Thaney CPA | Accounting Services Rochester, NY

Posts Tagged ‘Kissimmee’

How To Improve Your Credit Score

The days of easy credit, offered to anyone who can breathe, are history. In this sluggish economy, lenders want to know whether borrowers are likely to stay current on their loans, mortgages, and credit card accounts. Banks and other lending institutions are looking more closely at credit scores, the numbers that (in theory at least) predict the likelihood that a borrower will default on his or her outstanding debts. As a result, knowing your score and ensuring that it’s climbing toward the upper percentiles should be a part of your regular financial planning.

The most commonly used credit score is the FICO, developed by Fair Isaac Corporation. FICO scores range from a low of 300 to a high of 850 and may be obtained (for a fee) at myfico.com. The score is considered a predictor: the higher the score, the more creditworthy the consumer. Not so long ago, a score that just nudged the 700 mark would bring lenders to the table with their lowest interest rates. Over the last few years, however, higher scores are often required to get premium rates.

About 35% of the FICO score is derived from your payment history, and another 15% comes from the length of that history. Ten percent of the score is based on the types of credit you use—credit cards, retail accounts, and other types of loans. Another 30% takes into account the amounts you owe as a fraction of your available credit. These numbers and others are fed into the FICO calculator to determine your overall score.

To raise that score, focus on the numbers that matter most:

Avoid late payments.

If you must juggle payments because of cash flow problems, try to limit the number of past-due accounts. A history of late payments on several accounts will hurt your score more than delinquencies on a single account.

Mix it up.

Spread your debt over several types of accounts: installment loans, credit cards, and accounts with retail merchants.

Curb spending.

Keep your outstanding balances to less than 50% of your available credit.

Check your credit report regularly.

By law, you’re entitled to a free annual credit report from the three main credit-reporting agencies. Check the report for errors, and follow up to ensure that problems get fixed. One vendor’s erroneous reporting can tank your score.

Good credit is a valuable commodity. Guard it carefully.

Unclaimed Property Can Be A Business Issue

It sounds like a crossword puzzle clue: Name a seven-letter medieval word that can affect your 21st century business.

The term is escheat, and today it means turning over abandoned property, such as unclaimed security deposits and outstanding accounts receivable credits, to state officials. Your business may be both a holder of unclaimed property and a claimant.

For instance, say you’re holding an uncashed payroll check for a former employee. If the check remains outstanding, as the holder you may have to file a form with the Treasurer of your state reporting the amount of the unclaimed property. You might also have a responsibility for attempting to contact your former employee. Then, after a time period set by state law, you’ll generally be required to turn the funds over to officials or face penalties for failing to do so.

Since escheat applies to banks, insurance companies, utilities, and other businesses, you could also discover your company needs to file a claim to recover property that’s rightfully yours. This could be the case if, for example, you moved your corporate office and neglected to apply for a refund of your utility deposit.

Finding out if you have a claim is free. Just search property databases for various states where your business has operated.

Not sure how escheat laws apply to your business? Let us help.

Are All Your Business Eggs In One Basket?

Many small business owners share one problem, especially in their early days. It’s being over-reliant on a single customer or supplier for much of their business. If you’re in that position, your business is operating with higher risk. Just as with investments, you don’t want all your eggs in one basket. Your goal should be a well-diversified portfolio of customers and suppliers. (more…)

Good Financial Planning Means Never Having to Say Sorry

Even talented and successful entrepreneurs may concentrate so intensely on their business that they neglect their personal financial planning. They save little money outside their business, have only a modest retirement benefits package plan and carry insufficient insurance to cover any hiatus in the businesses’ income generation activity. Sooner or later, these people find themselves regretting their lack of foresight. Good financial planning means never having to say “Sorry”.

Never have to say sorry: to your spouse

Your spouse has probably provided a considerable input to the success of your business, either as business partner or as family mainstay and emotional supporter. What plans do you have in mind to reward them, and yourself, come retirement time? Will you be able to fund your dreams?

As a business owner, the first act of your retirement planning should be to open an individual retirement account. A good scheme will offer safety, a good rate of interest, compounding (interest reinvestment to generate further earnings) and tax concessions. In the right circumstances a spousal retirement savings plan, one owned by your partner but to which you make the contributions, allows you to split your income after retirement and reduce taxes by paying on two relatively low rates instead of one high one. To reap the optimum benefit from a retirement saving plan start contributing early and make regular payments. It’s fine to lead an affluent lifestyle while you are working but it’s also necessary to consider the retirement years. Build the contributions into your regular expenses by arranging an automatic withdrawal each month so you don’t find yourself short of income in retirement, or having to work on and on into your later years.

Never have to say sorry: to your heirs

OK, you won’t be around to actually apologize when the will is read, but probably one of the things you are working for is to achieve some financial security for your heirs. You don’t want to disappoint them even if you aren’t there to say “Sorry, I didn’t plan that too well”. Proper estate planning is the key to controlling your assets and not leaving your heirs in a financial quandary, but to be effective it requires your lifetime participation. The money saving and tax minimization opportunities that can be utilized for your heirs’ benefit will be limited unless you have laid the groundwork planning from earlier on in your lifetime so as to achieve the outcome you want.

A carefully thought-out estate plan will ensure you pass on your wealth to whomever you want to receive it in a way that avoids delay and minimizes asset shrinkage due to probate costs and estate tax.

Never have to say sorry: to your business

Another critical aspect of financial planning and your small business is using various types of insurance to protect it. The variety is exhaustive, and funding insurance for every contingency is probably prohibitive, but some may be more relevant to a particular business than others. Among the more common types are: liability insurance; property insurance; business interruption insurance (to cover lost income and overhead expenses when a business must temporarily close its doors due to a covered disaster); life and disability insurance; and key person insurance (to minimize the financial disruptions in the event of the death or incapacitation of someone who is critical to your business).

Boiled down to the essentials, financial planning is about two things – accumulating wealth and protecting it. Doing it properly may mean seeking advice from specialists in a variety of different fields, but a good starting point is someone with an overall understanding of the big picture, such as your accountant. As a small business owner it’s important for your long term personal financial success to take advantage of the variety of financial planning instruments that apply in the small to medium business context.

Check Out Disability-Related Tax Breaks

A variety of tax breaks are available to help disabled taxpayers cope with the financial burdens of disability. Tax relief falls into three categories. First, many types of disability payments are exempt from taxes. Second, disabled taxpayers can deduct a number of special expenditures related to their disability. Finally, some special tax credits are available. Businesses that improve access for the disabled are also eligible for tax credits and deductions. (more…)

Are You On Top Of Your Competitors?

Here’s a list of questions that every business manager should be able to answer with an unqualified ‘yes’. They relate largely to the fundamental need of identifying and understanding your competition, and if you find yourself giving a ‘no’ answer to any of them it means you could be short of valuable information that would provide you with a competitive advantage. (more…)

Perform A Midyear Tax Plan

It’s time to do a midyear review of your business tax planning. Here are five ideas to consider. (more…)

Homebuyer Tax Credit Is Extended

If you signed a contract before May 1 to buy a home, but have been unable to close the deal, you still have time to apply for the homebuyer tax credit. The deadline for finalizing the paperwork on your new home has been extended through September 30, 2010. (more…)

Good Personnel Management Means Better Profits

Most small businesses operate a tight ship. They manage overhead expenses and watch cost of sales to stay on the credit side of the ledger. But when you’ve reached a point where you cannot see any further ways to reduce costs, there could still be an opportunity to increase your profits through increasing productivity. Probably the most important way managers can increase productivity is in the way they manage their people. There are a number of practical steps you can take that revolve around your people management systems. (more…)