August 2 – Employer’s Quarterly Federal Tax Return (Form 941) due for Q2 payroll

August 2 – Texas Workforce Commission Employer’s Quarterly Report (From C3) due for Q2 payroll

August 2 – Employer’s Federal Unemployment Tax Deposit due for Q2 payroll

August 2 – Deadline for filing 2009 retirement or employee benefit returns (5500 series) for plans on a calendar year. (Normal deadline is July 31, but since that day is a Saturday, the deadline moves to the next business day, August 2.)

Many of us are living close to our financial limit these days. We pay our bills on time, but there’s not a lot left over. That could be a dangerous situation. If things go wrong, your financial situation can change very quickly from adequate to critical. Without a cash reserve, you could find yourself in serious trouble.

It’s important to have a cash reserve of at least three months’ living expenses. Invest your reserve in a safe, liquid account. Consider investments such as a bank CD, a money market fund, or a very short-term bond fund. Make sure you have easy access to the funds without losing too much interest. And once you’ve built your fund, avoid temptations to raid it for non-essentials.

Great, Rex, I get it.  But how the heck do I build that reserve in the first place?

There are only two ways to build up a cash reserve: reduce expenses (decrease outflow) and gain revenue (increase inflow).

I know you’re thinking, “well, duh!”  But it’s important to realize that it really is that simple.  Well, simplistic; not simple.  If it were that simple, you’d probably have that savings account filled up already.

Here’s an no-brainer way to start: A Dartmouth economics professor and three colleagues published a report late last year that found by simply texting people and reminding them to save money increased their savings-account balances by 6%.  The increase was even greater if the message included a reminder of the specific goals customers gave when setting up their savings accounts.

Yes, a simple, daily text message increased savings. One of the authors noted that it’s likely caused by the additional attention it forces you to pay to your savings, rather than a lack of self-control.  In addition to reminders you could set up for yourself via Google or Yahoo, the brains behind SaveEveryWay will do it for you.

Personal finance blog The Simple Dollar offers a step-by-step guide to creating an emergency fund.   Here’s the recap:

• Set your initial target low
• Find your breathing room
• Make it automatic
• Set reasonable milestones along the way

Actually, there are a number of incredible free resources with useful tips to help stretch your dollar in all kinds of ways:

Wise Bread

Get Rich Slowly

Frugal for Life

You can also read Jeff Yaegar’s book The Cheapskate Next Door.

Ultimately, expenses can only be cut so far.  No matter how spartan you’re willing to live, you’ll probably still need to pay for some kind shelter and to feed and clothe yourself.  In another post, we’ll explore some of the ways to increase the inflow of money.

Photo by nieve44

Planning what to do in case of a disaster is an important part of being prepared. The Internal Revenue Service encourages taxpayers to safeguard their records. Some simple steps can help taxpayers and businesses protect financial and tax records in case of disasters.

Listed below are tips for individuals and businesses on preparing for a disaster.

Take Advantage of Paperless Recordkeeping for Financial and Tax Records

Many people receive bank statements and documents by e-mail. This method is an outstanding way to secure financial records. Important tax records such as W-2s, expense receipts, tax returns, and other paper documents can be scanned onto an electronic format.

Be sure you back up your electronic files. You can copy them onto a ‘key’ or ‘jump drive’ periodically and then store them in a safe place. Making duplicates and keeping them in a separate location is a good business practice. Other options include copying files onto a CD or DVD. Also, many retail stores sell computer software packages that you can use for recordkeeping.

When choosing a place to keep your important records, convenience to your home should not be your primary concern. Remember, a disaster that strikes your home is also likely to affect other facilities nearby, making quick retrieval of your records difficult and maybe even impossible.

Document Valuables and Business Equipment

The IRS has disaster loss workbooks for individuals ( Publication 584, Casualty, Disaster, and Theft Loss Workbook) and businesses ( Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook) that can help you compile a room-by-room list of your belongings or business equipment. This will help you recall and prove the market value of items for insurance and casualty loss claims.

One option is to photograph or videotape the contents of your home and/or business, especially items of greater value. The photos or videos could be digitized and kept with your electronic backups.  Or, you could store the photos with a friend or family member who lives away from the geographic area at risk.

Check on Fiduciary Bonds

Employers who use payroll service providers should ask the provider if they have a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

Continuity of Operations Planning for Businesses

How quickly your company can get back to business after a disaster often depends on emergency planning done today. Start planning now to improve the likelihood that your company will survive and recover. Review your emergency plans annually. Just as your business changes over time, so do your preparedness needs. When you hire new employees or when there are changes in how your company functions, you should update your plans and inform your people.

There are real benefits to being prepared for disasters. The following preparedness strategies are common to all disasters. You plan only once, and are able to apply your plan to all types of hazards.

• Get informed about hazards and emergencies and learn what to do for specific hazards.
• Develop an emergency plan.
• Learn where to seek shelter from all types of hazards.
• Back up your computer data systems regularly.
• Decide how you will communicate with employees, customers and others.
• Use cell phones, walkie-talkies, or other devices that do not rely on electricity as a backup to your telecommunications system.
• Collect and assemble a disaster supplies kit. Include a portable generator.
• Identify the community warning systems and evacuation routes.
• Include required information from community and school plans.
• Practice and maintain your plan.

Update Emergency Plans

Emergency plans should be reviewed annually. Personal and business situations change over time and so do preparedness needs. Individual taxpayers should make sure they are saving documents everybody should keep including such things as W-2s, home closing statements and insurance records. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.

Make sure you have a means of receiving severe weather information; if you have a NOAA Weather Radio, put fresh batteries in it. Make sure you know what you should do if threatening weather approaches.

Count on the IRS

In the event of a disaster, the IRS stands ready to help. The IRS has valuable information you can request if your records are destroyed.

Immediately after a casualty, you can request a copy of a return and all attachments (including Form W-2) by using Form 4506, Request for Copy of Tax Return (PDF).

If you just need information from your return, you can order a transcript by calling (800) 829-1040 or using Form 4506-T, Request for Transcript of Tax Return (PDF). There is no fee for a transcript. Transcripts are available for the current year and returns processed in the three prior years. IRS.gov is an indispensable resource as you prepare for and recover from disaster.

Many students artisans now have a summer job. Some may not realize they have to pay taxes on their summer income. The IRS wants everyone to know about income earned while working a summer job.

• Many students artists do odd jobs over the summer to make extra cash. Earnings you received from self-employment are subject to income tax. These earnings include income from odd jobs like baby-sitting and lawn mowing.
• If you have net earnings of $400 or more from self-employment, you will also have to pay self-employment tax. This tax pays for your benefits under the Social Security system. Social Security and Medicare benefits are available to individuals who are self-employed the same as they are to wage earners who have Social Security tax and Medicare tax withheld from their wages. The self-employment tax is figured on Form 1040, Schedule SE.
• Whether you are working as a waiter or a camp counselor, you may receive tips as part of your income. All tip income you receive is taxable income and is therefore subject to federal income tax.
• All employees fill out a W-4, Employee’s Withholding Allowance Certificate, when starting a new job. This form is used by employers to determine the amount of tax that will be withheld from your paycheck. If you have multiple summer jobs you will want to make sure all your employers are withholding an adequate amount of taxes to cover your total income tax liability. To make sure your withholding is correct, use the Withholding Calculator on IRS.gov.

Did you know that your summer day care expenses may qualify for an income tax credit? Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation. Those expenses may help you get a credit on next year’s tax return.

Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the lazy hazy days of summer and throughout the rest of the year.

• The cost of day camp may count as an expense towards the child and dependent care credit.
• Expenses for overnight camps do not qualify.
• If your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
• The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income.
• You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

For more information check out IRS Publication 503, Child and Dependent Care Expenses.

Jumping off the cliff.
Pulling the trigger.
Taking the plunge.

Whatever you want to call it, I’ve just done it.

As of July 1, I’ve left the comfortable confines of corporate life to make my own mark on the world. I’ve joined the ranks of the willingly self-employed in order to realize my vision of …

Crap. What’s my vision again? If I can’t remember it, it must not have been that important. And if it’s not that important, how can I make any money at it? Oh no. Maybe it’s not too late to ask for my old job back…

And so it goes. From the soaring heights of self-empowerment to the depths of despair and debt in five seconds flat. An emotional roller coaster.

But also necessary. Alan Moore, who wrote V for Vendetta and Watchmen among other popular comics and graphic novels, described his own transition experience:

Quitting my day job and starting my life as a writer was a tremendous risk. It was a fool’s leap, a shot in the dark. But anything of any value in our lives whether that be a career, a work of art, a relationship, will always start with such a leap.

But now that I’ve leapt, how can I be sure to land on my feet rather than my face?  It’s inevitable that from time to time I’ll feel like a fool and regret my decision. That’s fear talking. What Seth Godin calls the “Lizard Brain.”

Consistent action and focused intent are the only ways I’ve been able to overcome it and get things done.  I’ve picked up a little trick that seems to help. I even use it at the gym. Once I’ve picked my goal—let’s say, to run two miles—I ignore it. Instead of focusing on the Big Goal, which inevitably makes me anxious and want to quit before I embarrass myself by failing to achieve it, I focus on the little milestones.

When I’m running, I don’t count how many laps I have to go, I count how many laps I’ve made and only think about making two quick turns on the track to get me to my next half-lap goal. The chatter in my brain sounds something like this:

5… 5… just have to get to 5½.
5½… 5½… two quick turns and I’ll be at 6.
6… 6… just have to get to 6½.

Before long, I’ve tricked myself into running 18 laps and I’ve accomplished by two mile goal.

E. L. Doctorow said that “Writing is like driving at night in the fog. You can only see as far as your headlights, but you can make the whole trip that way.”

Leaping, running, driving.  The metaphors may be a bit mixed, but the advice is still solid: Take a chance and keep at it, and you’ll get there.

July 15 – Payroll tax deposits due for monthly depositors

July 20 – Texas Sales and Use Tax Return due for monthly and quarterly filers

I’m feeling energetically giddy again.  I feel a great sense that anything is possible, good, and has promise.  And I want to do everything at once.  It’s energy overload.

This can be tremendously helpful in my creativity, but if I don’t learn to harness it better, I’ll get sidetracked by everything rather than making a quantum leap in impact for one thing.

I’ve been reading Scott Belsky’s Making Ideas Happen.  I get so excited when an idea resonates.  The excitement starts with the thought, “I want to do that.”  And, because I’m fearful I’ll either forget the idea or lose the excitement driving it, I’m compelled to do that right now.  And I’ve stopped reading and started on that.  Then, I’m so excited about that, I want to do this.  And before I know it I’m simultaneously working on this.  Or this.  Or this.

Raw creative energy at its finest, manifesting itself as a thousand-ideas-at-once.  When it hits, it feels like being sidechecked and dragged around the ice by a sweaty, growling hockey player with no front teeth.  When the ride’s over, I’m breathless.  What a rush!  But am I any closer to the goal box?

Figuring out how to deal with this is a lot like asking how to wrangle a lightning bolt.  Here’s a trick that works for me:

Whenever I’m trying to focus on one task that’s generating a lot of other ideas I want to remember but don’t want to process in the moment, I take out a 3×5 index card, or if I’m feeling particularly frisky, a letter-sized page folded in half lengthwise.  Having a narrow width to write on (3″-4″)  seems key, so that I can keep it just to the right (or left, for you southpaws) of what I’m working on.

When I get an idea tangential to my chosen focus, I force myself to simply write it down without acting on it, and immediately return to what I was doing.

Simple, no?  Yeah, try it sometime, bub.

The real magic behind the trick is the immediate return to my chosen task.  By capturing the idea nugget, I mitigate the urge to deal with it for fear of losing it in the deluge of the idea storm.  I can have my daydream moment (or half-hour, as just happened while writing this–I never claimed to be perfect) and get right back (more or less) to the task at hand.

Photo by maggieandcharles.

Artists with art to vend often face the perplexing problem of where to sell their wares online. Blogger Jason Fitzpatrick analyzed the marketplace for, well, marketplaces and offers his top five picks:

1. Big Cartel
2. Shopify
3. Self-hosted
4. Etsy
5. Sell Simply

Several of my clients have reported success with Etsy—it has a lot of name recognition as far as I can tell—but as a service slinger (as opposed to a product peddler) I have no personal experience with any of these electronic emporiums except for #3.  I roll all my own websites, including this one, and I often wonder if that’s the best use of my time & energy. Share your experiences in the comments.

Five Best Places to Set Up Shop Online

Photo by prakhar

Karol Gajda, guest posting on zenhabits.com, has authored a succinct and excellent guide for beginners starting a small on-line business.  Here’s the summary:

1. Focus on what’s important: Action
2. Invest in education
3. Ask for help
4. Participate in the community
5. Don’t quit your day job

His post is absolutely worth the 7 minutes you’ll invest in reading it, even if your business isn’t primarily on-line or that small.

The Absolute Beginner’s Guide To Starting A Small Online Business