THE TEN BIGGEST FINANCIAL MISTAKES PEOPLE MAKE

Most financial planners agree about the ten most common financial planning errors people make.  Here’s the list.

  1. Failing to plan retirement financing.
  2. Failing to carry an “umbrella” policy to protect against risks not covered in other policies.
  3. Investing too much in one stock, usually the employer’s stock.
  4. No disability insurance or too little disability insurance.
  5. Holding investments which are not productive.
  6. No will or an outdated will.
  7. Failing to use a short term trust to save taxes.
  8. Investing in unwise or unnecessary tax shelters.
  9. Relying on variable income to meet fixed expenses.
  10. Failing to coordinate estate planning with personal financial planning.

TAX LOOPHOLE

Tax loophole.  Shift income to low-tax-bracket family members by structuring your business as a pass-through entity – for example, an S corporation, partnership, or limited liability company.  The income each family member would report on their tax return is proportionate to their percentage of ownership.


BETER WAYS TO CHECK CREDIT

Today, more than ever, it’s vital not to take unnecessary credit risks.  In addition to Dun & Bradstreet’s credit information services, you can get even more complete information from credit agencies that specialize in certain industries.  Retailing, the garment industry, and automotive parts are some of the businesses with credit agencies that offer reliable information developed by industry experts.

Do Your Own Credit Investigation.

A call to the customer’s bank can be very helpful.  A loan officer will usually give you an idea of the company’s average account balance, the company’s borrowing history, whether loans are secured or unsecured (unsecured loans indicate excellent credit standing), which of the company’s assets have been used as collateral, and whether the bank has liens against key assets such as accounts receivable.

You can also ask the company for a financial statement.  Many companies will not give this information to credit agencies to keep it from their competitors.  However, if a company knows your inquiry is legitimate and its credit is good, it should be willing to supply a financial statement and any other credit information you need.

You can also ask the company for the names of some of its suppliers.  Most suppliers will gladly tell you how much credit they extend the customer and whether the customer pays promptly.

You lawyer can do a lien search of the county clerk’s records for liens that might be placed on a company’s assets because of failure to pay its bills.  IRS liens will also show up in a search.


WHAT YOU SHOULD KNOW ABOUT DEDUCTIBLE MOVING EXPENSES

 

To deduct the costs of a job-related move, your new place of work must be at least 50 miles more than the distance between your former residence and your old place of work.  In addition, you must work a minimum of 39 weeks in the 12 months following your arrival at your new location.  The 39 weeks don’t have to be consecutive, and you don’t have to work for only one employer.

You can deduct the expenses that are reasonable for moving your personal property (furniture, appliances, cars, and personal effects) and that of other members of your household as well as travel expenses for you and your family to get to your new location (including lodging).

You have the option of deducting your car travel by using either your actual expenses for gas, oil, parking fees, and tolls you pay to move or the standard mileage rate of 23.5 cents a mile.  You must keep an accurate record of each expense if you elect to deduct the actual expenses.

An important feature of deductible moving expenses is that they are not subject to the 2% of Adjusted Gross Income limitation on miscellaneous itemized deductions.