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The Best Way to Do Your Taxes When Running Your Own Business

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taxes when running your own business

Filing your taxes each year can be a daunting experience. Even if you’re only handling an individual income tax return. When you operate a business. The situation is often significantly more complex. Whether you run a sole proprietorship, limited liability company (LLC), or any other kind of corporation. You will need to file forms with the Internal Revenue Service (IRS) – and possibly your state, as well – covering that organization’s financial activities. If you are wondering what’s the best way to do your taxes when running your own business. Here’s what you need to know.

Preparing to Do Your Federal Taxes When Running a Business

Start with Record Collection

Generally speaking, your first step any time you need to file your taxes is to gather the various financial documents that you’ll need to complete the forms. In most cases, this is any receipts, statements, financial records, or other kinds of paperwork that demonstrate your business earnings, losses, and expenses.

Without the records, you won’t be able to fill in all of the details that need to be present on your tax forms. As a result, it’s best to handle this in advance. Thus, ensuring that, once you sit down to take care of your filing. You will have everything you need available.

Select the Right Forms

The forms you need to file with the IRS vary depending on the type of business you operate. If you’re a sole proprietorship, then you’ll usually need to attach a Schedule C to your personal income tax return. The same goes if you are operating an LLC, are the sole owner of the business, and want to treat the company like a sole proprietorship, which is an option.

However, if you prefer to treat the LLC as a separate entity, you’ll need to use Form 1120. The same is true for C-Corps.

For S-Corps, a different form is necessary. When you file, you’d need Form 1120S. Partnerships also require a different form, as those use a Form 1065 when they need to file.

If you use software or a tax professional to file, you’ll usually get some assistance when it comes to choosing forms. If you’re doing your taxes by hand on actual paper, then you’ll need to make sure you get printed copies of the correct forms.

Learn the Deadlines

Different filing deadlines may apply depending on the kind of business you run. For sole proprietorships, the deadline is the same as it is for personal income taxes. As a result, you typically need to complete your filing by April 15 to be on time.

C-Corps have to file by the 15th day of the fourth month following the closing of the tax year being filed. Typically, that means filing by April 15, as well.

S-Corps have to file Form 1120S by the 15th day of the third month following the closing of the tax year. As a result, that means having to file by March 15, in most cases.

By knowing the deadlines that impact you, you can make sure that you file in a timely manner. Since filing late can have consequences, this allows you to avoid fees, penalties, or other issues.

However, if you need more time beyond the deadline, it lets you know the cutoff for requesting an extension. If you file for an extension by the initial due date – usually by submitting a Form 4868: Application for Automatic Extension of Time to File U.S. Individual Income Tax Return or Form 7004: Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, depending on your type of business – you can typically get yourself more time to handle your business tax filing.

Research Tax Breaks

Before you move forward with completing your forms, it’s wise to do a little research into business tax breaks. By spending some time looking into what may be available, you increase your odds of securing every deduction or credit that may be available to you, ensuring you can reduce your tax burden while using the correct options.

The number of available IRS business tax credits is extensive, covering anything from hiring workers from specific demographic groups to using alternative energy vehicles as part of your company’s operations. These give you credits and deductions beyond your business expenses, and they can potentially add up quickly.

Depending on the tax break involved, this can also mean needing another tax form. Many require the use of a Form 3800: General Business Credit, so you want to make sure you have this available if you plan on filing a paper return.

Decide How You Want to File

When it comes time to file, you can usually either file electronically or mail your return to the appropriate office. Either approach is allowed, even if paper returns are largely falling out of favor.

Electronic submission is usually the preferred method. With an electronic filing, you can easily track when the information is received. Plus, you don’t really have to worry about your return being lost or damaged along the way.

Even if there’s an issue with an electronic submission, you’ll typically get an alert, allowing you to correct the problem quickly. If a paper return gets lost in the mail or is damaged to the point it becomes unreadable, you likely won’t know that anything has gone wrong. As a result, you could face penalties for a late or missing filing simply because your tax forms weren’t officially received or couldn’t be processed when they arrived.

Preparing to Do Your State Taxes When Running a Business

In many cases, the process of preparing to complete your state taxes when you run a business is similar to the approach you need to handle your federal tax filing. You’ll need to gather documents, research forms, and filing requirements based on your business type, learn about any potential tax breaks, and go over the deadlines in advance.

However, the exact process may vary from one state to the next. As a result, you’ll need to do some additional research regarding your state’s specific requirements. That way, you can follow any required processes, ensuring you handle this obligation correctly as well.

Filing Your Taxes When You Run a Business

When the time arrives for you to actually file your taxes, you have two choices. First, you can tackle the work yourself, completing your own documents and handling the submission.

Usually, if you are going the do-it-yourself route, the best option for small business owners is to take advantage of tax software. This can include downloadable options or web-based services, as both of them typically offer a similar experience.

You can follow the prompts to fill in the needed sections. Typically, you won’t have to worry about doing any math by hand, as the software will complete the calculations for you.

Now, that doesn’t mean you don’t want to review the figures for accuracy. While tax software typically won’t make a math mistake, if you incorrectly enter information, choose the wrong options, or there happens to be an error in the software, it could result in incorrect numbers. You’re ultimately responsible for the accuracy of your returns, which is why you should always look at the details closely before you finalize the filing.

Then, once all of the details are in place, and you’ve reviewed them for accuracy, you can file electronically or print out the forms and mail them. With electronic filing, you can apply a digital signature, sign up for notifications that will let you know when your documents were received, and save a copy of the documents for your records.

You Could Hire A Tax Professional

Alternatively, you can hire a tax professional to handle the paperwork and manage the submission of taxes. This method may be better if your tax situation is particularly complex or you simply don’t have the time, energy, or desire to take care of the filing yourself.

Generally, filing through a tax professional will cost more than doing it yourself. However, it does give you direct access to a tax expert who may be able to help you find credits, deductions, or approaches that may benefit you.

Additionally, just because you use a tax professional, that doesn’t mean filing electronically won’t be an option. Many tax preparers have the ability to submit your taxes electronically. However, some may rely on the paper approach, which means putting your return in the mail.

If you want the benefits of an electronic submission but also wish to use a tax professional, speak with them before you begin the process. That way, you can confirm the preparer can meet that need before you hire them to handle your tax filing.

Do you run your own business? What approach do you use when tax time rolls around? Share your thoughts in the comments below.

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Should You File for Bankruptcy? These Are The Telltale Signs That You Should

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should you file for bankruptcy

In many ways, filing for bankruptcy can give you a fresh financial start, at least to a degree. However, it’s almost universally viewed as a last resort as the long-term impact of filing is significant. Additionally, filing for bankruptcy is a complex process, so much so that the mere idea can be overwhelming. But while there are consequences for moving forward, that doesn’t mean it isn’t the right move for many people. If you’re trying to decide if you should file for bankruptcy. Here are some telltale signs that maybe you should.

Telltale Signs That You Should File for Bankruptcy

You’re Using Debt to Pay Bills

If the only way to pay your bills – including general living expenses – is to use debt, speaking to experts like those at Stoneroselaw.com and filing for bankruptcy may be a wise move. When you have to use credit cards, payday loans, or personal loans to handle your daily life you’re only getting deeper into debt with each passing month. This creates a cycle that can be difficult, if not impossible, to break on your own.

With bankruptcy, many unsecured debts can potentially be erased. This allows you to bring that vicious cycle to a halt. Essentially eliminating debts that you feasibly could never repay.

You Can’t Afford Your Minimum Payments

Once your minimum debt payments become unmanageable. You’re usually in an incredibly tough financial position. Missed payments commonly trigger fees, penalty interest rates, and other debt-increasing activities. This often makes a hard situation worse.

At times, missing a single payment on one debt may not mean bankruptcy is the best move. Sometimes, a shortfall is due to a situation that you know will pass. But, you may be able to catch back up.

However, if missing multiple payments is either already happening or likely to happen for the foreseeable future. Bankruptcy could be worth considering. Payments that are so unmanageable that you know you can’t handle them is a sign that you may be over your head financially, and bankruptcy could help you get back on your feet.

You’re Being Sued for Unpaid Debts

When traditional debt collection efforts fail, some creditors will take the next step and sue you for what’s owed. When this happens, you’re already in a tough situation. Often, heading to court to deal with the lawsuit means taking on additional expenses – such as hiring a lawyer or other court costs – making it financially unviable for many who are already struggling.

If you’re being sued for unpaid debts, filing for bankruptcy can pause those efforts. All collection activity legally has to stop while your case is being considered, giving you a reprieve. Plus, the outcome of your bankruptcy filing could erase many unsecured debts. If the lawsuit involves an unsecured debt, such as a credit card or personal loan, it could come to an end based on the bankruptcy decision.

You Can’t Escape Debt Collectors

Debt collection efforts can be intimidating and overwhelming. If you’re being hounded by debt collectors, receiving demanding phone calls and repeated aggressive letters, and you know you can’t pay off the debt, you might want to put bankruptcy on the table.

During bankruptcy, the accounts that are in collections may be eliminated. That will bring a permanent end to the calls, as well as let you have a fresher financial start.

You’re About to Lose Your Home or Car

Traditional home and auto loans are secured debts. The house or vehicle serves as a form of collateral, and the rules of the loan allow for the seizure of collateral under specific circumstances. If you fail to meet your repayment obligations, the lender has the ability to take action and potentially assert their claim on your home or car.

When you file for bankruptcy, any repossession efforts have to be temporarily halted. This can give you time to assess the situation without risking losing your house or vehicle.

Depending on the type of bankruptcy you file, these debts aren’t necessarily erased. However, you may be able to keep your home or vehicle if part of the decision includes revised repayment plans, allowing you to catch up on what you owe.

Now, it is important to note that even if a house or car is paid off, that doesn’t mean it can’t be at risk during a bankruptcy filing. The value of the property is compared to local exemption rates. If the value is high enough, your property may have to go toward settling debts. But if it is below the exemption, they are protected.

How to File for Bankruptcy

Once you’ve decided to file for bankruptcy, you want to move quickly. The bankruptcy process can be quite lengthy, for one. For another, the longer you wait, the longer you have to deal with a financial situation that’s harming you.

In most cases, getting a bankruptcy lawyer is a must. Since many attorneys require at least an initial payment upfront, you’ll either need to gather up enough cash to cover the fees or search for a pro bono lawyer. In some cases, legal aid centers can help low-income individuals or households access free or low-cost representation. However, many of these resources are overburdened, so there’s no guarantee you’ll get a pro bono bankruptcy lawyer.

Once you secure an attorney, you may need to go through credit counseling. There will also be other steps, like filing the paperwork and attending a meeting or two. However, if you have a lawyer, they will be able to walk you through the steps.

Type of Bankruptcy to File

Additionally, you’ll need to determine the type of bankruptcy you’ll be filing. Usually, Chapter 7 or Chapter 13 filings are the most common. Again, your attorney can help you assess each option, ensuring you move forward with the right approach based on your unique situation.

Ultimately, bankruptcy is a big financial step, one that will impact your financial life for years to come. However, while the hit to your credit score hurts, being able to refresh your financial situation could make it a worthwhile move if you’re already in deep.

Have you ever contemplated bankruptcy? Did you ultimately go through with it? If so, what was the tipping point for you? If not, what led you to change course? Share your thoughts in the comments below.

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Here’s What You Should Do If Your Accountant Has Plead Guilty to Tax Fraud

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tax fraud

If your accountant pleads guilty to tax fraud, they’ve done more than make an honest mistake. Tax fraud involves the willful attempt to reduce the filer’s tax obligation through false statements, documents, or claims. These include  underreporting income, inflating deductions, and similar acts. Tax fraud is a crime and is treated seriously. However, the impact your tax preparer’s actions have on you can vary. If your accountant pleads guilty to tax fraud. Here’s what you need to do.

Understand Your Responsibility

First and foremost, it’s critical to understand your level of responsibility when it comes to your taxes. Regardless of who prepares your documents. You are ultimately responsible for your tax return. If you benefited from your accountant’s actions, and those actions were deemed fraudulent. There will be ramifications. This is true even if you weren’t aware of your tax preparer’s illegal acts.

Know What Can Occur

The exact ramifications you’ll face for fraudulent tax returns prepared by your accountant will vary depending on your situation. If you can prove that you had no knowledge of the fraud and played no role in it being committed. The impact is usually purely financial. The IRS will require you to pay any taxes that should have been paid had the returns been correct. Additionally, you may owe interest on the back amount, as well.

If you did play an active role in the fraud. The outcome could be different. Along with having to pay the amount owed. You could face criminal charges. The exact nature of the charges would depend on your fraudulent actions. If found guilty, you could owe additional fines and penalties or even end up with jail time.

Gather and Review Your Tax Returns

Once you know that your accountant has pled guilty. You should gather up every past tax return they handled. While the IRS can only audit your returns for three years. A guilty plea on the part of your accountant can extend the review window. Thus, giving the IRS the ability to look at more past filings.

The IRS will review these returns to look for fraudulent activity and other discrepancies. So it’s wise to start that process yourself. As a result, it’s best to review every one you possibly can. Which allows you to identify fraudulent activity and estimate the impact.

Usually, you want to conduct reviews yourself. However, you may also want to enlist help from a tax professional. This is especially true if you aren’t fully aware of tax law or don’t understand some of the information contained in your return. Who you turn to for assistance is up to you.  Although you may want to consult with a tax attorney or a reputable tax accountant as a starting point.

Consider Amending Past Returns

If during your review you find fraudulent information on your returns. You may want to amend them. Using Form 1040-X, you can submit updated tax calculations, allowing you to correct the issues proactively.

However, you should only file the amendments proactively if you have not received a notification that an issue has already been identified by the IRS. If you’ve received a notice that a given tax year’s return has already been reviewed and a decision regarding whether additional money is owed is being (or has already been) made. Filing an amended return may either not be necessary or could complicate the situation further.

If you’re uncertain about whether to amend a past return after your accountant pleads guilty to tax fraud. Consult with an expert. A tax attorney could provide you with guidance. Thus, helping you determine which approach is best based on your current situation.

Don’t Avoid the IRS

While you may want to take time to review any tax returns that may be impacted by fraud, don’t actively avoid the IRS. Generally speaking, it’s better to engage sooner rather than later.

Precisely how you may want to engage could vary depending on any communications you’ve received from the IRS. If you’ve been notified about specific dollar amounts of back taxes being owed or other penalties related to your returns, the process may be fairly simple. If you don’t disagree with their assessment and they aren’t pursuing criminal charges against you, you may choose to simply pay the amount (or make payment arrangements if the amount is too large to cover) to end the matter.

However, if you disagree with the assessment or are concerned about criminal liability, you might want to contact a tax attorney first. While this can cost a tidy sum of money, it ensures you have access to a professional who understands the nuances of what you’re going through and can speak to the IRS on your behalf.

Additionally, if you’re simply uncomfortable speaking with the IRS, you can enlist support from a tax lawyer. They can help you navigate the situation and find a reasonable resolution.

Exploring Additional Legal Avenues

If your tax accountant’s actions left you with a significant financial liability, you might want to consider suing the preparer for damages. While this can be costly in its own right, as you usually need assistance from an attorney, it is an option on the table.

Whether it’s the right move for you will depend on the nuances of your case. Additionally, you may want to take the accountant’s financial situation into consideration. If the accountant has no way to pay any amount awarded – either through cash, assets, or other sources – even if you win, you may not see any financial reward for the favorable judgment. This could leave you in a tougher situation, as you could still be responsible for your attorney’s fees, at a minimum.

 

Have you ever worked with an accountant who was later convicted of tax fraud? Has your accountant ever put you in a sticky financial situation? Share your thoughts in the comments below.

 

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Should You Report Income from the Sale of Your Home on Your Income Taxes?

7 Tips to Get The Most Out Of Your 401k v/s Pension

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7 Tips to Get The Most Out Of Your 401k vs Pension

When it comes to company-sponsored retirement plans, 401(k)s are likely the most common offering. While pensions were once fairly widely used, that isn’t the case any longer. For some professionals, this is incredibly frustrating. Pensions – also called defined benefit plans – come with a level of stability and predictability that you don’t always find with a 401(k). Investment returns can be volatile, and some earnings may be eaten away by fees and other costs. However, that doesn’t mean the results in a pension vs 401k calculator can’t come out in favor of the latter. If you want to know how to pull that off, here are seven tips that can help.

1. Contribute Early and Consistently

With 401(k)s, compound interest is your friend. By contributing at a younger age and continuing to do so for as long as you are eligible, you’re allowing the magic of compound interest to work for you.

Additionally, by making regular contributions, you can offset some of the impacts of volatility. While some of your money will be invested when the market is strong, you also get to invest when prices in the market are low. In the end, this often balances your investing out over time, which does work in your favor.

2. Contribute the Maximum Amount Every Year

Each year, the IRS sets a maximum contribution limit for 401(k)s. Ideally, you want to contribute up to that amount, ensuring you can stash away as much money as possible.

For 2021, the employee 401(k) contribution limit is $19,500. For individuals who are 50 years old or older, they can also add in catch-up contributions up to an additional $6,500.

It’s important to note that employer contributions aren’t counted toward that limit. Only what you save is used to determine if you’ve hit the limit, so employer contributions can send you above and beyond those amounts.

Ultimately, contributing the maximum amount gives you the best chance of coming out ahead in the pension vs. 401(k) debate.

3. Capture Your Full Employer Match

In many ways, employer matches are like free money. They add to your savings without impacting your income, but only if you’re actively contributing enough to qualify for the match.

If you’re contributing the maximum amount each year, you save more than enough to get the full match. However, if you can’t set aside the maximum amount, work to dedicate enough of your funds to receive your full employer match. That way, you get as much free money as possible, increasing your odds of having enough in savings to have your 401(k) perform at least as strongly as a pension.

4. Aim for 15 to 20 Percent

Another option for winning the pension vs. 401(k) game is to make sure you are stashing away at least 15 to 20 percent of your income. Now, this can include your employer match. So, if your employer will match up 3 percent, that means you need to dedicate 12 to 18 percent to hit that mark.

Precisely how much you need to set aside may vary on either your current income level or your target retirement annual income amount. Some professionals may be able to get by saving less if they tend toward frugality, plan to retire in a low-cost area, or have outside investments or retirement income sources that will bolster their financial security during their golden years.

However, it typically doesn’t hurt to over-save a bit. Worst case, your retirement will be more comfortable than you initially hoped, and that isn’t necessarily a bad thing.

5. Diversify Your Portfolio

While diversifying your portfolio won’t automatically lead to gains, it can help protect the value of your 401(k). Typically, when markets shift, some sectors are affected more than others.

By diversifying, you create a level of stability by ensuring you don’t keep all of your eggs in one basket. Usually, when some of your investments are trending downwards, others aren’t. You end up better equipped to ride out normal market fluctuations, ensuring your portfolio as a whole is heading in the right direction no matter what a portion of your individual investments is doing.

6. Reconsider Your Risk Level

The risk level represented in your 401(k) plays a role in how much your savings may grow over time. Higher-risk investments typically have the potential to yield greater growth. However, there’s also a chance for more significant losses.

If your portfolio is diverse, you can often afford to take on additional risk. This is especially true for younger professionals who have enough time to ride out a degree of volatility.

While you don’t want to take on so much risk as to keep yourself up at night worrying about your 401(k), consider being as aggressive as you can while still feeling comfortable about your choice. That way, you’re giving your portfolio a chance to grow.

7. Reevaluate Your Portfolio Annually

Investment decisions you make when you first start with a 401(k) may not be ideal down the road. Economic conditions change, sectors shifts, and the value of various investments will move around.

If you want to make the most of your 401(k), review your portfolio annually. See if your allocations still make sense or if making an adjustment is a smart move. Not only can this allow you to alter your strategy based on economic shifts, but it also gives you a chance to reassess your risk level and portfolio composition. You can make changes to make sure you are diversified and that your risk level feels appropriate based on your life stage.

Do you have any other tips that can help someone get the most out of their 401(k) vs. pension? Share your thoughts in the comments below.

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What Could Cause a Credit Score Drop of 100 Points?

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why did my credit score drop

If you’re wondering why did my credit score drop, the answer may or may not be simple. There are a lot of actions and activities that could cause your credit score to tumble, at times dramatically. However, if you’re credit score fell by 100 points in a single moment, the list of potential reasons tends to be shorter. If you’re wondering why did my credit score drop 100 points, here are some possibilities.

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Should I Tap My Retirement Funds for Medical Expenses?

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tap retirement funds for medical expenses

Your retirement account is a critical nest egg. It’s money specifically set aside to ensure you can handle your bills and live comfortably after you leave the workforce. Making it a crucial resource. However, when large expenses, like extensive medical bills, are hanging over your head. It may be tempting to tap your retirement account to handle the obligations. If you are wondering whether you should tap retirement funds for medical expenses. Here’s what you need to know.

Can You Use Retirement Funds for Medical Expenses?

Yes, you can potentially use retirement funds to handle medical expenses. In fact, it’s one of the few instances where you can possibly withdraw money without being slapped with an early withdrawal penalty from the IRS.

Usually, these are referred to as hardship withdrawals from 401(k)s and IRAs. Typically, you need to have an immediate and significant financial need that falls into a qualifying category to make this kind of withdrawal. Medical bills are potentially a qualifying expense.

Additionally, to avoid the early withdrawal penalty. You would have to make the withdrawal during the same year you incurred the medical debt. Also, the total of the unreimbursed medical expenses would have to be more than 7.5 percent of your adjusted gross income (AGI). If either of those conditions isn’t met. You’ll have to pay the 10 percent early withdrawal penalty.

It’s also important to note that certain retirement plans may prevent or limit hardship withdrawals. If you’re using an employer-sponsored retirement program, you’ll need to contact the program administrator to see what options may be available. For IRAs, you’ll need to reach out to the financial institution overseeing the plan.

Could a Creditor Seize Your Retirement Account If You Have Unpaid Medical Bills?

Some people consider using retirement accounts to pay medical bills merely because they believe the institution they owe could seize those funds anyway. As a result, they withdraw the cash to make the payments, assuming that using that money for that purpose is practically inevitable. However, that isn’t universally the case, as some accounts are shielded from this kind of seizure.

Whether your retirement account is protected from creditors depends on the type of account involved. Generally speaking, creditors can’t seize your employer-sponsored retirement accounts even if you have unpaid medical bills and owe them substantial amounts of money.

Employer-sponsored retirement accounts – including pensions and 401(k)s – are typically shielded from this kind of seizure due to federal laws governing the matter. The only exception there tends to be if you owe money to the government, such as back taxes.

For traditional or Roth IRA, the situation is blurrier. You can exempt a certain amount of traditional or Roth IRA savings during bankruptcy proceedings, per federal law, but that’s really the only concrete protection available at the federal level.

However, your IRA may be protected by state laws. Since those rules can vary, you’d have to check locally to see what protections are available and if they apply to your situation.

Should You Tap Your Retirement Account to Pay Medical Bills?

Whether you should tap your retirement account to handle medical expenses is ultimately a personal decision. But, in many cases, it may be wise to explore alternatives first.

For example, many hospitals and medical facilities will set up repayment plans, often without interest charges. They may also have programs for low-income households that could eliminate some or all of the debt right off of the top, which could be worth exploring.

You may also have access to financing. For example, a 401(k) loan may be a better option in the long-run. With that, you borrow against your account instead of actually making a withdrawal.

If you’re in dire financial straights due to medical debt, you may even want to consider bankruptcy. While the ramifications are certainly substantial, you could potentially eliminate any medical debt while protecting some or all of your retirement savings.

Ultimately, the choice of how to proceed is yours. Just understand that you may have options available that you’ve yet to explore, so don’t default to making the withdrawal. Instead, see which paths are potentially available first. Then, select the one that’s genuinely right for you.

Do you think people should tap retirement funds for medical expenses? If so, do you feel it was a wise decision? Share your thoughts in the comments below.

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Remote Workers Get Paid to Live In These Locations

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remote workers paid to live in these locations

When you work remotely, you’re not stuck living in a specific city or state. This gives you a lot of freedom, as you can essentially take your job with you no matter where you head. Plus, it creates a unique opportunity. As a means of attracting more professionals, some locations actually pay remote workers to relocate there. If you want to see if these programs could work for you, remote workers are paid to live in these locations.

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Should You Care About Warren Buffet’s Stock Trades

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warren buffett's stock trades

Warren Buffett is a bastion in the world of investment. The billionaire has a reputation for making smart choices. As a result, many investors wonder if they should mimic his moves or if keeping an eye on his trades would help them achieve better results. If you are trying to figure out if you should care about Warren Buffett’s stock trades, here’s what you need to know.

Why Investors Follow Warren Buffett’s Stock Trades

Generally speaking, when an investor spends time tracking Warren Buffett’s stock trades, their main goal is usually to snag similar results. Following the investment moves of a legend usually seems like a great idea. Many think that, by using an approach that mimics the Oracle of Omaha’s strategy, they can reach the same level of success.

However, some many also watch Warren Buffett’s stock trades for other reasons. For example, instead of attempting to follow his moves directly, they may use his trades to identify sectors that could be poised for gains or losses. At times, investors simply enjoy seeing how their strategy aligns with or differs from what others are doing, including individuals with some fame.

Changing Your Investment Approach to Match Warren Buffett

As mentioned above, some people watch Warren Buffett stock trades in hopes of following his strategy to increase their gains. In reality, that isn’t always a great idea.

One of the biggest reasons why you may not want to follow in Warren Buffett’s footsteps is that his investment goals may differ from your own. For example, he isn’t stashing cash for retirement, while that may be your main objective. As a result, his choices may not align with your preferred risk level.

Additionally, there are certain moves that he can make that are out of the reach of the vast majority of investors. For instance, he can establish massive stakes in companies that are household names, something that most investors can’t pull off.

Finally, Warren Buffett can make deals that an individual investor just can’t. For example, his $5 billion investment in Goldman Sachs in 2008 – which many considered to be a bailout – resulted in a $3+ billion gain when he unloaded it. But he didn’t purchase Goldman Sachs’s stock the way a normal investor would when that happened, putting him in a different position.

Generally, Warren Buffett’s unique position means that he can make moves that nearly everyone else can’t. Mimicking his approach is, therefore, practically impossible.

Overall, all of the points above suggest that changing your investment approach to match Warren Buffett isn’t a great idea. His strategy doesn’t rely on traditional kinds of investing, so it may not be compatible with you.

Warren Buffett’s Stock Trades: Should You Care?

Even if you shouldn’t copy Warren Buffett stock trades directly, that doesn’t mean keeping an eye on what he does is a bad idea. You may be able to use his choices to figure out options that you were previously overlooking, like an emerging sector.

The trick is to make sure that, even if you want Warren Buffett’s trade activity, you only make moves that align with your strategy, goals, and risk tolerance. That way, you’re doing what’s right for you and not just copying a billionaire whose unique position gives them different kinds of options.

Do you think investors should care about Warren Buffett’s stock trades? Why or why not? Share your thoughts in the comments below.

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5 Steps For Getting The Most Money for Your Used Car

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get the most money for your used car

When you want to sell your used car, getting as much as you can out of the deal is typically the goal. While some factors – like the make, model, and mileage – of your vehicle aren’t changeable, there are things you can do to make sure you get the most money for your car. If you don’t know where to begin, follow these five steps.

1. Spruce Up Your Vehicle

If your car looks nicer, it may sell for more. Before you list it as available for purchase, spend time sprucing it up. Get it detailed. Repair any minor cosmetic defects. Make sure it smells nice.

You should also handle routine maintenance that’s come due. For example, if it’s almost time for an oil change or its fluids are low, take care of those issues, if possible.

2. Know the Value to Get The Most Money For Your Used Car

Understanding what your car is worth is a critical part of the equation. It allows you to set a reasonable price based on the vehicle’s condition, mileage, features, and general desirability.

If you don’t know where to begin your research, sites like Kelley Blue Book, Edmunds, and Consumer Reports can be great starting points. You can also lookup how much used cars like yours are selling for in your area by checking out used car sites, Craigslist, or other similar resources.

3. Understand the Pros and Cons of Each Approach

Typically, if you’re selling a used car, you can go one of two routes. First, you can try to sell it to a dealership. With this option, you may be able to offload your vehicle quickly, which could be ideal if you need fast cash.

However, you’ll have to deal with negotiating with a professional salesperson, which can be challenging. Additionally, you’ll usually get less this way as they need to have enough of a margin to turn a profit when they sell the car. If you shop around, you can find the best deal, potentially netting you a little more.

Otherwise, you can try to sell your vehicle privately. With this approach, you’ll typically make more. But it usually takes more time and effort. You’ll probably need to place ads, follow up with interested parties, handle showings, negotiate prices, and more.

4. Gather Your Records

Maintenance records can make it easier to get top dollar. You can show that you’ve actively followed manufacturer service recommendations and otherwise stayed on top of things.

If you have receipts, that could be enough. Put them in order by date, potentially in a binder, so you can easily show what you’ve handled.

If you don’t have records, reach out to your service station. Some can print out copies of everything that’s been handled by them, giving you a quick list of the maintenance that’s been performed over the years.

5. Be Ready to Negotiate

Negotiation is simply part of the game. In nearly every case, a buyer’s initial offer is going to be on the low side. Make sure you’re ready to reject lowball offers outright and are prepared to counter.

Usually, the best approach is to know your car’s value, as well as the minimum amount you’re willing to accept. If you need to sell fast, you’ll usually need to be open to less than the market value. However, that doesn’t mean you have to start there or can’t counter against an offer that’s ridiculously low.

Negotiating can be stressful. But with some care, you can secure a fair price for your used car.

Do you have any tips that can help someone get the most money for their used car? Share your thoughts in the comments below.

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