes, and commercial paper. Tax-exempt money market funds invest in municipal securities issued by state and local governments. They generally pay dividends that are exempt from federal and/or state income taxes.

The ease with which you can buy and sell shares may make money market mutual funds an appropriate place for assets you’ll need in the short term. Funds frequently offer limited checkwriting privileges, making withdrawals simple.

Breaking the buck. Money market mutual funds are structured to maintain a stable net asset value (NAV) of $1 per share. A fund “breaks the buck” when its NAV falls below this amount. Breaking the buck is rare. But since money market mutual funds are not FDIC insured, investors will lose some of their original investment when this happens.

Understand the risks. Low risk doesn’t mean no risk. Potential risks for investors include interest-rate shifts, unanticipated redemptions, major credit downgrades for firms represented in the fund, and loss of purchasing power should returns fail to keep pace with inflation. Before you invest, review the fund’s holdings. Keep in mind that the fund offering the highest return generally presents the most risk.

A different investment. A money market account (MMA) is not the same as a money market mutual fund. MMAs are deposit accounts that pay interest at a rate that’s typically higher than the rate earned in a savings account. Money market accounts generally are FDIC insured, may require a minimum balance, and often limit transactions.

Ask your financial professional if money market mutual funds are a good option for your portfolio.

Source/Disclaimer:
1An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. You should consider the fund’s investment objectives, charges, expenses, and risks carefully before you invest. The fund’s prospectus, which can be obtained from your financial representative, contains this and other information about the fund. Read the prospectus carefully before you invest or send money. Shares, when redeemed, may be worth more or less than their original cost.

Tax deductions aren’t the only things to consider when looking for ways to reduce your tax bill. There are a number of tax credits that you may be able to claim. A tax credit reduces your tax liability dollar for dollar (and, in some instances, may be fully or partially “refundable” to the extent of any excess credit)

CHILD-RELATED CREDITS

In 2022, parents of children under age 17 may claim a child tax credit of up to $2,000 per qualified child. The child tax credit is phased out for higher income taxpayers. A different credit of up to $14,890 (for 2022) is available for the payment of qualified adoption expenses, such as adoption fees, attorney fees, and court costs. The credit is phased out at certain income levels, and there are certain restrictions as to the tax year in which the credit is available. Look into claiming the child and dependent care credit if you pay for the care of a child under age 13 while you work. It’s available for a percentage of up to $3,000 of qualifying expenses ($6,000 for two or more dependents) in 2022. This credit isn’t confined to child care expenses — it may also be applicable for the care of a disabled spouse or another adult dependent.

HIGHER EDUCATION CREDITS

The American Opportunity credit can be as much as $2,500 annually (per student) for the payment of tuition and related expenses for the first four years of college. A different credit — known as the Lifetime Learning credit — is available for undergraduate or graduate tuition and for job training courses (maximum credit of $2,000 per tax return). You’re not allowed to claim both credits for the same student’s expenses, and both credits are subject to income-based phaseouts and other requirements.

SOMETIMES OVERLOOKED

One credit that taxpayers sometimes miss is the credit for excess Social Security tax withheld. If you work for two or more employers and your combined wages total more than the Social Security taxable wage base ($147,000 in 2022), too much Social Security tax will be withheld from your pay. You can claim the excess as a credit against your income tax. The alternative minimum tax (AMT) credit is another credit that’s easy to overlook. If you paid the AMT last year, you may be able to take a credit for at least some of the AMT you paid. The credit is available only for AMT paid with respect to certain “deferral preference” items, such as the adjustment required when incentive stock options are exercised.

Your tax professional can provide more details regarding these and other tax credits that may be available to you.

There are various federal taxes that may apply to your small business. The type and form of business you operate determines what taxes you must pay and how you pay them. At the federal level, several different taxes may apply.

EXCISE TAXES

The IRS defines an excise tax as a tax imposed on the sale of specific goods or services, or on certain uses. Federal excise tax is typically imposed on the sale of items such as tobacco, fuel, alcohol, tires, heavy trucks and highway tractors, and airline tickets. Many excise taxes are placed in trust funds for projects related to the taxed product or service, such as highway or airport improvements.

An excise tax may be imposed at the time of import, sale by the manufacturer, sale by the retailer, or use by the manufacturer or consumer. Some excise taxes are collected by a third party, which then must remit the taxes to the IRS in a timely manner. An example of a third-party collector of an excise tax is a commercial airline, which collects the excise taxes on airline tickets that are paid by airline passengers. Businesses that are subject to federal excise taxes must generally file Form 720, Quarterly Federal Excise Tax Return. Certain excise taxes, such as those owed to the Alcohol and Tobacco Tax and Trade Bureau, are reported on different forms.

INCOME TAXES

Income taxes must be paid on business profits. How that tax is paid depends on how the business is structured. Most small businesses are pass-through entities, which means that the business’s profits or losses are passed through to the owners and reported on their personal income tax returns.

Partnerships and multi-member limited liability companies (LLCs) generally file a partnership business tax return for informational purposes only. The individual partners and LLC members pay income taxes for their share of the income of the business. Note, however, that some LLCs elect to be treated as a corporation for tax purposes.

An S corporation files an S corporation income tax return for the business. Like a partnership, an S corporation’s net income is divided among the owners, who pay tax on their share of that income individually.

A sole proprietor reports business profit or loss on a separate schedule filed with the sole proprietor’s individual income tax return. Unless an election to be treated as a corporation has been made, the owner of a single-member LLC also reports the company’s profit or loss directly on the owner’s return.

SOCIAL SECURITY AND MEDICARE TAXES

Employers must generally withhold Social Security and Medicare taxes from their employees’ wages and must pay a matching amount. Employers must also withhold the 0.9% additional Medicare tax on employee wages and compensation that exceeds a threshold amount.

SELF-EMPLOYMENT TAXES

Self-employment tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes paid for other workers.

FEDERAL UNEMPLOYMENT TAX

Employers are required to report and pay the Federal Unemployment Tax Act (FUTA) tax separately from federal income taxes and Social Security and Medicare taxes. FUTA tax is not withheld from wages; employers are responsible for paying the tax.

Business owners should exercise extreme care when it comes to paying taxes since any mistakes on their part could result in significant penalties. For assistance, consult a tax professional.

As a small business owner, tax liability is the money you owe the government when your business generates income. With changing laws and gray areas regarding deductions, exemptions, and credits, it’s no wonder small business owners rank taxes at the top of the list of the most stress-inducing aspect of business ownership. To reduce that stress, taxes shouldn’t be something to focus on only at year’s end. Use these tips on reducing your business tax year-round and see your taxes and stress level decrease!

1. BUSINESS STRUCTURE

Your company’s business structure is how it is organized – it answers questions like who is in charge, how are profits distributed, and who is responsible for business debt. The most common business structures are:

• Sole proprietorships have one owner who takes all profits as personal income. The owner is personally liable for any business debts.
• Partnerships are structured like sole proprietorships but can have an unlimited number of owners.
• C corporations have unlimited shareholders who each own part of the company. Profits are distributed as dividends between them. Owners are not personally liable for business debts.
• S corporations are structured like C corporations, but the number of shareholders is capped at 100.

In addition to affecting how a business operates, business structure impacts how much a company pays in taxes. The U.S. tax code is complex and includes four main tax categories:

• Income tax – paid on profits
• Employment tax – employee Social Security and Medicare contributions
• Self-employment tax – Social Security and Medicare contributions for self-employed individuals
• Excise tax – special taxes for specific goods and services like tobacco, alcohol, etc.

IA sole proprietorship or partnership is a good idea for businesses wanting tax simplicity. For those with less than 100 owners, an S corporation might be the right fit and best tax option. Again, business structure and tax laws are complex and are best determined by a qualified, experienced accountant.

2. NET EARNINGS

Net earnings (i.e., net income or profit) is the gross business income minus business expenses. Regardless of the business, it begins with gross income (the income received directly by an individual, before any withholding, deductions, or taxes), and allowable expenses are deducted to arrive at net income. How this figure is calculated is dependent upon business structure.

Net earnings are used to calculate business income taxes. Again, the calculation process differs slightly for different business structures. It is best to seek a professional to help with net earnings calculations for the proper calculation and maximum legal deductions.

3. EMPLOY A FAMILY MEMBER

One of the best ways for small business owners to reduce taxes is hiring a family member. The (IRS allows a variety of options for tax sheltering. For example, suppose you hire your child, as a small business owner. In that case, you will pay a lower marginal rate or eliminate the tax on the income paid to your child. Sole proprietorships are not required to pay Social Security and Medicare taxes on a child’s wages. They can also avoid Federal Unemployment Tax Act (FUTA) tax. Consult a trusted accounting professional for details about the benefits of hiring your children or even your spouse.

4. RETIREMENT CONTRIBUTIONS

Employee retirement plans benefit employees, but they can also be good for your small business. Employer contributions to an employee retirement plan are tax-deductible. They can also carry an employer tax credit for setting up an employee retirement plan. Again, this is a task an accountant can handle for you. They can guide you on retirement plan choices based on your business’s situation, employees, and other factors.

As a small business owner, you can deduct contributions to a tax-qualified retirement account from your income taxes (except for Roth IRAs and Roth 401(k)s). Sole proprietors, members of a partnership, or LLC members can deduct from their personal income contributions to their retirement account.

As with any tax situation, consulting your trusted accounting professional is always best. They are up to date on the latest tax laws, information, and allowable deductions. By being aware of ways your small business can reduce taxes, you can bring these topics up with your accountant, discuss the best options for you, and be prepared long before tax time rolls around.