It’s important to start your financial planning at the beginning of the year; organization is key when it comes to handling funds. And when you’ve got so much going on in January, it can be difficult to keep track of what you need to do. However, it might be a little easier to keep everything in order if you follow these four tips. Read on for the best financial goals you should be striving to complete by the end of January.
1. Set Up Automatic Retirement Contributions
The easiest way to save for retirement is to contribute a little bit each month. It’s much better to start right away with a small amount, than to put it off for some time in your life when you have “extra money”. We recommend 10-15% of your salary. If that’s too much, then try to put in at least enough to get the full match that your employer offers. For instance, if your employer offers a 5% match, then put in 5%. Your employer will double your contribution immediately. So you get an immediate 100% return on your investment and tax break if you make it a pre-tax contribution. 5% still too much? Then put in $20 per pay. Just put in something and get started saving.
2. Start a Mileage Log
If you drive for business, you need a mileage a log. It can be a little log book that you keep in your car, or a cool app on your phone, or an excel spreadsheet, or whatever you want. Each time you go somewhere for business, you need to capture where you went, the date, and the mileage. It’s a pain – but that’s what you need to do if you want the deduction to stand up in an audit. (Driving back and forth to the office don’t count – that’s considered commuting.) But tolls and parking are deductible, so keep track of those expenses too.
3. Adjust Your Withholding
Are there too many taxes being taken from your paycheck? Or maybe not enough? At any time of the year, you can go to your HR person and request to fill out a new W-4. You can change your number of allowances to decrease your tax withheld. (Think of it as more allowances – more mouths to feed – less taxes withheld.) Claim more allowances, and more of your taxes will be withheld. This adjustment needs to be done when you paid way too much on your taxes the previous year; this doesn’t always have to be the case, if you adjust your withholdings. The opposite works too. If you need to have more withheld, then decrease your number of allowances.
4. Set Up Automatic HSA Contributions
A health savings account (HSA) is a way for people to save money employees to pay for medical expenses that aren’t covered by their health insurance, like deductibles and co-pays. You get a deduction on your tax return for contributions that you make, but you have to have an HSA compatible plan. Make sure of that first. You can use an HSA as a medical savings account, which is great, but you can also use it for medical expenses right away. So, if you get a bill from your doctor for $75 dollars, you can put $75 dollars in your HSA and then take it out to pay the bill. There are limits to how much you can contribute each year.
Do you need help with your complicated bookkeeping issues? The Harding Group can help!
If you can’t seem to get your bookkeeping in order, trust the professionals at the Harding Group. Unlike other accounting firms, we never charge you for emails or phone calls and strive for open communication with our clients. Whether you are interested in business advising, tax preparation, bookkeeping and accounting, payroll services, QuickBooks training, or retirement planning, we have the expertise and years of experience to help. If you are ready to take the stress out of taxes, contact us online or give us a call at (410) 573-9991 for a free consultation. For more tax tips, follow us on Facebook, Twitter, Google+, YouTube, and LinkedIn.