Business Tax Forms

I found a cool web site for completing 1099 and w-2 forms for only $2.95 each.  This site is great for small businesses who need to file these forms and it enables you to easily get the job done affordably.  www.QuickEmployerForms.com

From their website:

Quick Employer Forms is for small business owners who have employees or use independent contractors to help them get their work done.

If you operated a business (including a Schedule C/Sole Proprietorship, an LLC, Corporation, S-Corp, or Partnership) and you had employees or independent contractors, you need to send a W-2 to employees or 1099 to independent contractors before the end of January. Quick Employer Forms makes it a lot easier to create and file these forms with the IRS. There’s no need to buy forms or worry about special printing requirements, including colored ink.

Quick Employer Forms is an online tool that allows small business owners to quickly and easily create W-2s and 1099s (as well as other required forms). It asks you easy questions, and then completes the forms for you automatically. It even e-files the forms and can mail required copies to your employees and contractors (you can of course mail them yourself if you prefer). It also creates other forms required by law, such as quarterly (Form 941) and annual (Form 940) payroll forms.

Unfortunately, the deadline for filing these has passed for 2009, but you can definitely bookmark this url for next year.

H&R Block At Home Premium vs. TurboTax Home & Business

Let me preface this discussion by saying that I am not offering tax advice, I am just commenting on my experience with the following tax preperation products.

Over the past several years I have done my own taxes using one of the online products available from Intuit, H&R Block, or TaxSlayer.com.  This year I set out to find the cheapest deal I could, while confidently preparing my taxes.   Since I do independent consulting work, I need to use a product that supports Schedule C and can handle self-employment taxes.  I didn’t review Tax Slayer this year, but I had a good experience with it in the past.  It was very cheap, using the free-file link from the IRS.  Tax Slayer was not as pretty or intuitive as the other apps, but it got the job done at minimal cost.

I started this year with H&R Block At Home Premium because it was the cheapest at $49.95 and I had a coupon to make it $34.95.  Everything seemed to go well at first, but I used this software a few years ago and I was surprised that it did not store any of my previous information.  I had to retype all my personal info and put in my family members and go through all the interviews.  I was interrupted and had to logout for a little while. When I came back to hrblock.com, I had a really hard time finding the button to log back in.  I then realized that I could click the button to start my return for $49.95 and it would let me log back in.  I had a problem entering my W2 info for my wife because H&R Block was expecting a 6 digit entry for the state employer ID field of the W2.  My employer id was 9 digits and preceded by an “R.”  This would definately not go into the form and the website would not let me continue.  I used the help feature and started a chat with a representative.  The help was useless and they would not recognize that the issue was a bug, they kept saying i could just enter the first 6 digits.  I don’t think so.  This would cause all kinds of havoc when the state started to process the return.  While waiting for the chat agent to become available, I did a quick search and found that the Alabama Department of Revenue changed the format of their ID numbers in 2007 to the new RXXXXXXXXX format.  I even pasted the line from the ALDOR that said be sure your Tax preparation software is aware of this change, but the support agent still refused that this was a bug and would not offer to submit it to the development team for correction.  At this point, my confidence in the application was starting to drop quickly.  I was starting to get frustrated with the interface and it seemed like the questions were not thorough and were not explained well.  It seems like H&R Block is no where near as good as it was years ago.  I actually enjoyed the software several years ago.  After completing the interviews, I was shocked that I might actually owe over $2500 to the IRS and that was just the federal portion.  I then decided to double check against TurboTax.

I used TurboTax online last year and it did a great job at helping me get through my taxes.  Intuit has a pretty strong product and the interface is visually appealing and very intuitive.  This year, they have made some enhancements that provide much more detail about the tax laws as you are completing the forms.  The interface easily guides you through the process and the flow helps you answer questions in an order that tries to keep you from getting bored and keeps you from duplicating your responses to similar questions in different sections of the interview. TurboTax also automatically imported almost all of my personal info from the previous year.  This was really great and kept me from having to re-type all that time-consuming info.  I was pleased that TurboTax helped me with my business expense reporting and had a thorough deduction section that really helped me maximize my return.  I was actually able to get a refund from federal and state.

One of the most important aspects of tax software, in my opinion, is the ability to make you feel like you are confidently completing the process and that you are able to answer all the questions accurately.  If you can’t confidently complete the interviews, then you probably need help with your taxes.  After that, I want to reduce my tax liability as much as possible and possibly get a refund.  I want to e-file my state and federal taxes and get my refund using direct deposit.  Finally, I want to pay a fair price for the service.

Overall, I would highly recommend TurboTax for filing your 2009 taxes.  I felt that it was easy to use, very accurate, and it helped me reduce my tax liability.  The cost was about $80 for federal and $30 for state.

If you are not self-employed, you can get by with one of the cheaper versions and save some more money.

Have an umbrella

Now that we have paid off all of our non-student loan debt, we have decided to prepare an emergency fund.   I have frequently heard Dave Ramsey say “if you know it is going to rain, you better have an umbrella.”   Well, my job is kind of like a large storm on the horizon.  I work for a start-up, albeit a rather nontraditional start-up.  That means there are basically two outcomes for my future with the company.  One outcome is the company is successful and we get acquired by another entity, resulting in a real valuation of my company stock and options.  This would be wonderful and would provide significantly for my family.  The other outcome is that ultimately we run out of steam and we all start looking for new employment.  Then there are the many possibilities that land somewhere between these two extremes.  But for the most part, the venture is Pass/Fail and this is exactly why we are starting to prepare a larger emergency fund.  In absence of all other possible needs for an emergency fund, and with the simplest of probabilities, there is a 50% chance that we are going to need an emergency fund at sometime in the near future due to lack of employment.

To fund this emergency fund, we will be channeling all of our debt snowball funds into savings and stop paying off debt.  This is a bit frustrating, but I feel it is necessary.  That being said, we will not be meeting our year end goal of $15,000 of debt payoff.  But we did make it a significant way there.   We now have only some low maintenance student loans, one of which is still deferred while Lindsey is in school and the other has very low interest.  As a result of our hard work for the last 2 years, we have been able to eliminate credit cards from our lives, we have a paid for vehicle, we have freed up a substantial portion of our monthly cash flow that was previously allocated to debt maintenance, and have an entirely different mindset about how we buy things.  We are permanently changed.

Murphy Resists

We made great progress this month.  We were able to free up some funds to pay off the car and it is gone off our debt list.  Now the day we get the car title in the mail, my boss tells me I have to turn in the company truck at the end of September.  I guess Murphy is just resisting.  (Murphy’s Law – Anything that can go wrong will go wrong) In addition to this, our transmission starts acting funny and we have to sink $228 bucks to flush the transmission fluid.   If that was Murphy’s last stand, we could handle it, but no he is not done.  I went to the oral surgeon this morning for an inital consultation for getting my wisdom teeth taken out and they let me know that we are going to have to come up with $800+ because my dental insurance isn’t very good.  Did I mention our TV is going haywire?  The colors split up and we have to watch 3 different images on the screen until it decides to converge.

I guess this is the point where I could get frustrated and say its time to give up paying off the debt.  But no, even when things get tough, there is one really important concept to remember.

Whether you participate or not, the cash flows.  By this, I mean that no matter what happens, if you don’t spend less than you make and keep an eye on where you are spending, you will always be broke.  Once you understand this, you understand that as hard as it gets, you have no choice but to keep on budgeting and paying off the debts.  There is only one road to financial freedom and we are on it.

Instead of being pessimistic, I try to remember that I would be in a much more difficult situation now if we had not made all these sacrifices over the past year and a half.  I have heard that God only gives you as much to deal with as he knows you can handle.  This is how we show him we are up to the challenge and ready to excel.

Cash Vacation

We have been working very hard paying off debt for about a year and a half now, so it was definately time for a vacation.  We started saving at the begining of the year since we realized that if we wanted to take a vacation this year, we would have to save for it.  We socked away a little every 2 weeks and we were actually able to have a nice little get-a-way to the beach with the kids.  It was very hot, but it was still relaxing and the ocean was beautiful.

This was our first time to pay cash for a vacation and I can tell you, it is so much better knowing your vacation will not follow you home. (On your credit card statement that is)

We are diverting our savings for the rest of the year into a Christmas account so we can cash flow Christmas again this year.  We also were able to get a great deal on a new to us dining room table and chairs by paying cash and finding a good deal in the classifieds.  Yay, now we can all sit at the table at the same time.  We have been struggling with that since two of our old chairs decided to collapse.

We weren’t able to make as much of an impact on the debt this month as we wanted, but we did accomplish a lot.  I have also updated our freedom stats.

Taste of Freedom

I know it has been a little while since I made a post.  I am really sorry, but I have been very busy.  I have been looking for some ways to bring in some extra income to help get this debt down and my efforts have been fruitful.  In keeping true to our goal,  we were able to make some significant strides this month.  We were also blessed with a special gift to help us with our debt payoff.  We are extremely grateful to the donors for their generosity. 

I would also like to thank God for providing for my family,  I look forward to being able to use His blessings to help others who are in need of help.   We make an effort to help at least one cause a month, but we anxiously await the day when we can do more.

With that being said, I want to let you know about the awesome thing we did yesterday.  We made our last credit card payment!  Yes!!! We are now out of credit card debt and have started paying off our car.  Once the car is gone, we will move to those dreaded student loans.  I can’t wait to kick Sallie Mae to the curb. There is definitely no room for her in our life.  

On another note, Lindsey has been cooking up a storm and making some really great meals.  Thanks Hun! I really do appreciate everything you do for us.  We also just watched the movie Fireproof.  We definitely enjoyed the movie and its message. It was also really nice to get out and watch a movie with my wife while the kids had fun with the other kids at the church.  

I also updated our Freedom stats a few days ago, I just didn’t get around to posting a blog entry to go with it.  I will be reviewing those budgeting tools when I find some that actually work with my bank.

So far I have heard that mint.com is really good, but I wouldn’t know because our credit union does not have a Direct OFX service thats lets online services pull your transaction data across the net.  

I have tried Wesabe.com and I like it a little bit, but I havn’t used it enough to tell. Until I find the perfect online budget tool, I will continue to use Money Dance.  (It is like Microsoft Money or Quicken.  It lets me import my transactions manually from our bank and keep them sorted by category and track our spending.  I also heard there is an online version of Quicken that I might take for a spin soon.

I should also warn everyone that there are a lot of scams going on lately to try and steal your identity.  A friend of ours got snagged on one of these and Lindsey received a scam email tonight.  These are very tempting to click on as they use social engineering to trick you into clicking the links and giving them your personal info.  Look out for emails telling you about a purchase you didn’t make or telling you your password has been reset or telling you your account has been locked or closed.  These all try to get your attention by triggering the fear that your identity has been stolen.  They then try to take advantage of you by making you think you are verifying your real identity to restore access or log in to your account.  You are actually giving the identity thieves your info at this step of the process and the site you are typing into will probably look exactly like your real financial institution’s website.  REMEMBER, if you get a suspicious email like this, immediately call your financial institution using the number on your paper bill or on the back of your card to determine if this is a scam.  You should also never click on a link to a financial institution website in an email and instead open a new browser window and type in the address yourself.

So long for now…

Happy New Year! Now Go Make a Budget!

Today is a great day for starting a budget so if you havn’t been doing one, start now.  Don’t put off until tomorrow what can be done today.  If you need help just send me an email or give me a call.  I promise it is very easy, it just appears to be difficult when you have never done one before.

That being said, go print out the budget forms and get started!  Remember,  if you don’t know how much to budget for any category, just make your best guess and move on.  Your budget won’t work for the first few months, but you will be on your way!

Over the next few weeks I will show you how to track all your expenses to see if your budget is working.

2008 Debt Payoff Total

We successfully paid off $17,751.94 in debt this year!  All I can say is WOW!  I have updated the Freedom Stats and have made a new chart for 2009.

Christmas is Not an Emergency

Christmas is a very tough time for some people.  It used to be very hard on us until we realized Christmas is not an emergency.  It happens every year on December 25th.  That means if you simply save a little every month, you will not have to dip into emergency funds or worse, charge it.

This year we actually saved up a little out of every paycheck to make sure we were prepared by Christmas.  We actually acheived our goal and were able to make it through quite painlessly.  We by no means had tons of money for splurging on “stuff,” but we did have a budgeted amount of funds available to buy gifts for everyone within our means.  I am very proud of my family for putting up with our thriftyness and supporting us and our goals.  I am in a much better place now than I was a year ago today and I can not put into words how much better I feel knowing that we are never going to use credit cards again.

I look forward to the days when we can redirect our cash flow to giving more, in addition to paying our current expenses, saving, and investing.  Currently we budget a variable amount towards giving every month.  This is one of my favorite things to do with money and feels even better than paying off debt.  I saw a poll on the GadsdenTimes.com website asking “With the end of the calendar year approaching, did your charitable giving change from past years?”

With 279 respondants, 43% said they gave more,  32.3% gave less, 3.9% never give, 2.2% said there was still time left to give, and 18.6% said they hoped for charity themselves.

I was pleased to see that the majority of respondants actually do give.  I encourage everyone to give, even if you need help yourself, you can always find someone that needs help more than you do.  Personally, I love to do things that have a visible impact or help someone directly.  If you havn’t watched it, try to catch the next episode of The Secret Millionare.

Merry Christmas and Have a Happy New Year!

12 Months of Budgeting

Today we completed our budget for December.  This marks our first full year of budgeting.  This is truly a milestone for us.

I have uploaded the Excellent Budget Document we use for budgeting so that anyone else who might be interested can use it also.  You can download it from my resources page along with all of my other resources I have made available. This cash flow planner comes from Dave Ramsey and is awesome.  It is in Word format (.doc) so you can edit it and customize it to your needs.  We put all of our debts in by name and took off the gas category because we are all electric.  You can basically change it any way necessary.

I can’t emphasize how important budgeting is to successfully managing your money.  Without a budget, you are not managing your money, it is managing you.  Remember, before the month begins, you need to assign a name to every dollar that is going to come in.  This budget should balance to $0.  That means you are spending, saving, and giving exactly the amount you are earning.  Otherwise, you will never be able have financial peace.

Budgeting may seem very daunting at first, but it is really very simple.   I will also share some tips we have found.

1) Sit down at least once a month with your spouse and have a budget committee meeting.  At this meeting, you and your spouse will gather together your records from your previous months spending and you will use this to compare your actual cash flow with your budget from the previous meeting.  You will then want to use this information to make your new budget for the next month.  This way you can see where you are coming in over and under budget and plan accordingly for the next month.

2) Anticipate upcoming expenses and include them in your budget.  If you have a doctors appointment coming up, add your co-pay to the budget in your medical category.  If you know your Mom’s birthday is this month, budget that into the gifts category, etc.

3) Save a small amount every month for large expenditures that happen once or twice a year. Christmas is not an emergency! It comes every December.  That means if you want to spend $600 total on christmas presents, you will need to save $50 every month.  Use this for other infrequent purchases such as semi-annual or quarterly car insurance payments.

4) Pick a day to cut off your monthly expenses and use the same day every month.  We start over the month on the 1st.  This means if you pay the bill between the first of this month and the first of next month, it goes on the budget for this month.  It doesn’t matter if you are paying next month’s car payment, it just matters when you are paying it.  Again use the date you spend the money, not the date it is due.  This was the single most confusing item I have had to deal with in budgeting.

5) Some months might have double payments and some might have none.  Due to your pay frequency and due dates for bills, you may end up making a mortgage payment twice in a single budget period and not at all in the next.  This is normal and should be planned for in the budget.

6) I suggest you use a calendar to mark all your pay days and the days your bills are due.  After you start getting good at it, you will probably want to pay your bills as soon as you receive the statement.  You can plan your bill paying dates by marking the day you receive your statements on your calendar.  This will let you adjust the day you pay the bill to a time that is conveinent to you between the day you receive the bill and the due date.  You will probably want this date to be roughly the same every month.

7) If you get paid every two weeks, May and October have an extra paycheck!  These are good months to get get ahead on bills or to pay off a chunk of debt or sock away for something important that is coming up.

8) Inconsistent Income – If you do side work, earn commissions, or have any other type of inconsistent income, you can still budget!  I suggest one of the following.

a) If you have a wildly varying income, have an account that you use as a cushion and deposit your income into this “cushion” account.  Make a budget based on your income you reported on your taxes last year and divide this evenly into 12 months (adjust as necessary for changes in your situation). This is your average monthly income.  Only transfer out the monthly budget amount from your “cushion” account.  Some months you will do well and your cushion account will have some extra cushion and some months you will not do as well and your cushion will shrink.  This way, your good months even out with your bad months and provide you with a stable income all year.

b) If you have a consistent part and an inconsistent part of your income such as with a salary plus commission, budget based on the consistent part of your income.  This budget should include your necessities first and they should be paid in order of importance (1st food, 2nd shelter, 3rd utilities, transportation, bills, credit cards, etc) once you reach the end of your consistent income, put the rest of your monthly needs in a list in order of importance and pay for them in order as you earn the inconsistent income.

9) It gets easier and easier!  The first few months, your budget will not work!  Just do the best you can and you will start to get the hang of it.

10) Envelopes really help control runaway categories.  Groceries are probably one of the easiest categories that can run away from you, and it is also fairly easy to get this category in line by making a cash envelope that contains all the money you have budgeted for that week.  Then when you run out of cash, you don’t by anymore groceries.  With this kind of motivation, you will be able to control these categories with ease.

11) Blow money.  Sometimes you forget to budget for something.  It is going to happen, so budget for it anyway.  We call it blow money and we budget about $100 a month for unexpected things that we blow money on.   If you are lucky, at the end of the month, you have a budget surplus and can put this towards something important to you.

Good luck with your budget! Feel free to send me an email or ask me if you have any questions…