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Smart Tips For Starting A New Business - April 18, 2014 by WWFCU

Group Of Business People Analyzing Graphs and Charts in OfficeThe many details involved in getting a new business off the ground could scare off even the most committed and motivated entrepreneurs. If you’re thinking about starting a new business, the Michigan Association of CPAs provides the following list to help you begin the process.

  • Stick to what you know and love. Successful businesses don’t just happen. They are made. Whether you plan to profit by “clowning around” at birthday parties or growing a multinational corporation, your success relies on your knowledge, passion, and commitment. Evaluate your skills and interests and find a business that works for you.
  • Get smart. Learn all the intrinsic details of the businesses that interest you. Use the Internet to research the industry. Investigate the competition. Subscribe to magazines that cover your field or trade (the cost may be tax deductible) and attend association meetings and local networking groups. Talk with business owners in similar fields. The more knowledgeable you are, the better your chance for success.
  • Choose an organizational structure. You’ll need to decide whether to organize your business as a sole proprietorship, partnership, limited liability company, or corporation. Each has its own advantages and disadvantages. Since your choice affects both your income taxes and personal liability, it is important that you learn as much as you can about each and seek professional advice before making a decision.
  • Name your business. This is not as easy as it may sound. It’s often best to select a name that is short, easy to remember, descriptive of the type of business you’re in, and likely to attract attention. Depending on your legal structure, you may have to register your business name with your local or county government. If a Web presence is important to your business, check to see if your desired domain name is available.
  • Make it possible with a business plan. Think of a business plan as your blueprint for success. The process of developing a detailed and accurate business plan, however daunting, will help you think through important issues. A business plan should outline your strengths and weaknesses, and show where you are, where you want to go, and how you plan to get there. A typical plan includes an executive summary, a description of the business and its products or services, marketing strategy, operations plan, financial data and projections, management description, and market, competitive and risk analyses.
  • Find the best location. Location is almost always a critical factor in a business’ success. Some local governments can provide information on traffic patterns for city and county roads. They also may have local population demographics. On your own, you can check area competitors and measure pedestrian traffic during business hours to estimate walk-in potential. Once you’ve settled on a location, decide whether to rent or own the building and then evaluate different sites.
  • Raise money. Raising the money needed to start a new business is almost always one of the most difficult steps. Financial resources available to small businesses can vary depending on whether you are starting a new business or purchasing an existing one. Generally speaking, business loans for start-up enterprises are not easily obtained. Many start-ups are financed by personal resources including savings, home-equity loans, and credit cards. Relatives and friends also may be potential sources of financing.
  • Make it legal. Governments often require licenses and permits for conducting business. In some cases, it’s as simple as paying for a license. In others, you may face the more difficult task of complying with regulatory ordinances that protect public health and safety and, increasingly, aesthetics.
  • Insure your business. Don’t make the mistake of cutting corners by not insuring your new business venture. Look into a business owner’s policy that includes, at the very least, property, liability, and business interruption coverage.
  • Plan to work extremely hard. While many people start businesses in the hopes of not being tied down to a job, business owners find themselves working longer and harder than most employees, especially in the beginning.

This article was submitted by the Michigan Association of CPAs.

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Save Money on Credit Cards - April 13, 2014 by WWFCU
  1. credit cardYou can save as much as a thousand dollars or more each year in lower credit card interest charges by paying off your entire bill each month or by using a check, cash or debit card for purchases.
  2. If you are unable to pay off a large balance, pay as much as you can and switch to a credit card with a low annual percentage rate (APR). Ask your credit union about their credit card offerings.
  3. You can reduce credit card fees, which may add up to well over $100 a year, by getting rid of all but one or two cards, and by avoiding annual, late payment, and over-the-credit limit fees.
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Avoid ID Theft When Job Searching - April 8, 2014 by WWFCU

Identity TheftLooking for a job? You should also be looking out for identity thieves.

You want to be thorough on your résumé when you’re looking for a job. But here are a few things you should NOT include on your resume, according to the Identity Theft Resource Center. You can provide any of these things to potential employers later in the process if they request that you do so:

  • Social Security or taxpayer ID number
  • Date of birth; age; sex; marital status
  • The year you graduated; your schools’ names
  • Professional license number
  • Disabilities
  • The reason you left a past employer
  • Hobbies
  • Driver’s license number
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Edison’s Tips to Thinking Creatively - April 3, 2014 by WWFCU

Idea ConceptCreativity isn’t just a talent; it’s a habit you can – and should – cultivate and grow. Learn how to develop your creative muscles from the genius of invention, Thomas Edison:

1. Question all assumptions. Don’t accept the conventional wisdom without first examining and challenging it. It’s said that Edison, when hiring a new employee, would invite the person to have some soup with him. If the candidate salted the soup before tasting it, he didn’t get the job—because he assumed it would require salt without testing the theory first.

2. Generate as many ideas as possible. The more ideas you have to test, the more likely you’ll find one that works, as long as you keep at it. Edison is reported to have conducted more than 50,000 experiments before perfecting the alkaline storage cell battery.

3. Analyze your failures. When an experiment fails, take some time to consider what you can learn. Keep detailed notes so that when an idea works, you can go back and reexamine your efforts in light of your success.

4. Adapt other ideas. Edison often used the inventions and ideas of other people as a mental springboard. Keep up with what’s going on in your organization and industry—what people are doing, where others have failed. Look for ways to take policies, systems, or ideas that are already working somewhere else, and turn them into something you can use in your own department.

5. Record all your ideas. Keep a notebook for writing down ideas whenever they occur to you. Go back over the notebook regularly, looking for connections between ideas or new ways of thinking about the same problem.

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Planning an Affordable Family Vacation - March 31, 2014 by WWFCU

Hispanic family in a car. Family tour in a car.Travel expenses can take a big bite out of your budget, but the Michigan Association of CPAs advises that there are many ways to make your vacation dollar go further.

Search for Deals
Don’t miss out on the many online opportunities to find great bargains. You can use online travel sites to search for the lowest airfare, hotel rates, and car rental, as well as entertainment deals. It’s a good idea to check specific airline sites, too, because they may be advertising specials that aren’t included on the bargain sites.

Pick the Package
Before booking any segment of your trip, check out packages available from airlines or hotel chains. It’s often possible to find low-priced packages that include both hotel and airfare, and admission to local attractions, as well. However, remember that packages may not always be the cheapest deals. Examine the details and make sure that what you’re getting is worth what you’re paying.

Be Flexible
Uncertain exactly where you’d like to go? Then plan your trip around the best deals available. Sites that specialize in low-cost travel usually advertise specials to certain locations, as do many airlines. If the location sounds like somewhere you’d enjoy exploring, you could save a great deal on your trip.

Choose a Destination Location
Want to save money during your vacation on gasoline and admission costs for various attractions? Pick a hotel that has a pool, playground, nearby hiking, or other on-property activities. In addition, many hotels offer suites with their own kitchens. While these may cost more than regular rooms, the savings on restaurants may more than offset the higher price.

Explore the Great Outdoors
Camping is not only a fun family activity, but it’s also a cheaper way to travel. There are campgrounds and cabins at national and state parks that offer an inexpensive way to explore these locations. Outdoor vacations are a great departure from the usual routine and make it possible to get away from the television and computers. And in many cases, they are much less rustic than you might imagine. There may be cabins available at some sites, as well as water and electricity hookups.

In addition, getting in touch with nature may not be your only option when you camp. Disney World, for example, has campgrounds that can lower the price of what might otherwise be a fairly pricey vacation. You may find campgrounds near other theme parks or attractions, so don’t limit your search to hotels when looking for accommodations.

Head South
If you’ve dreamed of taking a vacation in the Caribbean or Mexico, summer is a great time to do it. That’s because summer is considered the off season, and many resorts offer promotions that feature great rates. If you’ve assumed you couldn’t afford a sunny resort locale, double check to see if prices are lower than you thought at this time of year.

Consult Your CPA
Your local CPA has many great ideas for cutting costs in various aspects of your life. Turn to him or her for advice on any of your financial needs.

This article was submitted by the Michigan Association of CPAs (www.michcpa.org).

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Turn Retirement Dreams into Reality - March 24, 2014 by WWFCU

Close up view of golf ball on tee on golf courseHave dreams about retiring early? We have some tips on how to make that dream a reality.

According to the Michigan Association of CPAs, retiring early takes meticulous planning and more than a tidy sum of money, but for the truly committed, early retirement is possible. Here is what you need to do if you desire an early escape from the work world.

Envision Your Retirement Years—One of the biggest challenges that retirees face is determining how much they need to save by the time they hope to retire. The further away you are from retirement, the more difficult the task. CPAs and other experts say you need somewhere between 70% and 80% of your pre-retirement income to maintain your standard of living. This rule of thumb is helpful for starters, but it doesn’t consider that the amount of money you’ll need in future years depends, to a great extent, on the retirement lifestyle you plan to lead.

Make The Most of Retirement Savings Opportunities — Perhaps the best way to prepare for an early retirement is by taking full advantage of 401(k) plans or other employer-sponsored, tax-deferred retirement plans. These plans make it possible for you to invest pretax money for retirement directly from your paycheck and, as an added bonus, many companies will match part, or even all, of your contributions.

If you’re self-employed, you can create your own retirement plan by opening a Keogh account. Even if you work for another company and are covered by a retirement plan, you can use a Keogh plan to shelter self-employment income you may earn from consulting or freelance work.

Traditional and Roth IRAs offer additional opportunities to build your retirement nest egg. Eligible workers can contribute to an IRA even if covered by a 401(k) at work. In certain cases, your IRA contribution may be tax deductible and, in all cases, there is no tax on earnings inside an IRA until the money is withdrawn.

Reduce Expenses to Build a Surplus — Retiring early is an aggressive act that requires not only intense saving, but a serious willingness to live below your means during the wealth accumulation phase of your life. Are you willing to replace expensive restaurant meals with dinners at home? Are you ready to lower your housing costs by trading down to a smaller home? The more fat you can trim from your budget, the more you can invest toward achieving early retirement.

Become an Astute Investor — It’s important to be vigilant about the allocation of the assets in your investment account. The biggest mistake you can make with retirement savings is to play it too safe. The longer you have before you retire, the more you should invest in stocks which offer growth potential. Stocks may be considered risky because they are more volatile in the short term but, over time, stocks typically outperform other investments. Your challenge is to achieve a reasonable balance between risk and reward.

Consider Your Future Insurance Needs — Right now, you probably have health, disability, and life insurance coverage under your employer’s group policy. In fact, your employer probably pays some of the cost of this coverage. When you retire, at the very least, you will need to replace your health insurance with a new policy that will carry you to age 65 when Medicare kicks in.

Enlist Help — Retiring early necessitates far more than a desire to call it quits before reaching your normal retirement age. It requires a knowledgeable look at the lifestyle you envision and the resources you have to fund your future. A CPA can be a valuable resource for would-be early retirees. He or she can help you work out a spending and investment plan that considers your retirement goals, current resources and investments, and future sources of income, as well as taxes, inflation, interest rates, and other components that factor into your plan. The sooner you make an appointment with your CPA, the sooner you’ll be on your way to achieving early retirement.

This article was submitted by the Michigan Association of CPAs.

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The ABCs of Auto Insurance - December 30, 2013 by WWFCU

Auto_insuranceYou know you have to have auto insurance, but do you know exactly what it covers?

Auto insurance protects you against financial loss if you have an accident and is a contract between you and your insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.

Auto insurance provides property, liability and medical coverage:

  • Property coverage pays for damage to or theft of your car.
  • Liability coverage pays for your legal responsibility to others for bodily injury or property damage.
  • Medical coverage pays for the cost of treating injuries, rehabilitation, and sometimes lost wages and funeral expenses.

An auto insurance policy is made up of six different kinds of coverage. Most states require you to buy some, but not all, of them. If you’re financing a car, your lender may also have its own requirements.

Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium.

This article was submitted by the Insurance Information Institute, an organization that provides facts and assistance free of charge to the media, individuals and organizations. Submission of this article does not imply an endorsement or recommendation of the Financial Resource Center site.

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6 Tips for Deducting Donations - December 17, 2013 by WWFCU

DonationIf you’ve donated to a charity this year, the IRS wants you to know about few things about deducting it:

Tax-exempt status – Contributions must be made to qualified charitable organizations to be deductible. Ask the charity about its tax-exempt status, or look for it on IRS.gov in the Exempt Organizations Select Check, an online search tool that allows users to select an exempt organization and check certain information about its federal tax status as well as information about tax forms an organization may file that are available for public review. This search tool can also be used to find which charities have had their exempt status automatically revoked.

Itemizing – Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.

Fair market value – Cash contributions and the fair market value of most property you donate to a qualified organization are usually deductible. Special rules apply to several types of donated property, including cars, boats, clothing and household items. If you receive something in return for your donation, such as merchandise, goods, services, admission to a charity banquet or sporting event only the amount exceeding the fair market value of the benefit received can be deducted.

Records to keep – You should keep good records of any donation you make, regardless of the amount. All cash contributions must be documented to be deductible – even donations of small amounts. A cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity that includes the charity’s name, contribution date and amount usually fulfill this record-keeping requirement.

Large donations – All contributions valued at $250 and above require additional documentation to be deductible. For these, you should receive a written statement from the charity acknowledging your donation. The statement should specify the amount of cash donated and/or provide a description and fair market value of the property donated. It should also say whether the charity provided any goods or services in exchange for your donation. If you donate non-cash items valued at $500 or more, you must also complete a Form 8283, Noncash Charitable Contributions, and attach the form to your return. If you claim a contribution of non-cash property worth more than $5,000, you typically must obtain a property appraisal and attach it to your return along with Form 8283.

Timing – If you pledge to donate to a qualified charity, keep in mind that for most taxpayers contributions are only deductible in the tax year they are actually made. For example, if you pledged $500 in September but paid the charity just $200 by Dec. 31 of that same year, only $200 of the pledged amount may qualify as tax-deductible for that tax year. End-of-year donations by check or credit card usually qualify as tax-deductible for that tax year, even though you may not pay the credit card bill or have your bank account debited until after Dec. 31.

Bottom line: your support of a qualified charitable organization may provide you with a money-saving tax deduction, but conditions do apply. For more information, see IRS Publication 526, Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property. These publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

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Taxes–What to Stash and What to Trash - December 10, 2013 by WWFCU

Tax_DocsWhat records and documents should you keep in case the IRS ever decides to audit you—and for how long should you keep them?

Here’s some advice to consider:

  • The standard statute of limitations is three years, but the IRS can audit up to six years after a filing if it suspects under-reporting of income by more than 25 percent.
  • If auditors find fraud, or if you fail to file a return at all, there is no statute of limitations. For this reason, many tax advisers recommend hanging on to your tax returns forever. Then, if the IRS claims it has no record of you filing for a certain year, you will have a copy to defend yourself.
  • It also makes sense to keep backup documents to your tax returns, such as W-2 forms, receipts for charitable donations, and other deductible expenses for at least six years.
  • As for investment statements, you only need to keep monthly or quarterly documents until you receive a year-end summary. These summaries, along with stock certificates and any documents related to investment purchases or sales, should be kept for as long as you own the investment plus an additional seven years after you file taxes reflecting the sale.
  • This same schedule applies to mortgages. Keep the monthly statements until the year-end statement arrives. Save these annual statements for the term of the mortgage, plus seven years.
  • Unless you are being audited, monthly bank and credit card statements can be discarded after a year.
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Know Your Obligations when Cosigning a Loan - December 3, 2013 by WWFCU

Loan_Co-SignOften, parents cosign for their sons or daughters who have adequate income but a lack of credit or employment history. By cosigning, parents help their offspring get the loan and establish credit in their own names.

But many borrowers, be they the cosigner or the primary borrower (also known as the maker), don’t recognize the magnitude of the responsibilities borne by cosigning a loan.

What responsibilities do you have when you cosign a loan?

Cosigners lend their names and good credit histories to the maker. Should the maker die, lose a job, or otherwise fail to make payments, all responsibility for meeting the terms of the loan transfers to the cosigner.

An often-overlooked aspect of cosigning a loan is the fact that the loan appears on both the maker’s and cosigner’s credit reports.

If the maker doesn’t pay, the lender will notify you to make the payments. In most cases, however, your credit report already will contain the delinquency by the time you receive the notification.

How might a cosigned loan affect your ability to get new credit?
Even if it is not delinquent, a cosigned loan is part of your credit history. Since financial institutions consider a cosigned loan your responsibility, they’ll include it when calculating your debt-to-income ratio.

This ratio helps lenders judge whether you have too many bills to pay relative to your income. The cut-off point varies widely among financial institutions and the type of loan. If it’s too high, though, the result is the same: your loan application will be denied—even when the primary borrower never misses a payment on the cosigned loan.

Should you cosign a loan?

Before making a decision whether to cosign a loan, consider the following advice offered by Experian:

  • As a cosigner, you should know the purpose of the loan, the type of loan, the terms, and why your friend or relative needs a cosigner.
  • Understand your legal and financial obligations. Federal law requires financial institutions to tell you in writing that you are responsible for paying the debt if the primary borrower can’t or won’t make loan payments.
  • Read and understand the credit contract. Be aware that a lender may be able to collect from you even when there is collateral. In the case of a car loan, for example, the lender might demand payment from you instead of repossessing the car. And even if the car is repossessed, its value may not be sufficient to pay off the loan.
  • If the primary borrower defaults on the loan, then you as the cosigner may have to pay late fees or collections costs in additions to the loan amount.
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