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If you are a small business owner, then you know that keeping track of your accounts payable/accounts receivable can be a daunting task. There are so many different software options out there, it can be hard to know which one is the best for your business. In this article, we will compare three of the most popular business accounting software options: QuickBooks Online, Xero Accounting, and Wave Accounting. We will discuss the pros and cons of each option so that you can decide which one is right for you for your financial reports! What is Accounting Software? Accounting software is a program that helps business owners track their expenses and income. It can be used to create invoices, pay bills, and manage payroll. There are many different types of accounting software available, but the three most popular options are QuickBooks Online, Xero Accounting, and Wave Accounting. What Are The Benefits of Using Accounting Software? There is a huge range of benefits to using accounting software, including: Quick and easy access to your financial data - This can help you make better business decisions, as you'll have real-time information at your fingertips. Improved accuracy - Automated software can help reduce the chances of human error. Easier financial reporting - QuickBooks Online, Xero Accounting, and Wave Accounting all offer built-in reports that make it easy to track your business performance. This makes is easy to see things such as balance sheets, payroll services, and bank transactions. Reduced bookkeeping and accounting costs - Automated software can help you take care of many of the administrative tasks associated with accounting, saving you time and money. Easier budgeting and forecasting - QuickBooks Online, Xero Accounting, and Wave Accounting all offer budgeting and forecasting features that can help you plan for the future. Reduced stress levels - Automated software can take care of many of the tasks that often cause stress for small business owners, leaving you more time to focus on your business. Some of these accounting programs also offer more robust features including inventory tracking, loss statements, online payment management, expense tracking, payment processing, and payment reminders. Additional users are important, especially those dealing with an accounting process. Some programs do offer unlimited users but typically come with more advanced features. It's important to look at how many users you'll need for your online accounting software. Using Accounting Software to Ensure Cash Flow Cash flow is king when it comes to small businesses. QuickBooks Online, Xero Accounting, and Wave Accounting all offer features that can help you keep tabs on your cash flow. Being able to keep a tight rein on your finances is crucial for the success of any small business. QuickBooks Online, Xero Accounting, and Wave Accounting are all great tools that can help you do just that. Which One Is Right For You? The best accounting software for your small business depends on your specific needs. QuickBooks Online, Xero Accounting, and Wave Accounting are all great options, and each has its own unique features. QuickBooks Online If you're looking for a comprehensive accounting software package that will handle everything from invoicing to bookkeeping and other accounting features, QuickBooks Online is a great option. It's easy to use and offers a wide range of features, making it a great choice for small businesses. QuickBooks Online offers a range of functions, including the ability to: Create and send invoices using the invoicing software Handle bookkeeping Track expenses/ expense management View your business' financial performance QuickBooks Online also offers a specific account platform for self-employed people. The mobile-based QuickBooks platform lets you manage your finances on the go, so you can keep track of your business' progress no matter where you are. QuickBooks Online's Benefits There are a number of benefits to using Quickbooks, including: The ability to easily and quickly create invoices can help you get paid faster The ability to easily track expenses, so you can keep your budgeting on track A wide range of features that lets you do everything from tracking your business' financial performance to handling bookkeeping An intuitive and user-friendly platform that is easy for anyone to learn and use Flexible reporting that lets you track your financial statements A wide range of features to help with bookkeeping and accounting QuickBooks Online is designed for small businesses that don't have time to learn complex accounting software programs. Intuit, the company that created QuickBooks, is always updating and improving the software QuickBooks Online is one of the most popular accounting software packages out there, and for good reason. It's easy to use, versatile and has a ton of features that can help small businesses save time and money. Xero Accounting Xero is also a comprehensive accounting software package, and it offers some unique features that QuickBooks Online doesn't have. For example, Xero allows you to connect with your bank accounts directly, which makes reconciling your accounts much easier. It also has a great mobile app that makes it easy to keep track of your finances on the go. Xero offers a huge range of features, and it can be a little overwhelming to try and figure out which ones you need. That's where their excellent customer service comes in - they're more than happy to help you get set up and make the most of all that Xero has to offer. Some of the features include: Invoicing - keep track of who owes you money, and create invoices and quotes in minutes Estimates - get an idea of how much a project will cost before you start, and track your progress as it goes along Bank reconciliation - make sure your accounts are always up to date Receipt capture - snap a picture of your receipts with your phone and have them automatically added to your account Tax reporting - stay on top of your taxes, and get help when you need it Xero Accounting Benefits The benefits of Xero accounting include: Quick and easy setup so you can be up and running in minutes Automatic bank reconciliation which keeps your accounts always up to date Automatic bank feeds allows you to import your transactions directly from your bank account Cloud-based, meaning you can access your account from anywhere, at any time User-friendly, which makes it perfect for small businesses If you're looking for a comprehensive accounting solution that will handle all of your small business needs, Xero is a perfect choice. It's a great option for small businesses. It's cloud-based software, which means you can access it from anywhere, and it's user-friendly, making it easy to use even if you're not familiar with accounting software. Wave Accounting Wave is a cloud-based accounting software that's designed for small businesses that are just starting out. It's free to use, which makes it a great option for businesses that are on a tight budget. Wave also offers some great features, like: Tracking your expenses - This makes it easy to see where your money is going and identify areas where you can save. Tracking your sales - This allows you to keep track of how your business is doing, so you can make changes as needed. Invoicing - Wave lets you create professional invoices in just a few clicks, which helps you get paid on time. Paying bills - Wave makes it easy to pay your bills on time, so you don't have to worry about late fees. Wave Accounting Benefits The benefits of wave accounting include: Wave is free for businesses with under $1000 in sales each month. The interface is simple and easy to navigate, so you can start using it right away. Wave offers a wide range of features, so you can do everything from tracking your expenses to creating invoices. If you have any questions or need help using Wave, the customer support team is available 24/11 to help you out. When it comes to finding the best accounting software for small businesses, Wave is definitely a contender. It's affordable, easy to use, and packed with features. Choosing the Right Software Choosing the right software for your business can be a daunting task. There are so many options available, and each one has its own set of features. Quickbooks, Wave, and Xero offer some of the best features for small businesses, and the range of benefits they provide can make a difference to your business.

You’re working at the office, getting stuff done around the house, or hanging out with family when — wham! — a phone call, email or text alerts you that something happened with your finances. When a not-so-nice financial event hits, don’t let it take you down. Here are some common miscues and steps to remedy each situation: An overdrawn bank account. First, stop using the account to avoid additional overdraft fees. Next, manually balance your account by reviewing all posted transactions. Look for unexpected items and fraudulent activity. Then call your bank to explain the situation and ask that all fees be refunded. Banks are not obligated to refund fees, but sometimes they will. The next steps vary based on the reason for the overdraft, but ultimately your goal is to bring your account back to a positive balance as soon as possible. A missed credit card payment. Make a payment as soon as you realize you missed it. If possible, consider paying off the entire outstanding balance because interest will be assessed on old AND current charges. Then call the credit card company to get them to refund the late fee and interest charges. The customer service representative will look at your account, see the payments, and be more willing to do as you request. As long as you aren't habitually late with payments, you can usually get the fees eliminated or reduced. A tax return that didn't get filed. Gather all your tax documents as soon as possible, and file the tax return even if you can't pay the taxes owed. This will stop your account from gathering additional penalties. You can then work with the IRS if necessary on a payment plan. The sooner you file, the sooner the money will be in your bank account if you're due a refund. If you wait too long (three years or more), any potential refunds will be gone forever. Losing a wallet or a purse. Start by calling all of your bank, debit, and credit card companies. Set up fraud alerts with the major credit reporting companies and get a new driver's license. Then file a report with the police. Visit identitytheft.gov and review additional steps and procedures to protect yourself. A missed estimated tax payment. Estimated payments are due in April, June, September, and January each year. If you are required to make estimated payments and miss a due date, don’t simply wait until the next due date. Pay it as soon as possible to avoid further penalties. If you have a legitimate reason for missing the payment, such as a casualty or disaster loss, you might be able to reduce or even eliminate your penalty. Remember that mistakes happen. When they do, stay calm and walk through correcting the situation as soon as possible.

With the recent collapse of SVB bank, it is important to consider the impact of bank failures and the importance of diversifying your investments. If you have deposits or investments that exceed the FDIC insurance limit of $250,000 per depositor per bank, it may be wise to consider alternative banking options to reduce your exposure to any one institution. Was your business directly impacted affected by this collapse? Below are 5 steps you should take now: Consider diversification of funds: Diversify your funds across different banks or financial institutions to reduce their exposure to any one institution. Review deposit insurance coverage: Review your deposit insurance coverage and ensure that your deposits are fully insured. The FDIC provides up to $250,000 in insurance coverage per depositor per bank, but this may vary depending on the type of account and the ownership structure. Consider moving funds: If you have deposits or investments that exceed the FDIC insurance limits, consider moving these funds to another bank or financial institution to protect your assets. Review contractual agreements: Review any contractual agreements you have with SVB bank and consider the impact of the bank's collapse on these agreements. Stay informed: Stay informed about developments related to the SVB bank collapse and any regulatory changes that may affect your financial situation. But what if you were not personally affected by the collapse of SVB bank? If you have deposits or investments that exceed the FDIC insurance limit of $250,000 per depositor per bank, it may be wise to consider alternative banking options to reduce your exposure to any one institution. One option is to spread your deposits across different banks or financial institutions to ensure that each deposit is fully insured by the FDIC. Another option is to consider investing in other asset classes, such as stocks, bonds, or real estate, to diversify your portfolio and reduce your overall risk. It is important to review your deposit insurance coverage and ensure that your deposits are fully insured. The FDIC provides up to $250,000 in insurance coverage per depositor per bank, but this may vary depending on the type of account and the ownership structure. Now is a great time to reach out to your bankers and CPAs for options that best suits your business needs. -My Accounting Crew

If you’ve ever lost a key employee, you know the immediate and long-term hit to your bottom line. Here are some ideas to help reduce employee turnover and the challenges it brings: Review employee compensation. Do your homework to ensure your company is offering competitive industry salaries and benefits for your area. Consider making pay adjustments to key employees that would be hard to replace. Also review benefit packages. Many of your competitors may be offering additional vacation, enhanced family leave and other benefits. A good way to look at this expense is to bal­ance the additional cost against the cost of replacing one or two key employees. Talk with employees about what keeps them satisfied. An IBM work­place study found that the priorities of employees across working genera­tions align on major job-related issues, including fair treatment, growth opportunities, flexible work hours and their work making a positive impact. During performance reviews, ask your employees about their priorities. This will give you insight into what retention strategies are working well at your company, or tip you off on why employees may end up leaving. Anonymous surveys may also be an effective way to gauge the satisfaction of your employees. Offer career paths to employees who want them. Chances are if employees feel stuck in their job roles they’ll go looking for opportu­nity elsewhere. Show the ambitious employees at your company that their desires for career development are heard by offering them more respon­sibility and trust in their roles. This could come in the form of additional assignments outside of their usual scope, plus more autonomy. Cross-train employees in key functions. This not only offers employees new challenges and a chance to develop more skills, it also provides you with the comfort of knowing that key positions can be temporarily backfilled should someone leave unexpectedly.

One of the S-corporation tax deductions that are often overlooked by S-corp owners is health insurance premiums. S-Corp shareholders can deduct medical expenses for themselves, their spouse, and dependents on Schedule A as itemized medical expense deductions, if they are over 7.5% of adjusted gross income or unreimbursed expenses exceed 10% of adjusted gross income. In addition to health care premiums, S corporation shareholders may be able to deduct out-of-pocket medical costs such as co-pays, prescriptions, and doctor visits. However, unlike S-corporation employees, who can simply claim employee health insurance as a tax-free benefit, the process for S-Corp owners to receive company-sponsored health insurance and still deduct it from their tax bill is more complicated. In this article, we’ll be setting out how medical insurance can be claimed as a personal expense by S corp owners and how to make that happen. Health insurance isn't a tax-free fringe benefit for S corp owners Unlike a C corporation, S corp shareholders are not employees and therefore cannot receive health insurance as a tax-free benefit. S corporations do provide some flexibility, which allows S corporation owners to deduct 100% of their medical expenses However, S corporation owners must first calculate the related business deductions that apply to those expenses in order for them to then be able to make them tax-deductible. This process is far more complicated than simply taking an employee health insurance deduction on Schedule C. While it's more complicated, it certainly isn’t impossible, it simply means the S corporation has to pay the healthcare premiums and other associated expenses for the S corporation owner as part of their reasonable compensation for working for the corporation. Simply put, the health insurance premiums will need to be added to the W2 wages of the shareholder. Allowing healthcare as a 'reasonable compensation' If you are a greater than 2 percent shareholder in an S corp, you are required to state the cost of health insurance paid through by business as income, as per Section 707(c) of the Internal Revenue Code. In order to claim S Corp deductions, the S corporation must have a written reimbursement plan in place for reimbursing shareholders as part of their reasonable compensation. The S corp also needs an accounting method that allocates business expenses to shareholders based on their pro-rata share of stock ownership. The S corporation must provide its owner with a written notice that the S Corporation is going to include the cost of health insurance as part of shareholders' wages, or an allocation policy that includes these payments. Personal deduction for health insurance premiums Once the S corporation has a written notice that the S Corporation is going to include the cost of health insurance policy as part of shareholders' wages, or an allocation policy that includes these payments, S corporation shareholders can deduct the premiums from their personal income taxes. This is because self-employed people are allowed to deduct health insurance premiums from their income tax. S corporation shareholders with more than 2% of the company stock are considered self-employed for tax purposes. The S corporation's earnings pass through to their personal returns which means they are eligible to claim the S corporation's deductions. It should be noted that this is not a business deduction, but a personal deduction and therefore must be included on the first page of Form 1040 as self-employed health insurance. In order to claim this deduction, S corporation shareholders must have earned more than one-half of their total income from an S corporation business and they can't be claimed as a dependent on another person's tax return. They also need to keep proper documentation just in case the IRS decides to audit them. This is why is important to keep documents of any income tax withholding, federal income tax, along with medical care coverage receipts and medical bills. Finally, it should be noted that S corporation owners who are over age 65 or retired due to permanent disability may deduct premiums paid for Medicare Parts B & D along with other medical expenses as an itemized deduction. In fact, those deductions will help reduce adjusted gross income which could increase eligibility for several popular tax credits.

The IRS is more strictly enforcing rules that determine whether a worker is actually your employee, rather than an independent contractor. So be careful if you regularly pay a gardener, housekeeper, nanny, babysitter or any other household service provider. You don't want to run afoul of the IRS's household employee rules, often referred to as the Nanny Tax. Do you have a household employee? Many taxpayers unwittingly establish an employer relationship when they hire someone to help around the house. To decide whether a household worker is your employee, the IRS looks at whether you: Control how and when their work is done Provide them with supplies and equipment The IRS also considers whether the relationship is permanent, and whether a worker is economically dependent on their employment with you. A worker may be considered an employee whether or not their work for you is part- or full-time, or paid hourly, weekly or by the job. Tip 1: The more independent the worker is, the less likely they are to be considered your employee. Have your worker set their own hours and use their own tools. Also have them invoice you for their work and provide you with receipts. Tip 2: If the worker works for another company that issues them a W-2, or they run their own company that offers services to the general public, you are generally safe from having them considered as your employee. Tax consequences If you think you have a household employee, here is what you need to know: The $2,400 limit. If you pay less than $2,400 in a year (or $1,000 in any calendar quarter) you generally are not responsible for paying employment taxes. But if your payments are over these limits, you may need to withhold and pay Social Security, Medicare and unemployment insurance taxes. Overtime. You may be required to pay overtime, depending on federal and state laws. Timing is important. Employment taxes must be paid regularly throughout the year or you could face fines and penalties. Other considerations. You may also need to purchase worker's compensation insurance to cover you should there be any accidents while they are working for you. If you are going to rely heavily on the services of a domestic worker, it’s worth thinking carefully about the relationship at the outset. Consider getting a formal employment contract in place, and call for help to create a plan to handle your tax obligations.

If you own a business, you know that you may accelerate the expensing of qualified capital purchases. This can be done within two special provisions in the tax code: Section 179 The annual amount of qualified assets that may be expensed (instead of depreciated) was raised to $1.08 million for 2022. This benefit can be maximized as long as the total assets purchased by your business don't exceed $2.7 million. Qualified purchases can be new or used equipment, as well as qualified software placed in service during the year. Bonus Depreciation There is also an option to chose additional first-year bonus depreciation of 100 percent of the cost of qualified property. To qualify the property must be purchased and placed in service before 2023. After that, an annual phaseout lowers the bonus deduction percentage. Property can be new or used, but it can't be in use by you before it was acquired. There are a few exclusions for electrical energy and gas or steam distribution. Not interested in claiming the bonus depreciation expense? Then you may choose to opt out of this provision for each category (class) of property you place in service. What should you do? Taking advantage of these provisions may be good for your business, but that's not always the case. Remember, if you use these special asset-expensing provisions, depreciation expense taken this year is given up in future years. How many future years depend on the recovery period of the asset, but the additional tax exposure could be up to two decades! This is especially important to consider if your company is organized as a passthrough entity, like an S Corporation, as more income could be exposed to higher marginal taxes. The short-term tax savings these two provisions provide is often too good to pass up. However, if you have some predictability in your business, it probably makes sense to forecast your projected pre-tax earnings with and without the accelerated depreciation to ensure you are making the correct long-term tax decision.

Before 2022 comes to a close, take some time to review these essential items to ensure you are not missing something that could cause tax trouble when you file your tax return: 1. Take required minimum distributions (RMDs). If you are age 72 or older, you need to take RMDs from certain retirement accounts before Dec. 31st to avoid a 50% penalty! This includes most IRAs (except Roth IRAs) and 401(k)s. Your annual RMD is calculated by dividing the prior Dec. 31st balance by the life expectancy factor provided by IRS tables. 2. Watch for your Identity Protection PIN from the IRS. If you are a victim of tax-related identity theft, the IRS will mail you a one-time use identity protection personal identification number (IP PIN) as added security. The IRS mails IP PINs between mid-December and early January, so look for your IP PIN during this time period. 3. Contribute to retirement accounts. Making contributions to tax-advantaged retirement accounts like a traditional IRA or 401(k) is a great way to lower your tax liability, even if you don’t plan to itemize your deductions! 4. Harvest gains & losses. If you expect to have capital gains from your investments, selling stocks in a loss position to offset the gains will lower your tax liability. In fact, you can claim excess losses of up to $3,000 to decrease your ordinary income, such as wages from your job! Timing matters with investment sales and income taxes, so having a year-end strategy can help lower your tax bill. 5. Make last-minute tax moves. Here are a few ideas worth considering: Donate to charity to maximize itemized deductions Make a tax-efficient withdrawal from your retirement account if you are over age 59½ Take advantage of 2022's gift-giving limit of $16,000 per person ($32,000 if married) If you own a small business, delay receipt of income from 2022 into 2023, or accelerate expenses from 2023 into 2022. Understanding your current situation and having a plan will help maximize your year-end tax savings.

One way to reduce your tax bill this year is to donate appreciated stock to a charity of your choice versus making a cash donation. While this will be a tough challenge in today's market, it is still one of the best tax planning strategies available to you. This part of the tax code provides a tax benefit in two ways: 1. Higher deduction. Your charitable gift deduction is the higher fair market value of the appreciated stock on the date of your donation and not what you originally paid for it. 2. No capital gains tax. You do not have to pay tax on the profits you made after selling the stock. As long as you have owned the investment for more than one year, you can avoid paying long-term capital gains tax on the increased value of your stock. A Sweet Example Winnie and Christopher each own 100 shares of Honey, Inc. that they purchased three years ago for $1,000. Today the stock is worth $5,000 (after taking a bit of a sticky hit in the down market). Winnie sells the stock and donates the proceeds to “Save the Bees” while Christopher donates his stock directly to “Honey Overeaters: Finding a Cure”. Assuming a 15% long-term capital gains tax rate*, a 25% income tax bracket, and no other limitations: Not only does Christopher see $750 in additional federal tax benefit by donating his appreciated stock, but Honey Overeaters has $600 in additional funds to use for their charitable program. Other benefits The Alternative Minimum Tax (AMT) does not impact charitable deductions as it does with other deductions. Remember, this approach also provides more funds to your selected charity. By donating cash or check, those additional funds are instead paid as federal taxes. This tax benefit could be worth even more if our honey lovers have more income. The maximum long-term capital gain tax rate can be as high as 20%, and also be hit by a potential 3.8% net investment income tax. This benefit is for everyone who itemizes deductions that have qualified assets, not just the wealthy. Things to consider Remember this benefit only applies to qualified investments (typically stocks and mutual funds) held longer than one year. Be careful as investments such as collectibles and inventory do not qualify. Consider this a replacement for contributions you would normally make to qualified organizations. Talk to your target charitable organization. They often have a preferred broker that can help receive the donation in a qualified manner. Contribution limits as a percent of adjusted gross income may apply. Excess contributions can often be carried forward as deductions for up to five years. How you conduct the transaction is very important. It must be clear to the IRS that the investment was donated directly to the charitable organization. If you think this opportunity is right for you, please contact a trusted advisor to ensure you handle the donation correctly. * The total tax rate on this type of investment can be as high as 23.8% (20% capital gains tax plus 3.8% net investment income tax) if you have qualified investment income above applicable threshold amounts.

Towards the end of the year, many are undergoing an annual review of their retirement funds. It certainly was a tough year and one of the decisions many parents are grandparents are facing is the difficult decision to either save for retirement or use funds to pay for their children’s or grandchildren's college education. Here are some thoughts on the matter: Prioritize retirement over education In most cases it is more important to put the financial needs of retirement ahead of college education. Here's why: Retirement funds will be used to cover your basic needs for daily life for as many as 20, 30 or even 40 years. While education for children is important - and expensive - it is secondary to your long-term well-being. Financial aid and numerous other programs are available for your child to take advantage of to help them afford college. This includes current and future student loan forgiveness programs. If necessary, your child can take out student loans. While it may take years for them to repay a student loan, they will have future income potential to do so. Your income will be lower or even stop upon retirement. Ways to plan for both There are plenty of opportunities to fund both retirement and college education in a tax-advantaged way. Consider funding basic retirement needs first, then look at educational savings accounts and related programs. Here are some suggestions: Start saving early. Use time to help grow the value in your retirement and education savings accounts. Take advantage of employer-provided 401(k) or similar retirement programs, especially if there is an employer match. After that, look into Coverdell Education Savings Accounts and Section 529 plans to maximize your education savings potential. Research and apply for grants and scholarships. Start researching early, as there are college scholarships available for children as young as 5 years old! Consider in-state public colleges. They are generally less expensive than private or out-of-state colleges. If an out-of-state college is preferred, check to see if they have reciprocity agreements with your home state. Look into work-study programs. Many schools provide part-time jobs for students to help them pay for school while keeping up with their studies. These programs vary based on a student's financial needs. Making financial decisions like this can be tough, but with proper planning and insight, a path that works for you can often be found. Call if you want to discuss your specific situation.

There are few things as frustrating as not being paid what is owed to you. If it becomes clear the debt is not going to be paid, you might be able to recoup some of the lost money via a tax deduction. The IRS has two classifications for bad debt: business and non-business, each with its own deductibility rules. Business bad debt In order to be considered a deductible business bad debt, the IRS states that the debt must be closely related to your trade or business. To qualify as a deduction, both of the following must be true: The amount is or has already been included as income or as an asset The debt is considered to be partially or completely worthless There are many ways to determine the worthlessness of a debt, but at a minimum, you should be able to produce a summary of your collection efforts. If you determine that the debt is indeed bad debt, you can deduct it as a business expense if the aforementioned statements are true. Non-business bad debt All bad debt not defined as business-related is classified as non-business. For a non-business bad debt deduction, the debt must be considered 100 percent worthless. There is no partial deduction available. In addition, you need to prove that the debt is a loan intended to be repaid and not a gift – especially if loaned to a friend or family member. The best way to prove this is with a signed agreement. If you determine the bad debt is valid, you can report the amount as a short-term capital loss. The loss is subject to capital loss limitations and you need to submit a statement with your tax return that includes the following: Description of the debt Amount of the debt and when it became due Name of the debtor Business or family relationship between you and the debtor Efforts you made to collect the debt Why you decided the debt was worthless The other side of the coin If, on the other hand, you owe someone money and they write off the debt, the tax code generally requires you to record the forgiven debt as income on your tax return. There are cases, however, when this is not required. So if during the year you have forgiven debt, you should ask for a review of your tax situation. This is especially true if the forgiven debt is a discharge of: A home mortgage Student loans (especially for failed schools) Pandemic-related debt forgiveness While no one wants to be in a position to write off debt, it’s nice to know that you can at least benefit from a tax deduction. If you find yourself in this situation or are planning to loan funds in the future, call to set up a plan of action.

Although you won’t become eligible for Social Security until your 60s, there’s a lot you can do to prepare before then. Here’s a rundown of steps you can take during each decade of your life: In your 20s: If you’re like a lot of people, you’re embarking on a career. At this point, there’s no guarantee that Social Security will be around in its current form when you’re ready to retire. The smart move is to build up retirement savings on your own. For instance, you should be participating in a 401(k) or other qualified plan at work. If done, Social Security benefits will be a pleasant surprise when you retire. In your 30s: As you continue making retirement contributions, begin checking on your Social Security wage history. Go to the Social Security Administration (SSA) website to set up and review your account. Eventually, benefits will be based on your work history. Make sure your wages are being reported correctly and correct any errors that occur. As the same time, increase retirement plan contributions. In your 40s: Typically, this is a time when your earnings increase significantly. Be aware of the key rules relating to Social Security benefits. For example, realize that the SSA uses your average earnings for the 35 highest-earning years to calculate your payments in retirement. So keep track of this and continue to have lower income years be replaced with higher income years. This will result in higher benefit checks when you retire. In your 50s: Circle a target date for retirement. While not etched in stone, having a target date allows you to analyze whether you’ll be able to sustain your current lifestyle based on your expected income and expenses. This exercise is more important if you’re considering early retirement. Continue to check income being reported to the SSA and create a forecast for the future. If you wait until your 60s to begin this planning process, it may be too late to save enough to meet your retirement goals. In your 60s: Decide whether you want to begin taking benefits at age 62 (the earliest age), age 67 (the current full retirement age), or somewhere in between. The longer you wait, the greater your monthly benefits will be, but you'll be giving up use of the money in the meantime. Factor in aspects like your health, plan payouts, required minimum distributions and other earnings. Finally, remember that up to 85% of Social Security benefits are taxable at the federal level, so it's worth to start planning now!