Have you ever visited another country? If so, you may realize that cultures vary across the world. When it comes to Europe, one major difference between their culture and the United States is the embrace of vacation. Taking time to be away from work, recharge, and be with people they enjoy the most. This isn’t an excuse to be lazy. Rather, the people and communities know the value of taking time off. August is a big month for vacation in Europe. Talk to anyone and you may realize quickly that things are at a much slower pace during this month. An interesting article from Inc Magazine goes into detail about some of the things people may experience during August.
Although the US does not have a dedicated month like this, I believe that workers should be encouraged (and if needed forced) to take vacation time during the year. The hussle culture mentality can have benefits financially but one thing you can’t pay for is time. Time with your family, your friends, and time for yourself. We must embrace taking time off not only to have a break but to also increase productivity. As the famous line from “The Shining” states, all work and no play makes Jack a dull boy. We don’t want to be Jack. It didn’t really work out for him.
Small Business Checklist
Business Insurance. Whether an Umbrella Policy, E&O, Property & Casualty, etc, make sure you are covered for the type of work you're doing and the risks associated with it.
Term Insurance. In my opinion, everyone should have a term policy. They are cheap and protect your loved ones from financial hardship from the loss of your business income if you were to suddenly pass away. I currently have a $1M policy that's about $45/month that will cover me the next 20 years. Make sure this expense is not ran as a business deduction, otherwise the proceeds become taxable.
Long Term Disability Insurance. Do you sense a theme? This will protect you in the event you can't work due to an accident or illness for long periods of time. And as a self-employed individual, if you are paying the premiums and not taking them as a deduction - your proceeds from the policy are tax-free.
Access to Cash. Whether this is a cash reserve you build up or access to a revolving line of credit, it's always a good plan to have some type of access to cash should an emergency arise or as as source of cash-float to keep operations running and bills paid.
Roth Roll-Over Downside
Timing can be everything when you’re deciding whether to roll-over your Roth. As a reminder - the reason why Roths are preferred-retirement vehicles for many taxpayers is because any growth that occurs in it is tax-free upon distribution. Additionally, any contributions you make outside of the growth, can be removed at any time without penalty or tax.
Unfortunately, there are income limits to who can contribute, as well as contribution limits.
One way around this is my rolling-over a traditional retirement account into a Roth account. Taxes are paid on the roll-over, thus making future-growth tax-free.
There is one big downside though - Roth IRA Conversions have a 5-year rule, which means that any funds rolled-over you cannot access for five years without incurring tax. This means a roll-over might not be your best option if you need to access funds within that initial 5-year time period.
ThE oNe tAx sEcReT the iRs dOeSn'T wAnT yOu tO kNoW
So if you’re ever scrolling through social media and you hear that - one of two things is happening. One, it's actually a well-known tax strategy among tax professionals, and they will apply it in your situation when appropriate.
Two, it's actually tax fraud. The first way to suss out the information is - is this a licensed professional or someone cosplaying? If they have no licensed credential in the industry they are speaking on, that's an immediate no from me. The second way to fact-check the information is - Google what they are saying - are there any articles (especially from the IRS), saying the opposite of what they're claiming?
You'd be shocked (or maybe not) at how many things I come across that sound suspect (I'm by no means an expert in every area of tax law but know more than enough to know when something sounds wrong), and then after I search - find the IRS HAS A WHOLE PAGE(S) dedicated to that type of tax fraud scheme. I need you all to be very discerning out there - I don't want to see anyone falling prey to these scams which can leave you with hefty penalties, and at worst, prison time. If something sounds too good to be true, it usually is.
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