Fintech Freedom Editorial Team

5 Reasons Every New Small Business Owner Needs to Hire a Bookkeeper

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At the start of owning a business, money can be tight. Even if your financials are in good shape, it can be tempting to wear as many hats within your company as possible to cut costs. However, when it comes to bookkeeping, the investment is always worth it. Unless you are a professional accountant, having someone on your team who understands the ins and outs of bookkeeping is essential. Need more proof? FinTechFreedom shares the five reasons every new small business owner should hire an experienced bookkeeper.

Stay focused on your business

The duties involved with bookkeeping are extensive and time-consuming. Between entering every financial transaction that your business makes to calculating payroll, the hours add up.

If you’ve been handling these tasks up to this point, you are well aware of how much they can distract you away from your core duties. Rather than focusing on the business itself, you have to allocate enough hours for bookkeeping tasks. As a result, some of the most critical accounting duties may not be getting done properly (or at all). Having an on-staff or contract accountant will ensure that your financials are being handled in real-time—at all times.

Find every tax advantage

Accountants who specialize in small business bookkeeping are well-versed in the top tax breaks that can help your business save thousands. One such advantage that many new small business owners are unaware of is available when you form a limited liability company (LLC).

This single move can provide you with additional startup deductions, and it can also benefit your business for the long term when filing your state and federal taxes. Experienced professional accountants are able to advise on strategies like this, which can save you big time.

Keep consistent and accurate records from the start

Having detailed and accurate financial records is crucial for a number of reasons. For example, if you face an audit at some point, the process will be far easier if you’ve had a professional accountant maintaining your books. Being able to back up every number is crucial for a smooth audit that does not result in extra work and stress. Additionally, if you need to retrieve a transaction for any reason (e.g. refund request, verification of a specific purchase, etc.), you will be able to do so when you’ve maintained consistent and accurate records from the beginning.

Along the same lines, preparing and maintaining clear and explicit customer contracts are necessary to ensure timely payment for products and services rendered. These contracts also exist to protect both parties by defining each party’s responsibilities to the other. Among other things, when writing a contract, be sure to include the parties involved, the start and end dates, and the payment terms.

Better approval odds when applying for business loans

Planning to apply for a business loan to fund a major purchase? As a new business owner, getting approved for a loan (especially a more sizable one) can feel almost impossible. Having a bookkeeper as part of your team can increase your approval odds in a number of ways. Your accountant will be able to provide you with detailed, professionally created financial documents that are requested during the application process. When equipped with the right documents—especially ones that can prove your financial stability—lenders will see you as a lower risk.

Easier to make smart buying decisions for your business

One of the more important reasons to hire an accountant for your bookkeeping needs is to have an accurate idea of what you can afford at all times. Rather than making the best guesses, your accountant will be able to provide you with up-to-date figures that can inform your decisions. You can invest in smart tools like software with a bank account balance API integration. This will provide you with realtime banking information so you’ll never be caught out on available funds.

While it is certainly important to be diligent in minimizing costs when launching a new business, hiring a bookkeeper is always a wise move. Oftentimes, you’ll end up saving more in the long run (e.g. tax deductions) than you would handling accounting tasks on your own.

FinTechFreedom is here to give you a roadmap and step-by-step process in order to put your personal finances on the path to financial freedom. For more information, please visit our website or contact us today!

Best budgeting apps for 2022: Are they worthy of managing money?

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 What should you do to increase savings? Not just for saving, paying multiple bills can be a nightmare when a lot of necessary spending comes in your way. People struggling with their numerous debts only wish to know how to simplify their debt. They often consider bill consolidation programs to repay your bills. But this kind of professional help comes with a charge or a fee. A simple solution is available. You can use budgeting apps for managing bills and saving money. Many budgeting apps are available for free.

Mint, ranked as the best free budgeting app, is a good option. Free apps usually have limited features.

You may need to pay a specific fee for a budget app with premium features.

Read the article to know about budgeting apps in detail.

Budgeting apps: are they really useful?

The primary goal of budgeting apps is to provide you control over your finances while still being convenient and straightforward. Every budgeting app is different, but they all operate to help you manage your money in the same way. Budgeting apps can connect to your bank and credit card accounts, allowing you to keep track of your spending and manage your finances from anywhere. The primary purpose of these financial apps is to assist you in creating a manageable budget based on your regular income and spending. Some programs, such as the zero-based budget, take a unique approach to budget. Others take a broader approach, allowing you to set up numerous budget categories and allocate money from your paychecks to them. Budgeting apps linked to your checking or credit card accounts can automatically track new purchases and other debit activities for you.

You might be able to utilize budgeting software to pay bills on autopilot each month, similar to the automated bill payment feature your checking account or credit card may offer. Due date trackers are another feature available in budgeting apps that can help you avoid late or missed bill payments.

Top Budgeting appsFeaturesProsCons
Mint  1. Easy to use Interface
2. You can automatically classify your expenses. It helps in making graphs or charts.
3. Sign in with your fingerprint to keep all of your information safe and secure.
4. Allows customers to link bank accounts and obtain free credit reports.
5. The software allows you to check your credit score. 		1. Expenses are simple to categorize.
2. You can get real-time spending reports.
3. Monthly bills are simple to keep track of.
4. Make a spending budget for the month.
5. You can set spending alerts 		  1. Advertisements create a delay
2. While synchronizing accounts, you can face difficulties.
3. Multiple currencies aren't included in the system.
4. Multiple savings objectives cannot be assigned to a single account. 
YNAB1. Goal-setting function.
2. Users can better understand their purchasing habits with detailed visual data.
3. Users can establish goals and see how long it will take them to attain them.
4. Users will be able to deal with flexible budgeting. 		1. It's simple to double-check your financial facts.
2. Several banks and different devices are supported. Spending is simple to keep track of.
3. Spending categories that can be customized 		1. You can't track your investments.
2. Limited free offer.
3. Customer service is solely available via email.
4. There are no features for keeping track of bills. 
Goodbudget1. Syncs automatically between Android, iPhone, and the web
2. Add bank accounts and transfer money fast.
3. It allows you to exchange info with loved ones.
4. For emergency finances, make changes to your budget as needed.  		1. Easy to use.
2. Synchronizes to all devices
3. Can transfer funds from another envelope to cover the additional expense
4. Examine detailed spending reports.  		1. Limited free offers
2. It does not sync with bank accounts.
3. Can't keep track of your investments 
Personal Capital1. It has a cash flow analyzer system
2. It helps track your income and expenses across several accounts.
3. It has a retirement planner feature
4. It helps calculate your net worth. 		1. It assists you in determining your retirement objectives.
2. Tracking of your assets and liabilities.
3. It's simple to get in touch with personal advisors for any financial assistance.
4. Individual securities can be purchased.
5. Tools for managing investment are free.
6. Financial advisors can provide you with skilled assistance.
7. Tax optimization strategy available. 		1. You should have a minimum of $100,000 in your account.
2. You need to spend management fees. 

A few points to note while using a budgeting app

If you want to use a budgeting app. follow these guidelines to get the most out of them:

●   Before you download any budgeting app, think about what you want to get out of it. This can assist you in setting reasonable expectations for how you will use the app.

●   Don't give up on budgeting entirely if you find that a budgeting tool isn't working for you. A budgeting software tool or a budgeting spreadsheet may be a better fit for you. Whatever method you use to budget, the most important thing is to pick one that works for you and stick to it.

●   Compare the features and benefits of different apps. This can save you money by preventing a budgeting approach mismatch or paying for costly software with features you won't use.

●   If you don't check in with your money regularly, a budgeting tool can not help you save money. So make it a habit to check-in at least once a week, if not every day, to see how you're doing.

●   Set your goals like stop blowing your income or paying off your debt. Beyond using a budgeting tool, this can help you gain perspective on what else you might need to modify.

●   Know the fees you are paying for a budgeting app. Using a budget app spending a lot doesn't make sense if your goal is to save money.

Budgeting apps remain a popular money management choice for consumers who wish to feel more in charge of their spending.

Knowing the best budgeting apps can do wonders for you. Selecting an app that fits your spending style and overall financial position is the first step toward successfully using them.

Select examined and compared over a dozen budgeting apps, exploring their cost and features to decide the best overall. We have recommended simple-to-use apps here.

 AUTHOR BIO:

Lyle Solomon has extensive legal experience as well as in-depth knowledge and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific's McGeorge School of Law in Sacramento, California, in 1998, and currently works for the Oak View Law Group in California as a principal attorney.

5 Things About Self Directed IRA You May Not Be Aware Of

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Self-directed IRA FinTechFreedom

A self-directed IRA provides various alternative investment options that are generally prohibited under traditional IRAs or 401(k). Self-directed IRAs are administered by trustees or custodians but are directly managed by the account holders.

A Self-directed IRA is more flexible as compared to regular IRAs because it allows investors to distribute capital in a much broader array of assets. Although the popularity of self-directed individual retirement accounts is gradually increasing, many investors are still not fully aware of the rules and regulations. And as a result, beneficiaries end up getting poor outcome or become disqualified.

Here are the least known but some of the most important facts to help you make a sound judgment and maximize benefits from a self-directed IRA investment.

Ensure Accurate Documentation and Learn the Fee Structure for a Self Directed IRA

Proper documentation is required for investing in a self-directed IRA. Types of documents largely vary depending upon the asset being purchased. Generally, the required documents are the same as when purchasing an asset in your non-retirement account. 

A self-directed IRA has a complicated fee structure. Typically, a one-time establishment fee, first-year annual fee, and renewal fees are charged. Apart from this, you also have to pay for the investment bills. 

Choose a Qualified Custodian and Know Their Limitations

The NASAA has specified that only an IRS-approved company is authorized to act as the custodian. Non-depository banks, depository banks, or trust companies can qualify for this. You can also open a self-directed IRA at most major brokerages such as Fidelity and Schwab.

Remember, custodians do not guide investors because it is not their fiduciary duty. Neither do they recommend investment options nor perform due diligence reviews. They serve as an intermediary between investors and the issuer of an investment and do not investigate or verify the accuracy of the information. It is the sole responsibility of the investors to fact-check and decide.

Know Your Investment Options

A self-directed IRA gives you more investment choices than typical IRAs. Apart from mutual funds, stocks or bonds, some other self-directed IRA investment options are:

  • Precious Metals: Investing in gold, silver, and other precious metals as an alternative asset helps protect investments against inflation and preserve wealth irrespective of the economic condition.
  • Private Lending: Beneficiaries of self-directed IRAs can lend money to borrowers and earn interest, and also receive their invested amount. But lenders are required to handle the necessary paperwork.
  • Real Estate: By investing in a property or real-estate you can earn profits. Remember, you cannot live in that property and you have to use the IRA money for the purchase and maintenance of the property.
  • Bitcoin and Digital Currencies: Investing in bitcoin and cryptocurrency is relatively new but has great potential. Note that digital currencies are considered capital assets, so when sold at a profit, it would attract taxes.

Learn About Prohibited Transactions and Disqualified People

The IRS has provided a complete guideline on the prohibited transactions and disqualified people. A spouse, employer, fiduciary, and account-holders who own more than 50% in an entity are disqualified. If the account holder is a director or an officer or owns at 10% of an entity, then that is also prohibited.

Know Where Not to Invest

To avoid being disqualified and attracting a penalty, abstain from investing in the following sectors:

  • Life Insurance Policy: Buying life insurance plans is not allowed under a self-directed IRA.
  • Personal Loans: Self-directed IRAs cannot be used for personal loans.
  • Precious Metals Without The Required Purity Level: Precious metals below the purity level of 99% do not meet the eligibility standards.

By exercising due diligence, consulting qualified financial advisors and attorneys, and doing the groundwork, you can not only protect self-directed IRA investment but also maximize benefits.

If you are planning for your retirement we have a number of other resources you can find on the FinTech Freedom website.

Author Bio: Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as Business.com, SAP, MoneyForLunch, BiggerPockets, SocialMediaToday, and NuWireInvestor.