How To Kickstart Your Early Pre-Retirement Financial Planning?

The concept of retirement can evoke a mix of emotions, including apprehension and excitement. You may wonder how early you can realistically retire, how much it will cost, whether you’ll have enough to sustain the lifestyle over the long term.

In fact, 60 percent of Americans say their biggest fear is outliving their retirement savings. Regardless of your age or current stage of life, financial planning is essential. For this hiring a financial planner Santa Monica, Los Angeles is the first step.

You don’t have to let the financial planning complexities overwhelm you, or worse, keep you from getting the ball rolling. It’s essential to move forward really soon in order to prevent unpleasant or unexpected outcomes in the highly anticipated retirement years.

Though current research shows some harsh realities and statistics for American retirement, planning and experiencing a comfortable retirement is within your reach.

To give you some idea on how to begin the process, here are some tips. Use these insights as a framework for planning your retirement and gain complete peace of mind throughout the way.

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Determine The Retirement Goals

Many sources say your retirement savings must total 10-20 times your current income, and that you’ll need about 70-80% of your pre-retirement income in retirement.

However, in reality, very few people actually want to reduce their lifestyle after retirement. Therefore, you may need 100% of your income.

The truth is there’s no typical retirement experience or any universal truths about the matter. How you plan for your retirement will depend on your financial and lifestyle circumstances.

That’s why one of the first steps in the retirement planning process is taking time to think through financial goals.

If you want to live a rich life and plan for a happier, healthier retirement, you must consider everything that will impact your well-being.

The first variable you need to define is the year in which you plan to retire- meaning when you’ll begin withdrawing from your retirement savings. You’ll also want to do some reflection about how you envision your retirement lifestyle.

Will you continue to work? Do you have dreams of traveling? Will you want to continue residing in your current location or seek another geographic area?

Defining these types of goals and lifestyle aspirations will help set the stage for the kind of retirement strategies you’ll need to adopt to turn those plans a reality.

Plan For Your Retirement Now Thinking of securing your retired life? start early with financial planning. Let our skilled CPAs offer you all assistance.

Review The Assets And Organize Your Financial Information

For both assessing your current financial state and planning for retirement, it’s necessary to assimilate all of the documentation and information that pertains to your finances.

The following are some of the most important records you should collect and organize for this purpose:

• Employment and tax documents, including W-2 and 1099 forms, and pension information
• Information on the mortgage, titleholder, purchase price, the current value of your home
• Financial institution accounts and balances
• Any loan accounts or credit cards you may have

With all this information at hand, you will have a clear picture of how far along you are in the retirement financial planning journey.

Also, the financial planner Santa Monica, Los Angeles, help you with modifications. Before you can get to where you want to be, you have to understand where you are currently.

Start Saving Money Right Away

One in three Americans report having no money saved for retirement, and one in four have less than $10,000 saved. So, it’s no surprise that only 51% of Americans are confident they’re saving enough for retirement.

The best advice is to start saving from this very moment. Even if you can manage small contributions to your retirement savings, it’s worth it to do so. Compounding interest over the years can turn small investments into big returns.

If you’re not sure how to make room for savings, take some time to work up or adjust your monthly budget. Be sure to track the current spending and then assess the patterns.

Break down your expenses based on different categories, and make adjustments that allow you to allocate retirement savings contributions.

Just minor cuts and tweaks can help you find opportunities to start saving for retirement, now.

Also, keep in mind that the longer you can keep your retirement portfolio untouched, the more your investments would grow.

Even the opportunity cost of withdrawing from the retirement savings adds up over the years.

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Evaluate Appropriate Risk Levels

No investment is without risk. The more risk you’re comfortable taking, the greater your portfolio’s earning potential will be. Investors at times sacrifice investment returns by taking a conservative approach early in their lives.

On the other hand, there are investors who take too much risk for their particular situation. Now, investing is personal and you must take your financial picture into consideration.

Increase The Social Security Income

Holding off in Social Security for as long as possible is a smart move. Your monthly benefit would be 25% smaller if you claim Social Security at 62 instead of full retirement age of 66.

Now, everyone’s situation is different. Some people may apply for Social Security benefits in their early 60s since they really need the income.

For most retirees, waiting longer implies a larger lifetime payout, but not everyone can manage to take it later.

Team Up With A Financial Planner

Acquiring the support of an experienced, qualified financial planner Santa Monica, Los Angeles, is one of the best things you can do for the retirement planning efforts.

From providing objective financial advice to budgeting, and creating lifetime income, the planner has the knowledge and expertise to help you navigate your own financial boundaries.

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Few Tax Preparation Mistakes To Avoid In 2020

Do you know your business’s cash flow takes a hit when you owe IRS money? In such a case, avoiding a tax debt can be really simple like knowing when and how to file the small business tax return.

Also, by knowing what business tax mistakes to avoid, you can prevent having to pay the IRS money than what you legally and rightfully owe every year.

Whether you own a small business or a big one, you need help. Hiring skilled professionals helps you get small business tax tips in 2020 so you don’t need to worry at all.

Neglecting Hiring A Financial Expert

One of the easiest ways to avoid common small business tax filing mistakes is by hiring skilled tax experts. These individuals understand that as an entrepreneur you have very little cash left in your budget for anything other than the basics.

The tax expert can even ensure that your finances are just in order and also help you find ways to save money while bulking up the cash flow.

More importantly, the qualified financial expert professional can advise you on matters such as tax credits, small business tax preparation that you claim on the tax returns.

Now, the money this individual saves can cover the cost of hiring him and just leave some cash on your budget at the same time. So, this is again a win-win situation for you, right?

Missing Out On Legitimate Business Expense Deductions

Another important reason for hiring a tax expert for your small business involves finding and using legitimate expense deductions to which you are actually entitled. The IRS permits small business owners to deduct some expenses on the returns to help reduce their taxable income.

Knowing what these expenses actually are, however, tricky. Even more, failing to claim them when filing your returns can result in paying huge and unnecessary taxes to the IRS every year.

Some of the common business expenses you can deduct when filing returns are:

• Minor cash purchases
• Travel expenses such as car repairs, mileage, and gas
• Training classes
• Food expense such as entertaining clients

You can keep a record of these costs during the year so you can show proof of these when you are filing the taxes.

Falsely Classifying Hobbies As Businesses

One of the other tax mistakes to avoid is not classifying your hobby as a business.

Legitimate home-based business owners can actually deduct expenses such as postage, internet bills, purchase of equipment such as cameras, printers on the returns.

However, when you have a home-based business that constantly losses more money than it makes, the IRS labels it as a hobby and not a business.

As a rule, you can’t deduct hobby expenses on the taxes unless these are lower than the amount of income you make from it. If you are unsure of whether or not your endeavor is a hobby or business, you must check the IRS guidelines on their website.

You can then choose whether or not to deduct the related expenses on the tax return.

Incomplete Or Inaccurate Records

When you don’t keep your business records properly, you only make it more difficult to file and pay your taxes on time every year. Incomplete records often lead to you misplacing important tax documents such as income-earning statements or deduction receipts.

If you hire an expert to help you with small business tax preparation, you are likely to make the person’s job really challenging. However, you can avoid it by organizing the records. Take enough time to organize the business’s books.

If you lack the time or talent, you can hire staff specifically for the purpose. You even have the option of outsourcing the tax services to a recognized firm.

Inappropriate Income Reporting

It may be really tempting to under-report what your small business really made during the tax year. However, purposeful and inaccurate reporting of the income only puts the business at risk of having IRS audits.

In fact, the IRS will sooner or later find out that you manipulated the numbers on your tax return. Now, once they find you, you will definitely be at risk for having criminal and civil penalties levied against you.

You can also avoid penalties by being truthful about your income when filing the tax returns. If you aren’t sure of how to report the income, you must hire a tax expert to file your business’s returns on your behalf.

Failure To Pay Or File On Time

As with filing the personal tax returns, your business’s returns need to be filed on time every year. Further, if you owe anything to the IRS, you must pay in full by the mentioned deadline if you don’t want to pay huge penalties and fines.

Finally, you must keep in mind these small business tax tips 2020 so as to avoid paying fines and penalties to the IRS unnecessarily.

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Is Financial Planning Important For Small Business?

Want to build a business that will last well into the future? The secret is sound is proper finance planning.

Financial analysis and planning allow would-be business owners to look at several things before starting the company, including current funding, initial costs, potential funding sources, the viability of an idea, etc.

Starting a business is complex and expensive than paying rent and making passive investment payments. Though similar to personal financial planning, smarter planning for a business does involve looking at the financial situation, including investments and debts, to understand what is possible financially.

It is also more complicated and harder for new businesses to understand what is affordable and possible for their venture.

Working with a financial planner to help you understand the basics of finance seems necessary to getting a business off the ground and maintaining it successfully.

Planning To Start A Business? Get The Finance Planning Order First

In-Depth planning is necessary to start your own business. These guidelines will help you venture into the business world successfully.

Cash management

Many businesses have seasonal and monthly variations in revenues. This translates into periods when cash is plentiful and times when cash shortages occur.

In building the financial plan, you must take these cycles into account to keep a tight rein on expenditure during the forecast low revenue periods.

Poor cash management can result in negative consequences such as not being able to make payroll. Having the right financial planners Los Angeles by your side can help you sleep better at night. He provides a structure so there is a cash cushion helping you all the time.

The cushion allows your small business to take advantage of opportunities that arise, such as the chance to purchase inventory from suppliers at a temporarily reduced cost.

Long-range views

In business, it is easy to focus on the crisis and issues that must be dealt with on a daily basis. The price for being too short-term oriented is that you may not spend enough time planning what needs to be done to grow the business long-term.

The financial planning, with its forward-looking focus, allows the business owner to better see what expenditures need to be made to keep the business on a growth track and to stay ahead of competitors.

Spotting trends

As a business owner, you make so many decisions over the course of a month that it can be difficult to tell which decisions resulted in success and which ideas resulted in failure.

Preparing the financial plan involves setting quantifiable targets that can be compared to actual results during the year. As a business owner, you can see whether an increase in expenditure led to the hoped-for jump sales.

Prioritizing expenditure

Conserving financial resources in a small business is a critical element of success. The financial planning process helps you identify the most important expenditure, those that bring about improvements in efficiency, productivity, or market penetration, versus those that can be postponed until cash is plentiful.

Most well-capitalized corporations go through the prioritization process, comparing the cost to benefits of each proposed expenditure.

Hiring an experienced financial planner Los Angeles can help you deal with everything related to expenditure.

Measuring progress

In the early stages of their ventures, you work for long hours and deal with numerous challenges. It can be difficult to tell whether the progress is being made or whether the business is mired in mediocrity. Seeing the actual results are better than forecast provides the small business owner needed encouragement.

A chart showing steady growth in revenues month by month, or a rising cash balance is a great motivating factor. The financial plan helps you see, with clarity, that the business is on its way to being successful.

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