Author: Donohoo Accounting Services

Things To Keep In Mind When Investing During A Pandemic

While the past year has been incredibly volatile, the stock market is thriving resolutely through all these factors. Because the market is based partially on investors’ feelings and reactions to external elements, it makes sense that there have been changes with the uncertainty of the pandemic.

However, variation is inherent in the market, and is not a reason not to get involved. Whether you’re a seasoned investor, or just starting out, this can be an auspicious time to invest.

In fact, this time period holds extraordinary potential for investors. By keeping a few key circumstances in mind, you can access the market’s capacity and significantly advance your future prosperity.

Calculate the risk you can handle

The first thing to consider is how much risk you can take on yourself. Do you have an emergency fund? If not, you need to gather this in advance of making any investments. You should have 3-12 months of backup savings before you invest in case of personal or professional difficulties.

Think long term

The pace at which you want a return on your investment will impact your decision on how and where to invest. Are you searching for short-term or long-term investment options? If you’re looking for a short/medium term return, it may be better to place your money in a savings account with a good interest rate (1-2%). If you’re interested in a long-term return (with more potential for growth), then you can examine an investment in the stock market.

Whether or not you are interested in short or long-term investments, it’s important to diversify your portfolio. Investing in funds, where an expert broker invests your money for you, can be a good option, as well as individual stocks in companies you want to stake a claim with and high-interest savings accounts or CDs.

Stay patient and informed

Since the overall trajectory of the stock market is up, it’s important to remain level-headed with your investments. When the market does slump, it’s often due to unnecessary and ill-advised panic selling, so stay firm and trust in the market to recover naturally.

Because stocks values are based on perceptions, tapping into financial news outlets and what experts are saying can help you stay up-to-date on all the movements of the market, and be aware of what factors may be influencing its direction.

Use this guidance to open up cautiously to the stock market and get the best return on your investment. For all types of investors, having expert guidance can alleviate the strain of investing.

If you’re interested in using a financial advisor to help you, contact our team today. We’re tax and investment experts who are well-informed as to the best stock and investment options for you. Contact Donohoo Accounting Services today for information about your tax and financial issues, or to schedule a free consultation. For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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Little Things Add Up: Responsible Money Moves During Your Vacation

This summer, it seems a little more feasible to step out of our homes and travel to a new destination. Whether you’re taking a flight across the country or hopping in the car for a four-hour road trip, you should want to have a general idea for how much money you can expect to spend from departure to arrival and back. Below are some tips on how to make sure you don’t overspend on a vacation, while also enjoying your trip.

Know Before You Go

Before you leave for your trip, obviously take a peek at your bank accounts and decipher how much money needs to be allotted from savings to checking. If you have a local bank, find out what the different rates are for ATM withdrawals. If you bank with a larger national bank like Chase, research for ATMs nearby where you’re staying.

Money Talks

In a world where people use credit cards and money exchange services like Venmo, sometimes old reliable cash still holds its weight. By having hard cash in the form of traveler’s checks, you have a visible fixed amount and once it’s spent, there’s no more money to spend on that given day. Sort the cash out per day and allot it per person as well if it is a family vacation.

If traveler’s checks don’t sound like your cup of tea, a responsible move to make sure you stick to the budget is to write down what you spend when you’ve spent it.

Research Your Destination

If you hadn’t done it prior to booking the vacation, be sure to research some of the popular tourist attractions and what the costs of them are. When researching the area or areas, make note of the difference in prices between the weekday and weekend rates, as they might be different for some attractions.

Also, with differences in weekday and weekend prices, certain times of the day might be cheaper than others. For example, a mini-golf course at 2 p.m. on a Tuesday might be significantly cheaper than 8 p.m. on a Saturday.

Track And Weigh

With online banking, it’s incredibly easy and user-friendly to log into your account and see how much you’ve spent and where you’ve spent it at.

Another thing to consider is weighing your opportunity cost while on vacation. There are always those small little unforeseen costs such as parking that can pop up at a moment’s notice. Planning ahead and weighing these costs can be an easy way to stay in line with your budget.

Organize And Attack

Making budgets and sticking to them can be a combination of overwhelming, anxious and nerve wracking. That’s why here at Donohoo Accounting Services, we have trusted associates that can help you with any and all financial needs.

From making a small budget to extensive accounting work, we have been helping clients resolve their tax and financial issues for more than 20 years. If you’re ready to get a handle on your finances but need some help, visit our website and schedule a free consultation today! For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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How Employers Should Handle Repayment of Deferred Payroll Taxes

For businesses large and small, staying in the black during the COVID-19 pandemic required an immense amount of skill, strategy and cost-cutting measures. The Coronavirus Aid, Relief and Economic Security (CARES) Act, passed in March 2020, provided relief measures to help businesses and individuals survive their economic challenges.

One of these relief measures, the Deferred Payroll Tax, gave employers the option to defer their portion of Social Security taxes while business remained slow or stopped. This option was different from the additional executive order signed by President Donald Trump in August 2020 which allowed employees to defer their Social Security taxes.

Normally, employees and employers pay a combined 12.4 percent of each paycheck to the federal government for Social Security, with 6.2 percent by employers and 6.2 percent by employees. For employees, this is usually labeled FICA tax on pay stubs (FICA stands for Federal Insurance Contributions Act).

With businesses being hit hard by the pandemic, the federal government offered the option for employers to suspend payment of their half of these taxes, which many businesses decided to do to stay afloat.

For employers who opted in: it is now time to pay back the money owed. Repayment for these deferred loans began January 1, 2021, and these taxes need to be repaid by the end of this year (technically January 3, 2022, as December 31, 2021 is a holiday) to avoid any penalties from the federal government.

The IRS has made it clear that penalties and interest will apply to any unpaid balance of the deferred portion not paid on time, and that for employees who no longer work at the company or organization, the employer is entirely responsible for the deferred amount, both for their portion and the employees’ portion.

If you’re an employer who opted to defer your taxes, planning your repayment schedule needs to start now. Calculate the amount that you have due and set aside a portion of revenue to help fulfill this need during the next few months. More information about specific deadlines, and where to send your payments, is available on the IRS website. Your tax professional can also answer your specific questions, and help you make a plan.

With all the stress of the pandemic, accounting for your deferred payments doesn’t have to be challenging. Donohoo Accounting Services has more than 20 years of experience helping clients resolve their tax and financial issues. Contact us today or call 513-528-3982 for more information about repaying deferred payroll taxes, or to schedule a free consultation. We’re excited to serve you! For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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Six Credit Score Myths You Need to Know

If you’re like most people, you know the basics of what a credit score is for and how it works. Your score is a make-or-break determinant of whether you qualify for a loan and there are key things to know, and to avoid, concerning your score. Let’s debunk a few of the myths around credit scoring to put control in your hands, and avoid any potential harm to your score.

CREDIT MYTH #1: There’s only one credit score

There are actually thousands of formulas for calculating credit. Depending on what score your potential lender uses, your score could vary. However, FICO scores are most common, and widely available online.

CREDIT MYTH #2: Checking your credit score can lower your score

Only hard inquiries from lenders can lower your score. When you check your credit score, there is no impact on your credit. Hard inquiries, however, are flags on your account when a lender accesses your credit history, and can lower your score because it indicates you may be increasing the amount of your credit. Do this too often and you can be seen as a risk to financial institutions.

CREDIT MYTH #3: Lowering your debt will immediately raise your score

It depends on the type of debt you pay off, and your credit limits. Paying off debt is important, and often high debt can result in a lower score. Keeping your credit card balances low, for example, can help to keep your score high.

CREDIT MYTH #4: Your job impacts your score

The job you have and how much money you make a month has no direct impact on your credit score. However, the bank or loan company may want to see your proof of employment and a few paystubs to ensure that you have a steady source of income. This can help people who are building their credit score by proving they have the funds available to pay off the loan.

CREDIT MYTH #5: Closing your credit cards will raise your score

Potential lenders are more concerned with how much credit you are using rather than how much you could be using. Closing a credit card could actually lower your score because it decreases the amount of credit you have. Remember, your credit score is all about giving lenders a blueprint for how you manage your money. If you have nothing to show them, they can’t draw up a plan.

As a leading accounting services firm in Cincinnati, Donohoo Accounting Services strives to make our clients feel comfortable discussing their tax situation and finances. Still have questions about your credit score, and how you can improve it? Let’s get you on track! Contact us today or give us a call at 513-528-3982 to schedule a free consultation! For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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