Retirement planning. It seems like a huge task. An undertaking only to be taken on by those who have hours upon hours of time that they can dedicate to the process. Fortunately, those are common misconceptions.

Retirement planning actually only takes about an hour per year. And that hour doesn’t have to be done all at once. You can spend 15 minutes here, and 15 minutes there, and develop your plan. Considering that most of the planning has to do with determining how much you spend now, how much you earn now, how much you would like in retirement, and so forth; you don’t even have to sit down with a financial advisor until it is time to implement that plan. Here’s how you can get started.

Determine Your Income Needs

There is a big myth out there that says during retirement you will need approximately 60% of your pre-retirement income. Nobody is sure where that myth got started, but it proves to be false for the vast majority of people.

Instead, when you sit down to plan for retirement, you should plan on spending exactly the same as you spend now. Your mortgage may go away, and you won’t have to contribute to savings any longer, but most people find ways to spend the same amount. Lifestyles don’t decrease because you are no longer working. If anything, they increase due to more free time to pursue hobbies.

Let’s suppose that you are living on $4,000 per month now. That means during retirement, you will still need $4,000 per month.

Accumulating Wealth to Generate $4,000 Per Month

There are a number of ways to accumulate wealth. Most people do so by working. They set aside a portion of their income in a 401k, and when they retire they draw on that income. Others will invest in things like real estate. The properties that they own will generate income for them.

Regardless, you need to know a few things. First, when do you want to retire? Second, how much do you need to save to get there? These are the biggest determining factors to meet your retirement goals.

But that is for another discussion at another time. For now you need to know that you should be earning more on the side, slashing expenses, and investing your money properly. This is going to bring you to your “magical” retirement number.

Your Magical Retirement Number

As indicated, you need $4,000 per month to survive. We can now reverse engineer the number that you need to be able to comfortably retire.

$4,000 per month is $48,000 per year. Let’s just call it $50,000 to accommodate unexpected expenses. Using the 4% rule we can determine that you need $1,250,000 to retire. Let’s see how that is done.

We can safely assume that your investments will generate 4% per year in perpetuity. That’s a fancy way of saying you can withdraw 4% of the account value from your investments forever. If $50,000 is 4% of the overall account, we simply divide $50,000 by .04 to reach a number of $1.25 million.

Now we can’t exactly stop there though. We have to account for 2 other variables that could make this whole analysis worthless.

Inflation and Market Declines

Inflation and market declines can destroy a portfolio in a matter of weeks. But there are ways to combat these inevitabilities.

To combat the risk of inflation, you simply have to realize that you will need to save more than you thought. So instead of $1.25 million as our analysis previously determined, you will need to save closer to $1.5 million.

That $1.5 million, however, can quickly be cut in half during a severe recession. If you are drawing from your account during that time, you will deplete your nest egg much faster than you anticipated. But there is a way around market risk as well.

You will want to keep an additional 1/5 of your portfolio (our magical number is now up to about $1.8million) in an account that is not subject to market risk. So cash savings, permanent life insurance, government bonds, or the like. During times when the market has dropped severely, you live off of these savings and allow your investment portfolio to recover. When it has recovered, you slowly replenish your savings.

Investing, Saving, and Planning for Retirement

The biggest hurdle for planning for retirement is determining how much you will need to live on. Financial advisors have some fancy software that can help you determine that number, but you can do it yourself pretty easily.

Now that you know how much you need to retire comfortably, the last step is determining when you want to retire. Knowing how many years you have is all that is needed to determine how much you have to set aside each year.

Don’t be surprised when you realize that you can’t save enough; you will likely have to adjust one, or more, of your numbers.

Practical Taxes Can Help

As mentioned, these calculations don’t take into account taxes. That can throw a big wrench in your retirement planning. Fortunately, we can help when it comes time for taxes. We know how to minimize taxes, which accounts would be best for tax advantages, and can even prepare your tax return so you get the biggest refund possible.

Give us a call today at 406-894-2050 to learn more about tax preparation, payroll services, business consultation, or more in Billings, Montana.

There are many people that are fantastic at their jobs. They do so well that they deserve to be promoted. After their promotion they would have more responsibilities, a higher pay, and be in an overall better situation. Many of those people are passed over for promotion for two reasons: they don’t ask for one, or they don’t ask properly. Just popping into your boss’s office and asking for the promotion likely won’t yield the results that you desire. However, if you take the approach that your payroll services expert in Billings, Montana recommends, you can be sure to land that promotion (and all it entails).

 

Do Your Homework

The worst thing that can happen when you want to be promoted, is to simply walk into your boss’s office and ask for the promotion. Most of those conversations go something like this:

Employee: I have been here one year now. I think I deserve a raise/promotion.

Boss: What have you done to deserve it?

Employee: I have arrived on time every day, worked hard, I understand the business and the job, I have more responsibilities now than when I started.

Boss: So… what have you done to deserve a raise?

Employee: I’ve been here a year, and all the stuff I just said.

Boss: Now isn’t the right time.

While it seems silly, that is how the vast majority of people ask for a raise or a promotion. They simply walk in and ask (or usually demand) it. The gut reaction is to throw up defensive arguments and turn down the employee.

Before you ask your boss for that raise or promotion, you need to do your homework. This can be extensive, and it should start when you begin working.

Track Your Progress – As soon as you begin your job, you need to track your progress. How many accounts are you bringing in? What value are you adding? How are you easing your boss’s burden? Over time all of these quantifiable aspects will grow and give you solid evidence that you deserve more.

Go Above and Beyond – As you work, you have to do more than the minimum. The minimum will help you to keep your job, going above will help you grow your career. If you are comfortable doing just the minimum, then you must be comfortable earning just the minimum.

Know the Competition – Your job isn’t the only one in the industry. This can go both ways. If you’re a terrible employee, you are replaceable. If you’re a great employee, you have options. Pulling out the “I can work for XYZ” should be a last resort option. And be prepared to follow through on your threats.

Asking for the Promotion

Now for the daunting part: asking for the promotion. First, here are your don’ts.

1. Don’t ask at your performance evaluation
2. Don’t blindside your boss
3. Don’t be demanding
4. Don’t ask without evidence

Your boss needs to know, ahead of time, what you are meeting about. He needs to know what he can offer, even if he is “certain” the answer will be no, before you step foot in the room. When you do go in, follow these tips.

1. Do be polite
2. Do show evidence of increased productivity
3. Do expect the answer to be no, and have a compromise ready
4. Do be prepared to move to another company

If you have done your homework, and you have evidence to show that you are providing much more value to the company than you did when you received your last raise or promotion, then your boss shouldn’t have any problem giving you the promotion.

Practical Taxes

Practical Taxes is a full service accounting firm in Billings, Montana. If you are passed over for promotions or raises repeatedly, it may be time to start your own company. When that time comes, we can help with business consultation, payroll services, tax preparation, and much more. Let us ease the burden so you can focus on growing your business.

Having employees can make your life as a business owner so much easier. It takes the burden off of you to do every little thing, letting you focus on the important aspects of running the business, and it provides a job for someone else, helping to stimulate the economy. But anyone who has dealt with employees before knows that it can sometimes be difficult to keep your employees motivated so that they want to work hard and help further the business. Your accountant in Billings, MT outlines six ways to keep your employees happy.

 

 

Company Paid Lunches

One of the best things that you can do is to take little stressors away from your employees. Making it so they don’t have to worry about lunch can do just that. If you have just one or two employees, you may want to consider providing lunch every day of the week; if you have more then you may want to do company provided lunches on Friday. No matter how you structure it, your employees are going to be happy because how many companies actually do this?

Be Real

This is easier said than done. But think about it who you would appreciate more: a boss that comes by once a week and gives you a cheery smile and tells you how much you’re benefiting the company, or the boss that comes by and says that things are looking grim and everyone needs to work extra hard to make sure we turn a profit this quarter? Now you can’t be negative all the time, but when you’re real your employees appreciate you more.

Listen and Follow Through

Too often the boss gets in the habit of saying, “This is how I want it done, so you do it like this.” This makes for disgruntled employees. Perhaps even worse is the boss that seems to care, listens to complaints and suggestions, and never does anything about them. Want to keep your employees happy? Encourage them to give you feedback, actually pay attention when they do (turn off the computer if you need to minimize distractions), and ultimately follow through.

Empower Them

Talking about “empowering employees” sounds cliché and overused. But there is a reason that these buzzwords exist. An employee that has a say in the company is going to be a productive employee. They don’t want to feel as though they come to work, do a series of chores, and then go home. If your employees have an idea of how to make operations smoother, test those out. If your employee wants to work from home, try it for a week to see if he or she is as productive (or more productive) than in the office. People want a say in what they do, let them have it.

Provide Incentives

Most jobs can be quantified in some form or another. Determine a series of goals and provide incentives for the employees as they meet those goals. Incentives can be as simple as a coffee card for small goals, or bonuses and pay raises for bigger goals. Little rewards keep employees happy; happy employees work harder and stay longer.

Profit Sharing Plans

This is separate from “provide incentives” for a couple reasons. First, it is more than just an incentive for working harder; it is a reward for the employee for their expertise. Second, it should be reserved for your top executives. Top talent needs to be rewarded when they help to grow the business. It encourages them to put more time and effort into the job (even if their pay remains the same); because at the end of the quarter they know they will get a fat bonus check. Profit sharing amounts depend greatly on the executive, size of the company, and many other factors.

Motivating Employees shouldn’t be Hard

You don’t need gimmicks to motivate your employees. In fact, if your treat them fairly, and you have the right person in the right job, then their biggest motivation will come from job satisfaction. But sometimes people get a little burnt out, and you do need to provide some incentives.

Practical Taxes is a full service accounting firm in Billings, Montana. We can help you with your tax preparation needs, bookkeeping needs, payroll services needs, and much more. If you are a business owner, and you want to grow your business, we can help you do that. Give us a call at 406-894-2050 to set up an appointment today!

 

Failure. Nobody wants to hear that word. We don’t want to fail on our tests in school, we avoid failing in sporting events, we definitely wouldn’t want to be failures at life, and if we fail in our business there could be lasting consequences. Since there is so much pressure on not failing, we often get an overwhelming fear of failure. Spend the next few minutes learning how your accountant in Billings, MT suggests overcoming the fear of failure.

 

 

 

Fear of Failure

It is said that the fear of failure is the biggest fear that business owners have. They aren’t afraid of selling, they aren’t afraid of losing a key employee, and they aren’t afraid of the monetary risks they are taking. But the fear of failure is huge.

So what is the fear of failure? To some people it is the fear of losing all their money. Business owners understand that money comes and goes. To some it is the fear of not seeing their business grow to the size they want. But an entrepreneur knows that if this business doesn’t succeed he can start another that will. The fear of failure that business owners suffer from is the fear of never succeeding. It isn’t a onetime setback, it’s a permanent loss.

Overcoming the Fear of Failure

What often happens when we are presented with the possibility of failure is that we simply freeze up. Rather than make a decision, we end up making no decision. That can be as bad, or worse, than making the wrong decision. So here are ways to overcome that fear, and become a better business owner because of it.

Analyze – Weigh the pros and cons of each decision carefully. Write this all down.

Seek Advice – You should surround yourself with a team of advisors. An accountant, a financial advisor, a marketing person, a graphic designer, a strategist, a website person, etc.

Go with your gut – Generally speaking your gut feeling is sound advice. Your subconscious has already made the decision, so follow through.

Keep Moving – We all make mistakes, learn from the past mistakes and prevent future mistakes.

Accept the Fear – Fear of failure will never go away. But we can harness that emotion and use it for our good.

Harnessing the Power of Fear

There are two ways that fear will motivate people. Some people will be wrought with fear of failure so they become workaholics. They have to do everything and have everything perfect. In the end they are no better off than those who don’t do much at all. The other group will harness the power of the fear, and use it to make themselves better business owners. They will work smarter, not harder; they will learn from mistakes, not repeat them; they will seek advice, not be a one-man show. In the end, you don’t want to get rid of the fear, because that is what drives you and motivates you. But you can’t succumb to the fear either.

Practical Taxes is a full service accounting firm in Billings, MT. We can handle your accounting, payroll services, bookkeeping, and much more. This leaves you the time to focus on what you do best: running your business. Don’t let fear distract you, instead put some of your burdens on us in order to overcome your fear. Call us today at 406-894-2050 to learn how we can help your business thrive!

If you are a business owner, then you know that having the right people in the right position is imperative to keep your business flowing smoothly. However, getting the right person can be tricky if you are not aware of what to look for. Fortunately, there are a few clues that you can look out for in order to prevent mistakes. Read on as your accountant in Billings, Montana helps you learn to make good hiring decisions.

How to Start Your Search

There are different approaches to finding the right person for the job. It all depends on who you are, what the position is, and a variety of other factors. Here are the most common methods.

Advertisement – You can put an ad in the paper, online, post it on a bulletin board, or create a TV or radio spot. Advertising for the job is the fastest way to get people to apply, and you will likely be flooded with applications in no time. The problem is that you will get a lot of applications for people not exactly fit for the job.

Word of Mouth – As a business owner you likely have a good network to bounce ideas off of. By telling those around you that you need an employee, they can come up with recommendations that might be a good fit. By using a pre-screen like this you weed out those simply looking for a job because they want more spending money, and get some better suited for the position.

Employment Service – There are a number of employment services that can help you find the right employee (Kelly Services is one of them that does a great job). These services do all the hard work for you; you just pay a small fee to have them pre-screen.

So now you have the search going for an employee… but how do you know that you’re hiring the right person?

Being Selective When Hiring Employees

The first rule of hiring is to never hire the only person you interview. The larger your pool of applicants is the better chances of not making a mistake. So here is what you need to watch out for.

Personality – Some people are quiet, some our outgoing, some are shy, some are thinkers, some are relational. There will be a wide variety of people that come through the door in order to interview for the job. Make sure the personality matches the job! A thinker or someone quiet won’t do well in a sales position; an outgoing relational person will dread a job where they are stuck behind a computer all day long. Pay attention and match the personality to the position.

Attitude – Education and experience are one thing, but attitude is often seen as more important. As the employer you can train a hard-worker to do just about any job, but someone who has all the experience in the world that only wants to slack off won’t last long.

Goals – Nobody wants an employee that only plans to stick around for a few months. But any employee worth hiring won’t tell you that they only plan to stick around for a few months. You will have to do your best to determine through your interview to find out their long term goals.

Test Them – Anyone can give the answers that you want to hear when you ask interview questions, it only takes a little bit of preparation work to do that. This is why you should never hire based on the interview alone. Create a smaller group of those that you think would be a good fit for the job, and have them return for a second interview. This interview will consist of little tests and problems they will come across on the job. Those that do well are a better fit.

Hiring Employees

An employee costs money to find and train, but ultimately they will make you more money.   Unless they are a bad fit for the company. By being extra selective and not hiring the first one that comes along you can make sure to minimize the risk of hiring a bad employee.

Practical Taxes is a full service accounting firm in Billings, Montana. When you do get the employee or employees on board, you will need to pay them. We specialize in payroll services that reduce the amount of work you have to do every week. Give us a call today at 406-894-2050 to learn more.