Are Annuities a Good Investment

Are Annuities a Good Investment

There are two different types of annuities: deferred annuities and immediate annuities. The type of annuity you choose depends on how soon you expect to receive payments. If you are looking for a long term investment where you plan on making withdrawals once you reach retirement then you might choose a deferred annuity. If you are looking to make withdrawals sooner than you may want to choose an immediate annuity.

English: Types of Annuities
English: Types of Annuities (Photo credit: Wikipedia)

Either type of annuity can be fixed or variable. A fixed annuity acts like a CD from a bank but in this case it is an investment with an insurance company. You have a fixed interest rate that you receive for the annuity and it is usually a higher percentage than a normal CD would bring at a bank.

The guaranteed interest payment from these fixed annuities as well as the minimum amounts that you have to invest makes the fixed annuities appealing for those who are not confident in the ways of the stock market.

Another nice thing is that you do not have to pay taxes on the interest gained until you decide to start withdrawing the money from the annuity. A disadvantage with fixed annuities is that the interest rates might be high to begin with but can drop after the first year of having the annuity. This unknown factor can be a turn off for some who are hoping that they can maintain the rates that they first received when they started their annuity.

If you do not like the new rates and want to withdraw your annuity before it matures then you might be stuck paying surrender charges that will cut into your profits. With a variable annuity you can choose from a variety of investments to put your money into and the rate of payment you receive depends on how well the investments performed. With variable annuities you invest in several different stock or bond like accounts that will help your investment grow over a long period of time. Just like with the fixed annuities you pay no taxes on your gains until you begin withdrawing from your account.

Although with variable annuities you may have an opportunity to have greater growth potential with your investment there are some drawbacks as well. The investments you chose may take a turn for the worse causing your potential growth to plummet. There are drawbacks with the tax rates when you decide to withdraw you money,as well as fees if you decide to withdraw early and there can be high sales commission fees. It is good to do your research before you decide which annuity is best for you or even if an annuity is a good investment.

Turn to a Phoenix Tax Lawyer for Advice

Taxes
Taxes (Photo credit: Tax Credits)

Filing taxes can feel like a daunting process at times. Tax laws at the federal, local, state, and foreign levels change constantly, causing potential confusion for taxpayers filling out a return. Turn to a Phoenix tax lawyer for advice; they possess the knowledge and combined expertise of tax, business and litigation to counsel and guide individuals effectively. Their understanding of how the different tax laws interplay helps clients to minimize their tax liabilities.

Tax issues can impact many areas of a person’s life, from estate planning to formation of a new business, and bankruptcy, to name just a few. Attorneys can assist with protection of assets through by setting up an entity to protect from malpractice, divorce, or any other threats to a client’s assets. In essence, proper planning avoids stress and anxiety in the event of unpleasant circumstances threatening the client’s tax situation.

A Phoenix tax lawyer can also assist with waiving IRS penalties and working out a payment plan for individuals owing money. In some situations the debt can be settled for less than the amount originally owed. Individuals behind on their filings can catch up quickly with an attorney’s assistance, thus avoiding further accrual of interest and penalties.

Individuals in need of tax assistance should seek a Phoenix tax lawyer today. Any issues or questions related to repayment of debt, filing, can be addressed knowledgeably by an attorney. They can help the client plan for the future and unpleasant events such as divorce, death, or malpractice.

Running Your Own Business and Managing Accounts for the First Time

If the idea of being your own boss seems increasingly attractive in these trouble economic times, you’re not alone.  Surprisingly large numbers of individuals have taken, or are taking, the leap into self-employment.  It seems odd, when the economy is contracting, but it is often the case during recessions that the number of self-employed and new small businesses rises.  Small businesses are now leading the way in job creation; with more people facing job insecurity and redundancy, for many the only choice is to create their own job.  The idea is attractive at any time, being your own boss means freedom to take control of a big part of your life.  However, not all businesses will succeed and one crucial area that causes businesses to fail in the early days is poor planning, particularly of the financial kind. So what are the key tools to help you overcome the obstacles?

Basic Planning Matters

  • Planning can seem like a very boring part of preparing to go it alone.  However, it’s possibly the most essential part of the process.  Planning every aspect of your business from your marketing strategy to finding premises is absolutely necessary.  Planning your financial arrangements should also figure highly on your list.
  • Financial planning should include obvious, and frequently overlooked, matters like invoicing software and accounting software.  Customers will need to be billed and you need to be clear how this is going to work.  Simple paper invoices are fine; they are also time-consuming to produce and track. Invoicing software makes the process straightforward – and should be fool proof.
  • An accountant is an absolute must for any business or self-employee.  Tax and VAT regulations are complex and ever changing.  Regulations that apply to your company will vary depending on its size and could easily change as you grow.  Working with a professional from the start will ensure you stay on the right side of HMRC.  When choosing an accountant consider the following.

Finding an Accountant

  • Do find an accountant before, or when, you start trading.  It’s perfectly understandable that many small firms put this off.  Why pay for a service before you’re earning?  The simple answer is that you may not be aware of what records you need to keep.  Tax authorities recommend keeping records for at least six years.  An accountant can guide you through this from the start.
  • Contact a number of accountants and ask some questions.  Different firms operate on different charging structures.  Some will list charges for each service – which can allow you to pick and choose what you need.  Others will agree a service level for a fee – payable quarterly or monthly.  This may suit you if you will have a high volume of accounting work that needs to be dealt with frequently.
  • Find out what prospective accountants recommend in terms of accounting software.  Software comes in a range of options, including cloud versions which are extremely flexible and versatile.  Using online accounting software means that it will not matter what software your chosen accountant uses – they will be able to access your records online as and when required.

As your own boss you’ll be responsible for far more areas of your business than the actual work you do to bring in the cash.  While you don’t need to be an expert typist to type a letter, or a world class receptionist to answer the phone, areas such as accounting need specialists to be involved.  Don’t consider cutting corners on this particular aspect of your business but shop around carefully for a service that suits your specific needs and business.  With the right accountant and the right accounting software, making ends meet will seem effortless.

Simon Wilson blogs about small business issues and challenges, focusing on everything from accounting software to how small businesses can use social media.  When he’s not online Simon enjoys playing cricket and is a big movie fan.

Be Prepared For Your Taxes

There are many factors that can devalue your return during tax filing.  A bit of preparation each month can saves hours of work later on. This can also net you extra money on your return, which is always a good thing.
There are several ways to prepare for your taxes a little at a time.  Here we will discuss a few methods that will save you time when taxes roll around, or save you money if you are paying an accountant by the hour to prepare your taxes for you.

Save Your Receipts

Whether you are a business owner or simply buy supplies for your job out of your own income, you need to remember to save and file your receipts for any purchases made in relation to your work.  While most think of this when purchasing a new printer, laptop, or copier, they often forget the smaller purchases.  Other possible deductible purchases include:
•             Boxes of pens, pencils, highlighters, and other minor office supplies
•             Reams of paper and ink cartridges for printers and copy machines
•             Fuel used in travelling to purchase supplies

Stay Organized

There is nothing more frustrating and time consuming than a large box of random papers being dropped on your desk at tax time.  Save your accountant time and yourself money by properly filing these papers, receipts, and pay stubs for easier access during tax form preparation.  By doing this you will make a good impression as well as learn how to systematically reduce the stress that tax filing brings.

Communication is Key

During the year, if you have any doubts as to whether an activity will be important to your taxes, do your research and communicate with your tax professional.  This simple act can also protect you from possible auditing as your tax preparer will be able to notify you if an activity is going to bring up red flags later.
It is also important to communicate with your accountantabout any changes in your life or business. Common events that can affect your tax filing include:
•             Marriage, divorce, and separation
•             Custody changes
•             Insurance rate changes
•             Vehicle maintenance related to work

Plan Ahead

In the event that an audit takes place, you will need your records for several years prior to the year of audit.  In order to avoid excess stress and hassle, keep all tax records filed in an easily accessible place for at least ten years, more if you prefer.  The space taken by one four-drawer filing cabinet can save you from a very nasty auditing experience.

Some regularly saved records include:
•             Previous tax records
•             Purchase/Sale records for livestock in farm related industries
•             Banking records for all bank accounts
•             Receipts or proof-of-purchase for all vehicles
•             Maintenance records for all vehicles
•             Year-end paystubs for at least five years

Summation

By following these simple steps you will take a large bite out of the stress, time, and expense of tax preparation, as well as keeping secure and reliable resources handy in case of audit.  This system will also allow you more broad range of possibilities where your deductions are concerned, offering you a larger return at the end of each fiscal year.

Author’s Bio: Val Anne is an in-house writer from Franklin Debt Relief, a company specializing in programs for people with high credit card debt.

The Importance Of Having A Good Accountant

While it may seem that any bookkeeper or even keeping track of your own books will do, there is much to be said for employing a good accountant for your personal and business finances.

Save Money

Of course a good accountant will cost a fair amount of money, but in the long run having a capable accountant in charge of the books will save much more money than it costs. A good accountant will be able to see areas where expenses can be reduced as well as those instances where income can be increased. A really good accountant will even be able to make suggestions as to where productivity can be increased and save even more time and money.

Prevent Fraud

A good accountant will be able to spot fraud where you may not be able to.  Accountants are trained to recognize suspicious patterns and occurrences that a standard bookkeeper or even a business owner may not notice.  They can see when payroll is not quite right or when ghost deliveries area being made, and because they understand what is going on they can catch the culprit before he even knows anyone is onto him.  A potential perpetrator of   fraud will realize they stand a much less chance of being successful and fraud will be deterred.

Save Time

While bookkeeping software and basic accounting knowledge can get you far, there is too much at stake when it comes to accounting.  Difficult accounting issues can arise when you least expect, and having a good accountant on your side will save time, and time is money of course.  An example that involves both fraud and cost would be if the business owner suspected fraud.  He might spend a lot of time trying to figure out what is going on, while an accountant will know exactly what to look for to prove definitively whether fraud is an issue in very little time.  Another way time will be saved by employing a good accountant is in basic training.  Business owners have to spend the time to understand accounting and train on any software being used, while an accountant has already spent this time and is ready to get to work.

Better Productivity

As a business owner, you will be free to deal with other aspects of the business if you have a good accountant dealing with the finances.  With an accountant to keep you informed, you can rest easy knowing that if the budget or other financial issues need your attention, you will be notified.  This allows you to concentrate on whatever other business matters you need to and nothing slips through the cracks because you are trying to do too many things at once. If you are trying to deal with payroll and other financial issues while other areas need your attention, something important is likely to not get done.
It all boils down to specialization.  No one does finances better than a trained accountant, and having one handle your finances give you peace of mind, frees up your time, and saves you money.

Dennis works for one of Australia’s biggest accounting firms and knows the importance of finding a good accountant to manage both personal and business finances. Such is his expertise in the industry, Dennis is regularly used as a consultant to provide his fellow accountants with tips and advice for a range of situations.

What The Increase In Tax Rates Mean For The Economy

The Stock Market is threatened by Changes in the U.S. Tax Code

The stock market is expected to take a beating if tax rates on capital gains are increased by two thirds. There has been a lot of debate as to whether or not the economy will benefit or suffer because of these changes.

Apart from capital gains taxes, income taxes are also expected to increase. These changes will cause a lot of problems in the future unless the President and Congress agree on contentious issues. These two parties must agree before the year ends.

Investors in the stock market will have to protect their investments just in case taxes are increased. Many of them will have to sell before the new laws come into force. This is because an increase from 15 percent to 25 percent means that investors who will sell next year will lose 10 percent of their profits. For instance, those who plan to sell this year and get $100,000 in profits will pay $15,000 in 2012 taxes. If the same people liquidated their assets next year, they will have to pay $25,000 in 2013 taxes. The difference is quite significant, and many people will decide to liquidate their assets this year.

If a solution is not found before the election, the stock market might just experience the biggest sell-off in history as people rush to liquidate their paper assets before the next tax year.

People often consider many factors, including tax rates, when making investment decisions. This means that investors will consider what they will pay in 2012 taxes before they invest in anything.