Small-Business Recordkeeping: Pick the Right System

If you own a small business, you know how important it is to be organized, especially with business records. The Internal Revenue Service (IRS) allows you to maintain records in the manner that works best for you.

You should, however, plan to record income and expenses in a format that makes it possible to quickly create financial reports.

Your recordkeeping system can vary based on the nature of your income and expenses. A retail business that makes many small sales every day can benefit from buying a cash register linked to a computer that automatically records sales. If you make only a few large sales a month with minimal expenses, you might manually enter income and expenses into a paper ledger.

Many business owners save time with computer software such as QuickBooks®. If you work with accountants or bookkeepers, they may recommend software that is compatible with their systems.

Your bookkeeping system should help you figure out how much will be required for taxes so you can save funds on an ongoing basis. Even if you are the sole employee, you will probably be required to make quarterly tax payments.

If you hire additional employees, you must set aside payroll taxes from their wages to cover income taxes, Social Security, and Medicare, plus another 8.5% of their wages as the employer’s share of these costs. The business also may need to pay state or local sales and use taxes.

Don’t Get Sloshed By a Storm-Damaged Vehicle

Think about all those waterlogged vehicles shown on the news during hurricanes, floods, and other intense storms. Those cars and trucks could end up on a dealer lot near you—even if you live nowhere near the areas affected by the storm.

Flood-damaged vehicles can appear on lots all over the country, often priced very low but with no disclosure from sellers about storm damage. You might think you’ve found a great deal but, without a critical eye, you could drive off the lot with vehicle problems waiting to happen.

Take precautions before you buy a used vehicle:

* Get the history. Obtain a vehicle history report through a service like Carfax. You also can use the vehicle identification number (VIN) to check the vehicle’s status through the National Insurance Crime Bureau’s VINCheck tool.

* Check the vehicle. Look for soot, grime, and other signs of water damage. On the flip side, if a vehicle looks unusually clean–particularly under the hood–it should be another red flag.

* Trust your nose. Damage from water and sewage can create a musty odor. Sellers may try to mask it, so if you smell strong deodorizer or air freshener, it could be the scent of trouble.

* Drive it. Pay attention to the way the car handles and sounds during a test drive. Squeaking or grinding is a bad sign.

* Get hands-on. Feel all surfaces for dampness and dirt.

* Consult a mechanic. A professional can detect problems you wouldn’t necessarily notice.

Once you find a car that checks out, head to Hopewell Federal Credit Union for your financing. Speak to a loan specialist today to learn more about our affordable rates.

401(k) Hardship Withdrawals: Know the Stakes

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A sudden job downgrade, not being able to keep up with mortgage payments, or an expensive medical bill could leave you desperately looking for an immediate source of income.

Your 401(k) should be the last place you look for quick money. But if you’ve exhausted all other options, and your employer plan allows hardship withdrawals, you might have no choice but to tap in to your 401(k) retirement plan to help ease your financial burdens.

Before you do:

* Comb the fine print in your 401(k) plan to find out what qualifies as a hardship. Usually it must be an immediate and heavy financial need pertaining to certain expenses.
* Find out if you are eligible to take a hardship withdrawal. The IRS says you must exhaust other, specific options first.
* Learn how much money is available to you. It’s usually restricted to the amount you have contributed to the plan, without earnings, but not always.

Be aware that:

* For at least six months after you receive the withdrawal, you may not make new pretax contributions and you’ll miss out on all or some employer matches during that time.
* You will have to pay taxes on the amount you receive, based on your tax bracket.
* If you’re younger than 59½ years old, you will have to pay a 10% early withdrawal penalty.
* In addition to the penalty, your plan might charge a fee to take a hardship withdrawal.

Don’t go into this without understanding the consequences. First and most important is that you’ll forgo the compound earnings you’d otherwise enjoy in retirement.

To drive this home, say you are 30 years old, in the 25% tax bracket, and want $10,000 to pay for your tuition this year. You will have to pay an employer withdrawal fee, an IRS early-withdrawal penalty, and taxes; and you’ll have to stop making elective deferral contributions for six months. The end result: You could come short approximately $194,000 when you retire–assuming you miss a 7% annual rate of return.

In some situations it is worth taking the hardship withdrawal, but it should be your last resort. Consult with your HR department and your tax and financial advisers; and evaluate your alternatives with a Hopewell Federal Credit Union loan officer.

Pitfalls for the Online Job Hunter

Today’s economy, so unrewarding for job hunters, is a boon to con artists. They have a larger and more desperate pool of potential victims than they have had in 20 years.

The Internet, awash with electronic résumés, is prime hunting ground for many job cons. Most employment services are reputable, and the Web can be a useful job search tool. But it pays to know the good guys from the bad guys and how to protect yourself from job scams, especially those online.

The worst crime employment or personnel agencies might commit is to entice you to their office with an ad for a promising but nonexistent job. Other businesses make grand promises–access to “unadvertised job opportunities” and jobs with six-figure salaries. But watch out! The bigger the bait, the higher the cost of the deception.

These firms mine the Internet for résumés and send out e-mails promising you a job-winning résumé, five qualified interviews within a week, and the job of your dreams–before the month is out. All yours for a small fee, paid up front. That can cost you from $2,000 to more than $3,000, plus additional fees for “elite” services. Unfortunately, no matter how much you pay, you might get nothing but flimsy grounds for a lawsuit.

How do you protect yourself? Say no when you hear unbelievable promises or the words, “upfront fee.” Or, make sure all verbal promises appear in the contract. Ask for references from satisfied clients. Check them out on the Internet with a search engine or at a consumer advocacy site.

Your online résumé can come in handy for other cons. A common come-on, which you also may see in your local classifieds, is the opportunity to “make thousands working from your home!” Again, to get started, you have to pay that up-front fee, for which you get either nothing or a money-losing spot in a pyramid scheme.

The most dangerous con of all is the ID attack. This time, the e-mail appears to come from an employer who has gotten your résumé off the Web and wants to interview you for a job. You may even get a detailed, and credible, description of the job; and no request for upfront money. Just complete a simple online pre-employment background check. By completing that form you give them personal information, such as your Social Security number and maybe even a credit union/bank account number. That’s all they need to take your identity and create fake credit cards, borrow money, and leave you broke–and still without a job.

How do you protect yourself? Once again, listen for extravagant promises and requests for money. When you post your résumé online, don’t include personal information such as your birth date or Social Security number, phone number, or address. Even better, use a Web site that provides you with an e-mail address, so you can make your résumé totally anonymous. Don’t agree to an online background check.