College Loans: Paying Them Off

Now that you are a college graduate, you have many things to think about; finding a job, maybe a new place to rent, and paying off student loan debts. With all the talk about student loan interest rates in Congress, it is important for student have a plan for paying off loans after college. Nearly 12 million students will take out loans to help pay for college, and with 37 million students currently with outstanding debt, the total student loan debt is reaching towards 1 trillion. Having a plan to help reduce student debt loan is vital for any college graduate.

Most college students do not fully understand the financial burden student loans will be on their future. Around 75% of them will make sacrifices, either personally or financially, to repay the loan. Some tips that will help make it easier to repay student loans debt are:

  • Understand You Options. It is important to know the different options of payment, including standard repayment, graduated repayments, extended repayment, and income-based repayment. Research which payment would work best for you and contact you lender for financial help. If you cannot pay there are options for you including deferment, forbearance, and loan cancellation. Many of the option will require an application and financial proof, so working with your lender is very important.
  • Keep Track of Paperwork. Keeping accurate records including promissory notes, correspondence from lenders, notes on phone calls and other loan related paper. If you lose any paperwork, you may have problems providing information to your lender if you need to seek a deferment, forbearance, or loan cancellation.
  • Grace Period. Most student loans have a 6 to 9 month grace period before official payments start. Use this time to find a job, make a budget and start tracking your monthly expenses. Make sure to budget in paying student loans, so you are not surprised when the payments begin.
  • Student Loan Interest Deductions. If you pay $600 or more to a single lender, our interest is deductable. At the end of the year you will receive Form 1098-E from your lender showing the exact amount of interest paid over the year.
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Steps to Prepare for the Tax Season

The start of a new year is a busy time for any individual. Although the year has just begun, it is time to start preparing for the tax season. By starting the preparations early, it is easier to avoid mistakes and ensure the paperwork is ready before deadlines start coming up.

Gather and Organize Paperwork

Although the W2 forms are not normally sent out or even prepared until the middle to the end of January, the forms are only part of the paperwork involved in taxes. Paperwork will also include the tax deductions, charity donation receipts and other receipts related to taxes.

Gathering as much paperwork and documentation as possible beforehand will make it easier to put the information into the tax documents after the W2 forms finally arrive. Early organization and preparation simplifies the amount of organization that is required later, which makes it easier to complete and submit the IRS forms before the due date.

Write Down Questions

Tax paperwork and preparation can lead to many complicated questions. Taking extra time to write down any questions that arise will prevent confusion when the paperwork is being prepared. The taxes that are related to new events, such as filing jointly after marriage when compared to filing separately, can lead to many questions.

When new situations arise or new tax laws are applied to the paperwork, it is important to write down the questions and find out the answers before working on the paperwork. The preparatory step makes it easier to avoid accidental mistakes.

Review Any Changes to Laws

Laws related to taxes are constantly changing as world events and the situation of the country takes different paths. Since the laws can change when new regulations are passed, every individual should learn about any changes to the filing system or any regulations that might apply to a personal situation.

After learning about any changes, determine if other questions arise. The legal aspects of taxes are often confusing and complicated, particularly when it differs from previous years. If any new questions arise related to legalities, then it is important to add the question to the list.

Look for Mistakes

Financial statements are not always accurate. Before using any financial statements on tax paperwork, it is important to look for and correct any mistakes. Although mistakes are uncommon, catching problems and changing the data to accurate figures will reduce the risk of accidentally filing the wrong information.

With the tax season around the corner, it is important to start taking steps to prepare the paperwork and documentation. Early organization is a key part of simplifying the process and avoiding complications when the tax paperwork is filed.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Charitable Deductions: Individuals Going to the Limit

Charitable DedutionsThe leaves are changing and the weather is getting cooler, and people are starting to think about the upcoming holiday season. We all know it will be here before we know it, and it is the time to give to those less fortunate then us. Charitable giving by individual donors accounts for 75% of all US giving according to recent reports by Blackbaud Inc. and Atlas of Giving, national organization that provide analysis trends over charitable giving in the United States.

Charitable giving as defined by the IRS as a contribution or gift to, or for the use of the following:

  • A state, but only if the contribution is made exclusively for public purposes, such as a gift to reduce the public debt.
  • A corporation, trust community chest, fund, or foundation that is created or organized in the United States exclusively for religious, charitable, scientific, literary, educational purpose, to foster national or international amateur sports competition, for the prevention of cruelty to children or animals, for war veterans, an auxiliary unit or society of, or as a trust or foundation for an entity.
  • A cemetery company owned and operated for the benefit of its members or a corporation chartered solely for burial purposes.
  • A domestic fraternal society, order or association operating under the lodge system, but only if the contributions is exclusively used for purposes stated above.

Once you know to whom you want to give your donation, it is important to know how much you can deduct on your taxes. When giving charitable donation, if an individual gives 20% or less of their adjusted gross income then there is no limit considerations. Depending on the type of donation and organization, there may be a limit of 20%, 30% or 50%.

There are very stringent documentation rules that govern donations. You must have a record of the amount of the donation and how the donation was made, example: cash, noncash, or out-of-pocket expense. Some documentation that works is bank statements, credit card statements, written communication from the organization, payroll deduction record. These must have the amount donated and the name of the organization.

By knowing the legal restrictions and regulations governing charitable giving, the process is easier for everyone. Having a good, trusted financial advisor to help is always the best course of action when making large donations.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Global Opportunities: Small Businesses Make the Leap

Crowley Halloran Conference RoomIn today’s business environment, the more ways a company can share their product, the better for the company. Markets all over the world hold potential for small business, but what does it take to get into the foreign markets? Can small business take advantage of the global opportunities? The answer is yes. The global economy has never had more opportunities for small business, and with a strong global financial strategy, small businesses are competing in foreign markets.

To succeed globally, small businesses need to create a global financial strategy. Small businesses will face common issues and a few roadblocks in the global market, but having a well-defined plan can make the difference between being successful and failing in the new market

Some questions to consider when creating your plan are:

  • What performance indicators need measured for both financial and operation purposes?
  • How will accounts receivable and payable be set up and managed?
  • Is there enough support for multiple locations and countries?
  • How will the company keep control over the global financial process?
  • How are local tax regulations and requirements managed for each foreign location?
  • How are different currencies handled in foreign locations?

Being able to answer these questions and any other unique question regarding your company is the best way to start.

Some strategies that help in making a successful transition are setting up multi-entity accounting, understanding foreign tax laws and codes, managing multiple foreign currencies, and having local human resources. Businesses with multi-entity accounting have consolidated their business processes. By consolidating business processes, the company will eliminate duplicate work, create a standard workflow, and be able to support the demands of a more complex business model. Hiring a local accounting firm to help with all the local tax codes and regulations would be extremely useful when breaking into the global market. They will be able to navigate your business through the different regulations, and be able to keep up with the different currency fluctuations. They can also be part of your management team that will take care of the day-to-day running of the business.

Ventures into a new market are exciting new opportunities for small businesses. With a proper plan and a good management team, anyone, even a small business, can take advantage of the global business opportunities.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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Small Business Tax Deductions- What to be Thinking About before Tax Time

Since the year is now more than half way over, it is important to keep in mind the different tax deductions that can help your business. There are a few basic tax deductions that small business owners need to think about before tax season approaches. As a business owner it is important that you help your business in every way possible.

Here is a list of a few tax deductions that are easy to keep track of and can help when tax time approaches.

  • Mileage – If a car is used for business purposes then mileage can be recorded. The reimbursement rate for mileage is 55.5 cents per mile. Parking fees and business related tolls may also be deducted. Make sure that you are keeping a mileage log for record all the mileage used for business purpose. No not count any mileage that is personal use.
  • Books and Professional Fees – Spending money on books, including books on legal or tax information, to help you run your business can be very helpful when starting a business. All of these books are deductible at tax time. Also any fees spent on lawyers, tax professionals or consultants can be deducted in the year that they occur.
  • Travel – With some business, travel can be very important in building client relationships. Many business related travel expenses, including plane fare, rental car expenses, taxies, lodging, meals, shopping for business materials, cleaning clothes, phone calls, faxes and tips are all deductible. When combining business and pleasure id ok as long as the main reason for going is business. If the family comes along their expenses are not deductible.

Business Entertaining- Another way to build client relationships is to take them out for a meal. When entertaining a client or perspective client 50% of the check can be deducted at tax time, if business is discussed before, during or after the meal. Make a note on the bill to remember which client and the purpose of the meal.

There are many deductions that can be taken during tax time, and these are just a few. Remember that a good tax professional will guide you through tax time and what you will need.

Here at Crowley & Halloran CPA’s, our consultants would be happy to help you plan and manage your business budget. Click here to request a proposal.

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