Learn from My Mistakes: When a CPA is Worth It


Some years ago, I was teetering between working for a company and earning money on the side through websites I had created. I also dipped into freelance writing. When it came to tax time, I really didn’t have much of an issue because my main job covered the brunt of the taxes and whatever I made from the side-projects were easily included thanks to W2’s and 1099’s.

It wasn’t until I began making more than my normal work and deciding to leave the position that things started to get shaky in terms of finances and taxes. I was so focused on the money-making part that I neglected to plan for the taxes and by the time April 15th rolled around I was looking at owing quite a bit of money to the government (uh-oh).

I made it a point that I’d learn that lesson only once.

The problem I had was compounded due to my ignorance:

·  I didn’t fully understand what I could claim as business expenses

·  I went with one of the popular tax filing companies that just rushed me through the system

·  I wasn’t withholding enough money

After all was said and done I was facing well over $2,500+ in owed taxes which was quite a bit considering that I was still just getting started on my own in business. Every dollar counted because I needed it to help grow (and pay the normal bills).

Turns out that one of the other up-and-coming entrepreneurs within my circle happened to be a CPA for their day job so I got a hold of him on Skype and talked about the benefits of going with one. After about an hour I finally had a solid understanding of what I did wrong, what I need to do next time, and why I really needed to stick to a CPA from that point out.

Here are the main things I learned when talking to this individual about taxes and doing business:

A. Find someone local – As much as I wanted to just hire the guy on the spot, it would have been a pain overall because he lived so far away. I’m in the Central Florida area so I made a list of every CPA Orlando has to offer. I found one and having them so close made it very easy to do taxes the next year because I could fax over the documents, swing by to discuss any issues, have them walk me through it step-by-step, and also help me find ways to add deductions.

B. Frequency is better – We are all used to doing our taxes when it comes tax time because we have this love for one giant check. When you’re doing a business it’s far better to do your taxes quarterly so you won’t get caught off guard by a major hit if you did something wrong during that year. You can easily handle smaller taxes every few months than having it slam on you at the end of the year.

C. Deductions & Withholding – I thought I knew what I could claim as deductions that first year of doing taxes independently but boy was I wrong (it resulted in an audit). A CPA is trained in all of this and can answer your questions; they can help you fully understand what and what not to claim. Working with one that really knows the tax laws can help you save thousands and prevent you from making an “oversight” that could lead to potential tax fraud.

D. Retention – A CPA (or the firm) is going to keep all the files you’ve submitted on record. Compare this to the big envelop you receive or online account (which you forgot) and you see the benefits. If the IRS suddenly digs up something from a few years ago and you’ve been going to the same CPA you can bet that they’ll put in the effort to find the documents and fight back.

These days it’s all about keeping good records. I learned my mistakes early on (at least I’m thankful for that). Taxes aren’t that big a problem anymore and business is booming. In the end I would recommend a CPA to anyone that is out there on their own trying to build something from scratch; it’ll save you a ton of headaches and money.

Financial Jargon Busted

All of us have to start somewhere when it comes to finance. After all, we aren’t born with a head for figures and economics; it is something that we have to learn over time. Whether you are a newbie investor or a green entrepreneur, one of the most difficult things to get your head around at first is all the jargon that comes with financial matters. If you don’t know all the lingo of money, how on earth are you going to get buy?!

We know that learning a new language can be very difficult, and getting to grips with all this new financial jargon can be just like trying to learn Spanish vocabulary! So, to make it easier for you, here is our comprehensive guide to financial jargon. Consider all those tricky words and phrases well and truly busted!

Asset – Ok, let’s start with a very easy to understand term. You will no doubt have heard of “asset” used in a variety of different situations. It basically means something that you own. So, if you own your own home, then that is an asset. If you have your own business, then anything that the business owns is a business asset. For instance, if you own a taxi firm, then all of the cabs are assets. Investments such as stocks and shares are also classed as assets because they are worth money.

Inflation – Even though inflation is regularly spoken about in the media and in political manifestos, it can be quite tricky for people to understand. That’s because it is a bit of an abstract concept. Put in simple terms, inflation is the amount by which the price of goods and services rises by each year. Generally speaking, it is best if inflation only slightly fluctuates. If it rises or falls significantly, it is a sign that all is not well with the economy.

Debt – A slightly easier term for newcomers to finance to understand, debt simply means the amount of money that you borrow. For instance, if you take out a loan worth $5,000, then you are $5,000 in debt. People find that the more loans they take out, the more they struggle to pay them back. If this sounds like you, though, don’t worry as you could always consolidate your debt to make repayment easier. But if things get really out of hand, there are a few government organizations that can offer you advice and help you and your business through this rough patch.

Dividend – If you buy shares, you own a small percentage of the company in which you have bought your shares. As a way of thanking their shareholders for supporting them, companies pay out dividends to all shareholders on an annual basis. This is often expressed as a percentage of the amount that they have invested into the company. Normally, dividends are paid out in cash, but today more and more businesses are looking at unique and unusual ways to reward their customers. For instance, if you hold shares in a chain of restaurants, you might get paid in meal or drink vouchers.

GDP – GDP is an acronym that stands for “gross domestic product”. It means the total value of all the goods and services that the country offers. This is often expressed as a figure and is very important to help economists judge how well a country is doing and how healthy their economy and markets are.

Funds – If you are interested in investing some of your money, you may have already heard a lot about funds. These are a collective investment. People who invest in them pool all of their money together, and this large sum of money is then looked after by a fund manager. The fund manager splits the big pool of money up so that he or she can invest it in different sectors and assets. By splitting the money up into different assets, it reduces the risk involved and also increases the chance of returning a good profit for investors. When you are looking for a fund, you will be able to choose from different kinds, such as mutual funds and hedge funds.

Diversification – In the above point I mentioned about splitting up money to invest in different assets. This method of investing is known as “diversification”. You will usually hear this term in the phrase “diversify your portfolio”. More often than not, investors invest in different types of investments, from funds and shares to property and other physical assets. This is often a good way to invest your money, as different markets fluctuate differently. So, for instance, if you invest in both property and shares, and the stock market crashes, you shouldn’t lose too much money, as the property market could still perform very well. Because of this, many people see diversification as a safety net.

Online Investment Platforms – Not too sure how you could go about investing your money in the first place? No problem; you can make it easy for yourself by using an online investment platform. These are websites which give you the opportunity to invest your money without needing to go through a financial advisor. Many people find that using an online investment platform is very beneficial as it gives them somewhere to hold different assets together on one platform. They can then get a good overview of their current financial situation without jumping from site to site.

Pension – Many people believe that a pension is the best way to save up for retirement. It is just a long-term savings plan that you can tap into once you reach retirement age. Once you are old enough, you will be able to withdraw it completely as a lump sum or can choose to take monthly withdrawals. For many people, their pensions savings will come out of their salary on a monthly basis. However, some people like to take out a private pension plan as well to ensure that they have plenty of money to live off during retirement.

Buy-To-Let – Many people who invest in property choose to buy to let. This means that, rather than buy a property to live in themselves, they buy with the intention of renting it out. They could find a long-term renter or buy a holiday home to rent out to people on a short-term basis. Many people choose to do this as it provides them with a second monthly income. They could use this to increase their spending or invest it. Plus, the value of the property could increase over time, which will also see their investment grow.

Stock Index – There are various ways economists tell whether a market is doing well or not. One of these is the stock index. This refers to a few shares that are used to judge the current state of the market or sector in question. More often than not, it is the top performing shares in the market or sector that are used for the stock index, but this can vary.

Trading Floor – Ever wondered where all the magic of the stock exchange takes place? It’s down on the trading floor! This is the area of a company’s offices where all the hard work takes place. Have you ever seen the movies that show all the businessmen shouting “Buy! Buy! Buy! Sell! Sell! Sell!” Well, that is a portrayal of the trading floor! Sometimes, you might hear this referred to as the “trading pit”.

Volatility – Ever wondered what it means when traders and investors talk about market volatility? It’s all to do with the statistical likelihood that a market will make returns in the short term. Usually, the standard deviation of a market is used to work out the current market volatility. Sometimes, however, the market index is used. But, more often than not, a high market volatility means that it is currently quite risky to invest in the market in question.

Interest – Even though interest is a commonly used term, it is another one that can be quite difficult to grasp the true meaning of. Put into an easy sense, this term is simply the charge that comes with borrowing money. So, when you take out a loan, you normally don’t have to pay to do so. However, there will be interested added onto your monthly repayments, which are paid instead of a one-off charge. The amount of interested that is added on is usually a set percentage of the amount that you borrowed. There are different types of interest that can be added onto loans, so it is a good idea to double check with the loan company so that you fully understand how much you will need to repay.

As with most aspects of life, there is a lot of unique and niche vocabulary that goes hand in hand with economics and finances. But you shouldn’t let this put you off. Try and see learning all these new words as a way of increasing your financial knowledge. You never know, it might also help you improve your decision making, which could help your money grow even further!

What to Start with When Assessing Value for a Pre-Owned Car


When buying used cars in Canada, the most important resource that you need is the Canadian Black Book. It helps you find the correct value of the used car you want to buy based on its current mileage and features.

The info graphic gives information on several factors that you will need to consider when buying a used car. The first consideration to make when buying a used car is the features of the car. If the car has any additional features especially those that increase comfort and luxury the price of that car may be high.

Another factor to consider is the resale value of the car. Toyota cars are known to maintain their value and are therefore very popular cars. With high demand, comes a higher price even for a used car and thus also higher resale value.

Mileage is another very important factor you need to consider when buying a used car. Closely intertwined to mileage is the year of make and the model of the car. The older the car, the more the mileage and the cheaper it should be. Vintage and limited edition cars are the only cars that will be expensive when old.

When it comes to depreciation, a car depreciates by a quarter of its cost every year as soon as it leaves the show room.

Different car models have different reputations. The Mercedes Benz S class, Chevrolet Cobalt and Kia Sedona are known to be among the vehicles that depreciate the most while many Toyota, Honda CRV and the Jeep wrangler are known to really hold their value. Also consider fuel efficient cars such as the Dodge Neon or the Chevy Cavalier.

The most popular used cars one can buy are Honda Accord, Toyota Camry, Honda Civic, Toyota Corolla and the Ford Escape. Toyota, Hyundai, Ford and Honda are the car models in which you will not incur much in repair costs.