Make Investing Simple Whether you’re putting away your first $1,000 or have been saving for the future for years, you’re going to want to consider investing your funds at some point. Doing so will allow you to maximize returns and exponentially grow your savings. Unfortunately, the investment process can be pretty intimidating, especially if you are starting out on your own. It’s hard to know how to begin, where to invest, how to balance your portfolio and even what sort of fees you should expect to pay along the way. That’s where the convenience and ease of today’s best investment apps can come into play. What Are Investment Apps? Once upon a time, your only choice for investing was to pick up the phone and call your stock broker to initiate a trade. You were charged for the service, either based on commission or as a flat fee per transaction. While stock brokers are still an option, you can take investing into your own hands these days, without ever needing to talk to another human. And it’s all thanks to investment apps and platforms. Today’s apps offer a range of services and features. With them, users can: Research funds and individual stocks View fees and expenses related to investment choices Invest funds on-the-go, and even automate regular contributions Automatically reinvest earnings on current investments Adjust portfolio for personal risk tolerance View performance projections Choose funds or individual stocks that align with personal beliefs, through portfolios based on socially-responsible missions The best part? Investing through trusted apps is usually cheaper, faster and you’ll have instant access to your portfolio/reports at any time of day. Not only that, but you’ll also be able to set your investment risk tolerance, rebalance your portfolio and even reinvest earnings automatically. Who Are Investment Apps Designed For? Whether you’ve been playing the market for ages or are ready to invest your first $100, the right investment app is worth considering. For those new to the stock market, apps will simplify the process and put the power of investing at your fingertips… literally. From your phone or computer, you can easily see portfolio recommendations based on your own goals, savings plans and even risk tolerances. The right app will tell you up front how much you can expect to spend in fees throughout the year, and can even allow you to automate many of the more confusing aspects, such as picking well-performing stocks or even rebalancing. While investment apps are ideal for beginners, newbies aren’t the only ones who will see the benefits. Even seasoned investors will find the process easy to use, and may even learn that these platforms can maximize returns (and save them money in fees) along the way. Not to mention, many investment apps offer additional insight into specific funds, so you can choose to invest in companies that align with your own passions and beliefs. Now that you know why you should consider using an investment app for your own savings, let’s take a look at some of the best ones available today. Best Investment Apps Great for Beginners: Acorns Fees and Expenses: For investors with less than $1 million invested, fees are between $1-3 per month depending on the account option you choose. Acorns is also free for college students. Beginning Investment Requirement: At least $5 to start Types of Investments Available: ETFs (exchange-traded funds) Portfolio Options: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, Aggressive Automatic Investing?: Yes Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes If you want an easy, hands-off approach to investing that won’t leave your head spinning, Acorns is a great first choice. This app not only simplifies investing for beginners, but allows investors to completely automate the process from start to finish. After connecting the app to your debit card, the app will “round up” each of your daily purchases, putting the savings into an investment holding account. Once you reach the minimum required, Acorns will invest this money on your behalf, based on your account preferences. The app will also reinvest your earnings, as well as rebalance your portfolio when necessary. [youmaylike] Great for Truly Free Investing: Robinhood Fees and Expenses: Robinhood is a free investment platform in every sense of the word, pledging to never charge company fees or commissions to customers. Beginning Investment Requirement: You’ll need $2,000 to get started Types of Investments Available: ETFs, stocks, cryptocurrency and options Portfolio Options: Interest-based options such as Fashion ETF, Tech ETF and Energy ETF, as well as a standard S&P 500 ETF, all with personal risk tolerance settings. You’ll also find “collections,” which are individual stocks grouped according to specific interests — such as companies with female CEOs or that are in the social media sector. Automatic Investing?: No Automatic Reinvesting?: No Automatic Rebalancing?: Yes A great option for beginners and experienced investors alike, Robinhood makes the process both easy and affordable. How affordable? Well, it’s entirely free. By offering a truly free experience, Robinhood saves investors some serious cash over time. Additionally, the platform makes it easy to choose individual stocks or ETFs based on personal interests. If you want to invest in cryptocurrency or options, you can also do so through Robinhood. One of the biggest limitations of the platform, though, is its automation. While you can set up automatic deposits into your account, you will need to manually invest those funds and then reinvest (or withdraw) your dividends. Stash Fees and Expenses: $1 per month fee for those with less than $5,000 invested, or $2 per month for retirement accounts with less than $5,000. For users under 25, fees on retirement accounts are waived. If you have more than $5,000 invested, your fee will be 0.25% annually. Beginning Investment Requirement: You’ll need at least $5 to begin investing (fractional shares are available) Types of Investments Available: ETFs (exchange-traded funds) and fractional stock shares Portfolio Options: Too many to name, ranging from things you Want (portfolios that are conservative to aggressive mixes), things you Believe (such as groups of companies that believe in clean energy, LGBT rights, etc.), and things you Like (tech, retail and social media companies). Automatic Investing?: Yes Automatic Reinvesting?: No Automatic Rebalancing?: No The closest competitor to Acorns, Stash seeks to make investing easy for everyone, regardless of your goals and passions. They have three account options to choose from, allowing you to manage your investment and retirement accounts, or even a child’s education savings through custodial accounts. With Auto-Stash, you can set any number of automatic investment options and transfers. However, Stash will not rebalance your portfolio for you, nor will they reinvest dividends on your behalf. Wealthfront Fees and Expenses: 0.25% annually Beginning Investment Requirement: $500 minimum initial investment Types of Investments Available: ETFs (exchange-traded funds), individual stocks, retirement accounts (401k, IRA), 529 savings plans, trusts Portfolio Options: 11 asset classes to choose from, including natural resources and real estate Automatic Investing?: Yes Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes Wealthfront’s investment platform is designed to be friendly for users of all experience levels. If you’re a seasoned investor, you’ll enjoy all of the options available to you, including the ability to manage your retirement accounts, education savings, and even non-profits or trusts. If you’re a newbie, their free financial expertise center is the perfect place to learn all about investing and your future. TD Ameritrade Fees and Expenses: The managed, automatic portfolio investment option (called Essential Portfolios) is available with a 0.30% advisory fee Beginning Investment Requirement: $5,000 minimum for managed portfolios (no minimum requirement for traditional trading) Types of Investments Available: Stocks, ETFs, options, mutual funds, futures, bonds/CDs, Forex, cryptocurrency Portfolio Options: Essential Portfolios (EP) offer investors a range of options from Conservative to Aggressive, based on your individual passions, preferences and tolerances Automatic Investing?: Yes, with EP Automatic Reinvesting?: Yes Automatic Rebalancing?: Yes A more traditional brokerage app, TD Ameritrade is one of the most recognizable names in the industry. You can easily educate yourself on all things financial, thanks to their free videos and posts. If you want a traditional experience, you can choose your trades and pay per transaction. Prefer a more streamlined, automated approach? Opt for their Essential Portfolios, a hands-off investment option (robo-advisor) that charges a flat monthly fee and requires little-to-no oversight from you. Plus, their app makes the investing process easier than ever with a user-friendly interface, price alerts and no minimum to get started. If you prefer a desktop experience, this is also available to you through TD Ameritrade. Bottom Line Getting started with investing can be intimidating. With all of the terminology and account options out there, it’s easy to want to run and hide. Thanks to some of today’s best investment apps, though, you can not only get started with your first portfolio but also watch your money quickly grow… no matter how much of a beginner you may be! It’s important to choose an app that offers you the portfolio options and features you want most, with fees and deposit minimums that match your financial needs. The five apps above are our favorites for beginners, making that first foray into investing easier than ever before. The hardest part will be choosing the one you love most!
Filing Business Taxes 101
Virtually every business, big and small, must file a tax return. Companies are taxed in different ways compared to individuals, but they both must prepare and file an income tax return. In addition, businesses have some other types of taxes they must pay.
How a business prepares its taxes will depend on the type of legal structure it uses. A sole proprietorship, for example, will have a very different tax preparation process compared to a corporation. As a small business, the tax process can seem overwhelming when you are just getting started. This article is designed to give you an overview of business taxes to establish a good foundation of business tax requirements.
What Are Business Taxes?
Businesses pay several types of federal taxes. Income is perhaps the most well-known kind of tax, but there are other federal taxes companies may need to pay as well.
Like individuals, businesses are taxed on their income. Unlike individuals, however, enterprises offset that income with their various expenses necessary to run the company. In that way, businesses can actually end up having less “income” than the average individual because those costs are part of the equation.
Businesses, except some partnerships, must file a tax return every year, just like an individual. However, income taxes are actually due periodically throughout the year. As an employee, a company withholds taxes and provides that money to the IRS on your behalf. As a business owner, that responsibility falls to you. You must often make estimated tax payments throughout the year to keep up with your tax obligations. In fact, if you do not keep up with these payments, you will likely end up having to pay a penalty at tax time.
If you own your own company, you may need to pay self-employment tax in addition to income tax. This type of tax pays for Social Security and Medicare. You must file a Schedule SE (Form 1040) if you are self-employed and you earn more than $400 throughout the year.
If you have employees, you will also pay taxes on these individuals as well. You not only provide the employee’s contribution to their income taxes to the government, but you must also contribute to various federal programs.
- Federal unemployment (FUTA) tax
- Social Security
- Medicare Taxes
There are different collecting and reporting requirements for employment taxes that must also be met. Failure to follow through with these taxes can result in penalties and interest, too. You may even become individually responsible for your employees’ tax payments if you fail to provide the money you withheld to the IRS properly.
In some industries, you may also have to pay excise tax. This tax is in addition to other types of taxes and only applies to the sale or use of certain goods or services. The manufacture or sale of certain products or the use of specific types of equipment or facilities can trigger excise taxes.
Examples of these types of taxes include:
- Fuel taxes
- Environmental taxes
- Communications and air travel
- Taxes on certain types of trucks or other vehicles
- Lottery or gambling taxes
Many types of businesses can avoid these taxes entirely simply because they are not involved in certain industries.
Why Do I Need to File a Separate Tax Return for a Business?
Under the law, a business (except sole proprietorships and partnerships) is a separate legal entity. That means it has legal rights as if it were an individual. Those rights come along with the responsibility to pay federal taxes as well. Businesses will often have their own tax rates and reporting obligations under the law.
There are a few business structures that are not taxed separately, however. The sole proprietorship is the most common. In fact, there are an estimated 23 million sole proprietorships in the United States. They make up roughly 73% of all companies in the country. This type of business structure is likely so common, in large part, because it is so easy to establish. In most states, you do not have to do anything to create a sole proprietorship — you can simply open your doors and start a business. There are also no separate tax filing requirements for this type of company. Instead, you put the business income and expenses on your personal tax return, on Schedule C.
Sole proprietorships are commonly referred to as “pass-through” entities because the income they earn passes directly through the individual that owns and operates the business. Some corporations (S-Corps) can be set up this way. Partnerships are also a pass-through entity. S-corps require that you file a tax return, even if the company does not pay taxes. While it is generally a good idea to file a tax return for a partnership, they are not required, either.
Reducing Business Taxes: What You Can Claim
Businesses still have the option to assert deductions and credits, just like individuals. However, the average business does not rely on many tax deductions to reduce its tax obligations. Instead, a company’s biggest tax reduction method is the adjustments to their gross income — the expenses of the company.
A business can set out every single expense and decrease its taxable earnings by offsetting those expenses. Costs for a business can be huge, and even though a company brought in, for example, $500,000 last year, if it had $400,000 in expenses, it really only has $100,000 to pay taxes with. As a result, the IRS will only tax the $100,000 left over after considering all of the other expenses. This decreases the tax rate and the total amount of money that is actually taxed.
Forms Necessary to File Business Taxes
The forms you need to file business taxes will depend on the type of business structure you have. Below is a quick chart that provides the form necessary to file income taxes for each type of business.
Limited liability companies are unique because, like corporations, you can choose to be taxed as a pass-through entity, a partnership or a corporation. How you have your LLC set up will dictate which form you should use.
When to See an Accountant Instead of Preparing Your Own Business Taxes
Technically, you never need an accountant to file your taxes. You can prepare them yourself. However, it may be a good idea to use a professional tax preparation service in some circumstances. If you have a sole proprietorship or partnership, your taxes may be straightforward enough that you can do them on your own or with the help of a tax preparation software. Other business structures have much more complicated tax situations that may require professional advice.
Accountants can also provide additional helpful insights for your business, such as spotting tax savings opportunities and predicting trends regarding your income or expenses.
Having a business can make your tax situation very complicated, very quickly. Taxes become even more complex when you have employees, work in specific industries, or have a non-pass through entity, like a corporation. If you are unsure, it is a good idea to speak with an accountant to determine how you should handle your tax obligations.