Money Management

Running payroll can be an ongoing stress for small business owners. Read on to find out how the right software makes it easier. [[{“value”:”

Payroll may seem simple enough when you first start a business. After all, how difficult could it be to pay employees the same amount regularly? Pretty hard, it turns out.

Between managing employees, ordering inventory, and balancing expenses with revenue, ensuring your employees are paid accurately and on time is another responsibility to worry about. Here are some payroll struggles growing small businesses face and how to manage them.

1. Navigating laws and regulations

In college, my boss once told me that I and other workers wouldn’t get paid on our regular pay date because the company made a mistake with payroll. Instead, we’d have to wait until the next pay run to receive our checks. I was shocked that this was legal, but it apparently was in our state.

Any time you pay people money for work, you have to follow federal, state, and local laws. These can include rules about when your employees are paid, overtime laws, and restrictions on how long minors can work.

For example, California may require some businesses to pay their employees weekly, while Idaho employers may only need to run payroll monthly.

2. Keeping official records

Payroll isn’t just about paying employees on time; you also need to keep accurate records of how much you pay your employees. The federal government has record-keeping laws set by the Fair Labor Standards Act (FLSA).

One of the most important is that business owners need to keep payroll records for at least three years for non-exempt employees, including hours worked, wages earned, pay rate, overtime, and deductions. Sure, you could keep a shoebox of wage receipts crammed in a broom closet, but you’ll likely sleep better at night managing payroll records through an app.

3. Figuring out taxes

Small business owners are responsible for accurately calculating taxes from employee payroll. This includes federal requirements like Medicare, Social Security, and unemployment insurance, as well as other state and local taxes.

Considering that payroll taxes are by far the largest source of revenue the IRS collects, small business owners need to ensure they calculate payroll taxes correctly.

4. Learning new tech

Some small business owners may find it difficult to switch to a new software program to better organize their payroll system. The good news is that you don’t need to be a tech whiz to get your payroll right.

Some of my colleagues at The Ascent reviewed the best payroll software options and found plenty of low-cost options. Many even include robust features like direct deposit, multistate payroll, and automated tax calculations.

5. Analyzing payroll expenses

Growing small businesses constantly assess how much growth is the right amount and how much is too much. Payroll software can help make this easier by eliminating some of the guesswork.

For example, by looking at your payroll expenses over the previous six months, you can determine whether adding a new employee fits into your budget and how much additional sales you’ll need to offset that cost.

This one thing will make payroll much easier

I’ve already mentioned a few times that having the right payroll software can help grow small businesses, but it’s worth repeating. Spending a little time testing out one or two payroll systems will give you a good idea of what features you want and which work best for your business.

Just don’t wait until your business is growing quickly and then look for the right software. You’ll avoid additional stress by picking your software upfront and letting it scale along with your business as it grows.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

“}]] Read More 

Savings accounts give you easier access to your money, and most have no required opening deposit. But read on to see how a CD can be better. [[{“value”:”

Should you put your money into a certificate of deposit (CD) or a high-yield savings account? Both types of bank accounts are offering similar rates right now. You can find many CDs and many savings accounts paying upward of 5.00%. So, does it really matter which you pick?

Actually, the answer is yes. And in the right circumstances, there are three important reasons why opening a CD could be a way better idea than sticking your money in a savings account.

1. You may be able to get a higher rate

One of the best reasons to buy a CD is because CDs often provide higher rates than high-yield savings accounts do. The national average rate on savings accounts is 0.45% according to the FDIC, while the national average rate on a 12-month CD is 1.80%.

Of course, there are savings accounts and CDs paying well above the national average rate. The Ascent’s list of the best CD rates shows many options with yields above 5.00%. But the data from the FDIC still shows the general trend. CDs pay better rates because banks need to give you higher yields to convince you to lock up your money.

See, while you can take funds out of your savings account any time, you must wait until your CD matures and the term ends to make withdrawals if you don’t want to be penalized. Giving up access to your money is justified by the higher rate you get. So as long as you don’t need to withdraw your cash early, the higher rate makes CDs the better choice.

2. Your rate is locked in

There’s another big benefit to CDs compared with high-yield savings accounts: With a CD, you are guaranteed to get the promised yield for the entire duration of the CD term. If you buy a 5-year CD paying 4.35%, you will earn 4.35% on your money for the next five years — guaranteed.

But high-yield savings accounts have variable rates. This means your bank could change the rate whenever it wants to. If interest rates start to go down — as many experts expect in the coming months — today’s savings accounts paying 4.00% or 5.00% or better are going to quickly cut the yields they are offering. You could find yourself earning much less on your invested funds than you are now.

3. You won’t be as tempted to touch your money

Finally, CDs could offer less temptation to withdraw funds early. While you can take money out of savings whenever you want, you can’t do that with a CD or you could face a big financial penalty.

Now, this is often viewed as a disadvantage since you’re giving up access — but if you know you don’t want your money sooner than the CD term, it could be a benefit to you. The penalty acts as a deterrent against unnecessary withdrawals, helping you stay on track toward your savings goals by removing the temptation to make an early withdrawal.

For all of these reasons, you should think seriously about putting some of your money into CDs — as long as you know you won’t need it for the duration of the CD’s term.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

“}]] Read More 

There’s a lot of misinformation about credit cards out there. Read on to get to the bottom of it. [[{“value”:”

Some people prefer to pay for their purchases with cash. But there’s something to be said for the convenience of being able to tap or swipe a credit card.

Unfortunately, though, there’s a lot of bad information out there about credit cards, and buying into the wrong myths could lead to making less beneficial decisions. Here are three lies you may have been told about credit cards — and the truth behind them.

1. “They’re bad for your credit score”

Credit cards can actually be good for your credit score if you pay your bills on time and in full every month. The biggest factor that goes into calculating a credit score is your payment history. When you pay with cash, there’s no record of your transactions and no way for the credit bureaus to know how timely you are. With a credit card bill that comes due every month, that data is tracked and reported.

Another big factor that’s accounted for in your credit score is your credit utilization ratio, or the amount of available credit you’re using at once. If you keep your utilization to 30% or less, it could help your credit score improve or remain high. So if you have a $10,000 spending limit across three credit cards, keeping your total balance to $3,000 or less at all times could help your score rise.

2. “It’s okay to only make your minimum payment”

Making just your minimum monthly payments on your credit cards might hurt you in a couple of ways. First, that practice could drive your credit utilization ratio up, leading to a lower credit score. It could also cost you a lot of money in interest.

Remember, credit card companies let you only pay your minimum balance because they want to collect interest on the remainder. Over time, those interest charges can add up.

Say you owe $2,000 on a credit card with a 20% APR. If you carry that balance for 24 months before paying it off completely, you’ll spend $443 on interest. And that’s a shame, because $443 could probably take care of a lot of your bills.

3. “It’s best to only have one credit card at a time”

If you find a credit card with a great rewards program, you may decide to make it your one and only. And there’s nothing wrong with that, as it will surely make it easier to keep track of your payments and spending.

But there’s also nothing wrong with having multiple credit cards as long as you’re able to keep track of your balances and payment due dates, and as long as you’re not using multiple cards as an excuse to rack up charges you can’t afford.

Let’s say you find a credit card that offers terrific bonus rewards on gas and a separate card that rewards you generously for grocery store purchases. Both are expenses you probably pay for regularly. In that case, it could pay to have both so you can earn extra cash back on those everyday expenses. You may also decide to get a separate travel rewards credit card to enjoy money-saving perks when you’re taking vacations, like free checked bags on flights or discounts on in-flight meals.

All told, credit cards can be a useful tool in managing your finances, and they can put money back in your pocket for the things you’re buying anyway. But if you want to feel more confident as a credit card user, continue to read up about how they work and learn how to maximize their benefits.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

“}]] Read More 

Got some cash put aside for unplanned expenses? See why you should resist the impulse to lock it up in a CD. [[{“value”:”

Thanks to a string of Federal Reserve interest rate hikes in 2022 and 2023, interest rates on consumer financial products are up across the board. (The two don’t move in concert, but do trend in the same direction.) This has had a negative impact on the bottom line of those who need to borrow money — but if you’ve got money saved in the bank, you stand to profit from those rate hikes.

Certificates of deposit (CDs) are one type of bank account that is paying out higher APYs right now — you can find them with rates of 5% and higher. And the rate you get is locked in for the entire CD term. So if the Federal Reserve cuts rates next month and CD rates fall overall, your money is still earning the high rate you started with.

Despite this, CDs are not a fit for every financial situation. In particular, they’re a terrible place for your emergency fund, if you are fortunate enough to have one. Here’s why — and where you should put that money instead.

The problem with CDs

I can’t deny that CDs have some pretty sweet benefits. But they also have restrictions that make them a poor choice for any money you don’t have a short and well-defined timeline for. And your emergency fund is money that you likely don’t have a set use for; it’s meant to be there when you have a medical bill that insurance doesn’t cover, or you get a flat tire, or any number of expensive unplanned mishaps that aren’t part of your budget.

When you open a CD, you agree to leave your money in the account for the duration of the CD’s term (often between three months and five years) in exchange for earning that high APY for the entire term. If you need to pull your money out early, you’ll be penalized with an early withdrawal fee. The fee amount depends on your bank, but you can expect to lose at least a few months’ worth of interest earnings on a shorter-term CD, and perhaps a year or two of interest if you have a longer-term one.

And while up to $250,000 of your cash in a CD is protected against bank failure thanks to FDIC insurance, you can still lose some of your principal balance due to an early withdrawal fee. Let’s say that you open a 1-year CD, and the penalty for withdrawing early is three months’ of interest earnings. But just two months into the CD term, your car breaks down and you need the money to have it fixed. Your early withdrawal fee won’t be covered by the interest you’ve earned so far, so you end up with less money than you started with. Not ideal — but a good illustration of why CDs aren’t a great place for money you could need anytime.

Where does your emergency fund belong?

I’m not here to state a problem and then not give you a solution! Thankfully, there are two bank account types that are excellent fits for your emergency fund.

The best high-yield savings accounts are currently paying APYs around the same as what you could get with a shorter-term CD — with the caveat that rates are variable and subject to change. But in terms of ease, bank accounts don’t get any simpler. You can add or withdraw money any time you like (often by transferring it to a linked checking account — the highest-paying HYSAs are offered by online banks, which means more hoops to jump through for cash access).

Want easier money access and a similarly high (but still variable) APY? Look to the best money market accounts. These offer debit cards or check-writing privileges, giving you just one step to pay an unplanned bill. Both account types come with FDIC insurance and give you the flexibility you need to keep your cash safe and growing while not penalizing you for spending it on your own schedule.

Don’t use a CD for your emergency fund. It would be a real bummer to find yourself facing a surprise expense and losing some of your money to an early withdrawal fee in the process.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

“}]] Read More 

Buying a home can increase your net worth — with a lot of caveats involved. Keep reading to learn why stock investments are a better bet to grow wealth. [[{“value”:”

I just bought a house, and I’m thrilled at the prospect of turning it into a beautiful and stable home for myself. But according to findings from the National Association of Realtors, an awful lot of Americans take a different view of owning a home. In fact, 44% of respondents to the 2024 NAR Home Buyers and Sellers Generational Trends survey believe that a house is a better financial investment than stocks.

While buying a house certainly has value, it’s not quite an investment in the way these people assume. Here’s why.

A primary residence isn’t an investment

With stocks, you purchase shares and (ideally) hold them for a period of at least several years, during which time they (ideally) grow in value. But owning a home is a bit different.

A house costs you time and money

Unlike stock investments, owning a home comes with a lot of legwork. You’re responsible for maintenance and repairs, which will cost you money and time, especially if you do some of the work yourself. You’ll also need to pay property taxes (which tend to rise over time), homeowners insurance, and possibly homeowners association fees.

When you sell a house, you will have put a ton of money into it over the years. When you own stocks, you can monitor their performance and sell if you need to, but otherwise, they’re pretty low maintenance.

Appreciation isn’t guaranteed

It’s true that homes often grow in value over time — but it’s not guaranteed. It’s also impossible to predict the timeline for such an occurrence. If you need to sell a home just a year or two after moving in, you’re unlikely to get enough money for it to make up for what you paid for closing costs and all the other amounts you spent while buying it — let alone make a profit.

Of course, stocks aren’t guaranteed to rise in value, either. But over the last 50 years, the average annual stock market return has been 10%.

You have to sell a house to realize gains

Finally, when it’s time to use the money you’ve earned from your stock investments, you can sell them and pocket the money. But selling stocks is a lot different from selling a house — you’ll likely pay capital gains taxes on your earnings, of course. But you won’t pay closing costs or property taxes. And you won’t need to hire a real estate professional and pay them a commission.

True, you could sell your home yourself. But real estate law is complicated, and you may not have the time and skill to market your home the way an experienced real estate agent would.

Want to invest in real estate?

None of this is to say that you can’t buy houses as an investment, even if your own home isn’t one. You can certainly buy a home to rent out to tenants. But this is definitely not the easiest way to make money from real estate.

Based on my many (many) experiences as a renter in different places over the years, many otherwise sensible people don’t quite realize how difficult it is to be a successful landlord and maintain a property while earning money from it. You don’t want your tenants to encounter issues with major home systems that should’ve been addressed before they moved in (and preferably, before they became a hazard to both your tenants’ health and safety, and the value of the property).

If you want to make money from real estate investments, rather than buying rental properties or believing that your own home is an “investment,” you may want to consider REITs instead. “REIT” stands for “real estate investment trust,” and it’s an entity that holds a collection of commercial real estate or real estate loans. You can invest in them via your brokerage account in some cases, and they are often less volatile than stocks.

Home sweet home

Despite the opinions of nearly half of home buyers, a primary residence isn’t really an investment — it’s a place to live. It’s your beloved home. And unlike a rental, if you have a fixed-rate mortgage, your monthly housing payment will remain the same for the duration of the loan (or can even go down, if you refinance to a lower rate).

RELATED: Today’s Mortgage Rates

Buying a home has definite benefits — even if making you financially richer in a direct way like stock investing isn’t really one of them.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

“}]] Read More 

Paying in cash at Costco could limit spending, but credit cards earn rewards. Find out when you should pay cash and when using a card is more advantageous. [[{“value”:”

I’ll be forthright: Nine times out of 10, using a credit card is the best method of payment. Most credit cards provide 0% fraud liability protection, which protects you against fraudulent transactions. They can also protect your purchases with travel and shopping insurance, like extended warranties. And don’t get me started on credit card rewards (seriously — we’ll never get to Costco if I do).

But sometimes, Costco is that one of 10 that justifies using cash instead of a card. Although Costco doesn’t itself provide incentives for cash payments — like lower prices — its members could end up saving more if they do. If you’re a dedicated credit card user, or you’re trying to save money at Costco, here’s when paying in cash at Costco could work in your favor.

Cash adds firm guardrails to your budget

Costco does a decent job of tempting its members to overspend. The front of the store is usually stocked with discounted products, which give you good reason to buy something off your list (“but it’s on sale!”). Marked-down items are also arranged near the fronts of aisles, making it easy to grab them and place them in your cart. And if you can avoid these two ploys, good luck ignoring the free samples.

If you find your own defenses useless at Costco, paying in cash could add a buffer. With no cards on hand, you’ll be forced to stick to your budget. This reinforces your ability to say no to items that aren’t on your list, keeping your spending in check. What’s more, with credit card interest rates as high as they are, using cash could help you avoid credit card debt.

Credit card usage could mean extra rewards

If you don’t overspend at Costco, using credit cards might be a better idea. It’s more convenient to charge purchases to credit cards than count out your cash at the register. Besides, with the best credit cards for Costco earning 2% to 3% back, you might be leaving cash on the table without one.

Let’s say you spend $3,000 per year at Costco. If you have a credit card that earns 3% back on Costco spending, you would earn $90 in rewards or cash back. That would more than pay for your Costco membership ($60). If you spent $4,000 on this same card, you would earn enough to cover an Executive membership ($120).

All in all, using cash could help you stick to your Costco budget. But you might forfeit credit card rewards and extra projections if you do. While some debit cards could earn cash back on your Costco purchases, rarely will you find one that competes with the best credit cards for Costco. Use cash to curb overspending, but if you’re already frugal, using a credit card that earns more at Costco could help you cover your membership dues.

Top credit card to use at Costco (and everywhere else!)

If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

Click here to read our expert recommendations for free!

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has positions in and recommends Costco Wholesale and JPMorgan Chase. The Motley Fool has a disclosure policy.

“}]] Read More