Tag: finances

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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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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Spring Clean Your Financial Documents

With tax season upon us and the hint of Spring around the corner, now is the perfect time to focus your spring-cleaning efforts on your financial documents and be ready for the year ahead. Here’s what we recommend you do:

Have A System

Store all of your important papers all in one place. A traditional filing cabinet works great, with separate folders allocated for your utility bills, pay stubs, bank statements, credit card statements and investment information.

Keep similar statements together so you can find what you need quickly. Safely store your important documents in a fireproof and water-resistant container.

To Keep Or Not To Keep

You don’t have to keep everything forever. Here are some rules of thumb to guide you.

          • Utility bills. Keep these for about a year in case there is a billing question that comes up.
          • Pay stubs. Hang on to these for a year, too, or until you can cross reference it to your year-end W-2 statement.
          • Bank statements. Keep these for one year unless you plan to apply for a car or home loan, then keep two years of statements. Lenders typically ask for two years’ worth of statements, and many banks give you free access only to the past six months.
          • Credit card statements. You can typically pitch credit card statements that are older than a year unless you’ve used them to pay for home office or home improvement expenses. If they impact your taxes, keep those statements until you sell your home.
          • Investments. You can throw out the monthly or quarterly statements if you have the yearly statements, but hold on to statements that show trading confirmations.
          • Tax records. Keep all of your tax returns and the supporting documents for at least three years. The IRS can challenge returns for the previous six years if they suspect you haven’t reported income, so you may want to play it safe and hang on to them for six years, especially if you are self-employed. Returns that are decades old and several residences in the past will likely not be needed.
          • Other important documents. There are some documents you will keep forever—birth certificates, marriage licenses, estate planning, death certificates, etc. These documents should be kept in a place that protects them from flood, fires and theft.

Shred

When you have identified what you no longer need to keep and store, don’t just throw them in the trash. Shred them. This will protect you from identity theft, an all too common and devastating problem that results when dumpster divers go through your trash in search of personal information. Then they use it to make purchases or apply for new credit cards.

Donohoo Accounting Services is here to help you with your financial paperwork, tax preparation and business and personal tax returns. If you have questions about which financial documents you should keep, which you should get rid of, or if you need help with your taxes, give us a call at 513-528-3982. We would be happy to assist. For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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What Should You Bring to Your Accountant When You File?

Although it’s technically possible to file your own tax return by using software, this can leave you exposed to a wide range of issues. If you want to ensure that everything with your tax return is handled by an experienced professional, working with a reputable accountant is an investment that should always pay off by unlocking extra savings and helping you avoid mistakes.

 

If you’re planning on enlisting an accountant’s help this year and are wondering what to expect during your appointment, here are some helpful tips on what to bring along with you:

 

Social Security Cards

 

The accountant you work with will want to verify your identity prior to submitting your filing. And if you are claiming any dependents, it’s a good idea to bring their card along as well. Although social security numbers seem like an easy enough thing to manage, SSN mistakes result in 100,000s of tax returns being sent back by the IRS every year. Since that’s guaranteed to increase how long it takes to get your refund, bring along your cards so your accountant will be able to double check the accuracy of these numbers.

 

Last Year’s Tax Return

 

Even if your financial situation has changed quite a bit over the last year, it’s still helpful for an accountant to have your previous year’s return as a reference point. This will allow the professional you work with to identify which deductions and credits you previously claimed, then quickly see if you’re eligible for them again.

 

W-2 and Any Other Income Forms

 

If you work as a traditional employee at a company, your employer should have already provided you with a W-2 form this year. This document has a lot of important information your accountant will need, so be sure to bring it along. For freelancers, the most common form to receive is a 1099-Misc. And if you have any investments or other activities that produced income, you’ll want to bring all of those forms along for the accountant to review.

 

Expense Documentation

 

Did you make some charitable donations over the course of last year? Maybe you do some selling online and drove around a lot to source inventory. Regardless of the specific donation or expense, an accountant is going to want to see documentation before claiming it for you. While it may take some time for you to get organized prior to your appointment, it will be well worth the effort.

 

If you’re ready to file your tax return and want to work with a great Cincinnati accountant, Donohoo Accounting Services is here to help. Call us today at (513) 528-3982 to schedule an appointment