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Self Employment – Tax Smarts
Being responsible for your own taxes is probably one of the least favourable aspects of being self-employed. Instead of having your employer do it, you have to ensure you do it yourself. It can be overwhelming! Self employed individuals have to be much more careful with their finances than people who work for someone else. Not only do you not get paid sick time or have automatic medical benefits and a 401k, but you have to make sure you set aside enough money for taxes otherwise you’ll have a huge bill at the end of the fiscal year. You need to think about taxes not just at tax time. You need to consider them throughout the year otherwise you could get yourself into serious trouble. Tax arrears is a problem for many self-employed people and the government looks at this seriously on a regular basis so there’s really no way to ‘hide’ from it.
Are you adequately preparing for tax time?
If not, here are some tips:
• Hire someone to keep paperwork in order
• Ensure you’re getting adequate tax write offs by talking to a tax consultant
• • Determine your approx. tax bracket and set aside that amount monthly for tax time ( Consider putting it in an interest bearing account so that you earn something off it!)
• Pay monthly or quarterly in advance so that you aren’t hit with a huge bill at the end of the year.
What if you find yourself in a tax arrears situation?
If you find yourself in tax arrears, work with your government. Usually, if you’re cooperative, they will make payment arrangements with you.
What if you’re already in serious trouble?
If you’re already in a situation where you could be at risk for having property seized or bank accounts frozen, get some advice straight away! There may be IRS tax relief programs that could help you out.
Financial Resolutions
Are you ready to start a new year with a new outlook on money? Don’t let this be a resolution that wears off by January 31. If you resolve to change your spending habits and stick to it, you’ll have a brighter future.
Have you got the recession blues or even just the recession fears? There’s never been a more important time to be careful with your money. The state of the economy doesn’t indicate that things are going to get better any time soon and those who live on cash and get out of debt will be in better shape to ride out the financial storm that’s upon us.
How do you get out of debt when your income is down?
It’s important to cut expenses and pay your bills on time as much as possible. Do MORE than the minimum payment and you’ll inch your way towards being debt free. Strive ot save money and for every bit of money you save, use that to your advantage by: stocking up on essentials, putting money away for emergencies and paying down your debt.
Bargain hunting is fun once you get started and you can even get your family in on the challenge to see who can find the family ways to save money. From saving on your hydro bill to your automobile expenses to groceries, you can cut corners here and there that can help you get debt free and have more disposable income!
Should You Do A Reverse Mortgage?
What’s a reverse mortgage? It allows you to borrow equity out of your home when you are mortgage free and own your home outright. Generally, this is something elderly people do in order to supplement their income and then when they pass away or decide to sell the house, the lender gets their money first. They take their money plus a fee. Is this a good ide?
If you’re young, a reverse mortgage is not a good idea and you might not even qualify. If you want to take equity out of your house and you’re elderly, this could help you increase your standard of living and help you do things you want to do in your retirement years. If you do this, you can still leave part of your equity to your children and not have to worry about paying the loan back while you live in your house.
Some mortgages are done this way for people that are younger who are about to have their home foreclosed. This is a different scenario where you sell your house for dirt cheap and rent it from the new owner which simply saves you from moving but doesn’t save your house. Reverse mortgages for the aged are generally only worth a fraction of the equity.
Any loan that takes a big chunk of your equity or has a very high interest rate needs to be carefully weighed before you make a decision. The idea might sound like a good one but you also need ot look at the cost of borrowing and whtehr or not that’s a fair rate for having the money now.