Monthly Archives: December 2016

How To Trading Stocks Online

Stock trading, once the sole domain of Wall Street, has become easily and affordably available to all in the last 20 years, thanks to online brokerages. Prior to online trading, people relied on the services of a stock broker, who would make buy and sell orders on the customer’s behalf. Today, individuals are able to execute buy and sell orders themselves in a fraction of a second using computerized trading services.

While buying and selling stocks — which are shares of ownership in a company — can make you a fortune, it’s just as easy to lose that money. To become a successful trader, it is crucial that you become familiar with the tools of trading, the theory behind it and the daily reports that drive market shifts.

Stock market basics
Like all businesses, the stock market operates on a system of supply and demand. When you purchase stock, your hope is that other traders become more eager to own a share of that company over time. When the stock’s popularity increases, traders will compete to own it and bid up the sale price. In theory, a rising share price is the result of improvements in the firm’s value and potential, also known as its fundamentals. In reality, stock prices change for any number of reasons, only some of which investors are able to predict.

Researching and choosing stock
There are two main schools of thought regarding how to choose stocks. The first, called fundamental analysis, relies on the use of a company’s financial reports and public statements to analyze the health of the business. Balance sheets, income statements, yearly and quarterly earnings, and news releases from the company are all important tools for a fundamental analysis. Fortunately, those reports are easily searchable online, as are tutorials on how to read them, such as those offered by the SEC. Market and industry trends, media publications and historical analysis also play a role.

The second school of investing is called technical analysis. Technical analysts believe that swings in stock prices follow patterns that traders can learn to detect and profit from. Technical analysis is not as widely accepted or practiced as fundamental analysis. However, many traders use a combination of the two techniques to choose stocks. Choosing a company with sound fundamentals and then occasionally trading on a technical indicator is a safer strategy that relying only on technical indicators.

Before deciding to buy or sell any stock, you should thoroughly research the company, its leadership and its competition. Sites such as Yahoo! Finance offer excellent compilations of news stories, financial statements and stock price histories (called charts) that provide insight into the company. Stock sites also display professional analysts’ ratings of a given stock, indicating whether that analyst advises a trader to buy, hold or sell a stock. Examining the records of those analysts may help you assign value to their opinions.

Personal stock-trading services
Before you can begin buying and selling stocks, you need to decide which online trading service you want to use. Rob Beauregard, director of public relations for Fidelity Investments, says choosing your brokerage partner carefully can directly affect your bottom line.

“The best piece of advice for an online trader is to choose your brokerage partner with open eyes,” Beauregard told Business News Daily. “Know their pricing, service, investment choices, education and research resources, and securitypractices. No one should just rely on their gut instincts or the tip from their friend or neighbor anymore. The resources easily accessible to them to generate and validate investing decisions are too valuable not to utilize.”

When you’re looking for an online broker, consider the costs of each service the brokerage provides and the level of support you will need from qualified brokers. Business News Daily’s sister site Top Ten Reviews offers an overview of a number of trading services, with ratings for their fees, research tools, mobile access and investments offered.

As a beginning trader, you may wish to start with a company that can provide personal advice for your investments. As your skills grow, you may wish to ensure that the brokerage offers tools to engage in advanced trading, including short selling and margin trading. The following are popular services known for the quality of their services and support:

E-Trade
ShareBuilder
Fidelity
Scottrade
TD Ameritrade

Some companies, such as ShareBuilder, also offer functions similar to banks, with ATM cards that give you access to noninvested money, or the option to invest your cash in a money market fund to earn a slightly higher return than a traditional savings account.

If you prefer to be a do-it-yourself trader, you can make use of discount online broker services. These services allow you to buy and sell not only stocks, but also options, mutual funds, exchange-traded funds, fixed income funds, bonds, certificates of deposit, retirement accounts and more. You ultimately get to make the final decision on each investment and whether or not to buy or sell, and you don’t need a large sum of money to start.

Practice your skills
Learning to trade begins with education. Reading the news and financial websites, listening to podcasts and watching investing courses are all excellent ways to gather information. Joining a local investment club will give you the opportunity to discuss your education with more experienced traders. A list of some recommended resources is available at the end of this article.

However, reading is no substitute for experience. A zero-risk way to practice your new skills is with an online stock simulator, such as those available through Investopedia, MarketWatch and Wall Street Survivor.

Another option is to practice trading in the penny stocks market. Many companies offer stock shares valued at a penny a share, which makes it easier to practice leveraging the trends of the market and making a profit.

Tips for beginning investors
Online stock trading may be daunting for beginning traders, but with the right foundation and a gradual investment of funds, you can expect to see significant returns. Here are a few tips to help you make smart investment decisions.

Do not invest money you cannot afford to lose. Make intelligent decisions about what you can afford to invest, and begin slowly. Once you have realized gains from one or two stocks, you can begin to reinvest those gains — which have now become your principal — into other stocks and funds.

Diversify your investments. While stocks offer the attraction of seemingly easy money, they are unreliable sources of income. Consider investing at least a portion of your money in an electronically traded index fund, which holds many stocks. ETFs can be purchased and traded like stocks, but because they are diversified, losses in a given sector may be cancelled out by gains in another.

Don’t trade if you don’t have time to research. Stock trading should be approached as a part-time job. Like any job, your skills will suffer if they are not frequently practiced. In this case, “practice” means reading the latest news and financial reports on companies in which you are considering investing. If you do not have time to practice, consider investing in an index fund instead, or hand your investments over to a qualified professional.

Make a plan. Irrationality is the enemy of stock trading. Before buying a stock, consider what circumstances would lead you to sell it. For example, you can decide that you cannot risk more than 20 percent of your investment. Many brokerages have the ability to schedule buy and sell orders based on predefined criteria, such as a percentage drop (or increase) in your original investment. Scheduling limit orders takes the emotion out of your finances.

“Have a plan and stick with it,” Beauregard said. “Know why you are buying a particular security, how much to invest, what your expected return is, and have an exit strategy.”

Don’t buy high. Stock may be trending upward at an extreme pace, in which case you shouldn’t always jump to buy stock. Wait for opportunities to get a lower entry point.

Don’t give in to fear. Something many beginning stock traders deal with on a daily basis is the fear of losing money invested. While you may see stock values plunge for a company, don’t despair or pull your money out. Stock trading is a long-term investment and requires patience and perseverance.

End Year Payroll Mistakes

For a small business owner, year-end tax preparations are just one more headache to add to the already-busy holiday season. When you’re trying to do your own payroll, it can be even more difficult to keep track of all the documents to file, deadlines to meet and regulations to follow. But mistakes on your payroll, whether intentional or not, can really cost your business.

“There are many hard deadlines related to tax deposits and filings,” said Phil Noftsinger, CPA and president of business services provider CBIZ Payroll. “All of these come with painful penalties for noncompliance, so employers doing payroll in-house should make sure they are very comfortable with all of the deadlines and reporting requirements for year-end.”

“There can be hefty fines attached to incorrect filings, along with payroll audits,” added Shelley Ng, vice president of product management at payroll and HR solution provider Ceridian.

Noftsinger and Ng outlined four common but costly errors small business owners should avoid as they wrap up their payroll for 2014.

Improperly handling taxable gifts and rewards. Taxable business expenses, such as company property and life insurance, are typically reported at the end of the year, but other items, such as reward trips and employee gifts, should be taxed more closely to the time they were received.

“Tangible items provided as holiday gifts, or even items provided related to contests [employees] may have won throughout the year, fall into this category,” Noftsinger said. “[Also] tripping up many employers are the new ‘points websites that allow employers to deposit points into an associate’s account for him or her to spend through the website as they see fit. Once employees select an item for which to use their points, this becomes a taxable event and should appear on the associate’s payroll stub.”

Not researching legislative changes. Federal and state governments frequently change their tax legislation, rates and forms throughout the year, so it is critical that you understand these obligations, Ng said. She advised employers to research legislative changes and ensure that they’ve downloaded the latest versions of tax forms.

Ng noted that cloud- and Web-based payroll software are updated automatically through the service provider, but if you have local software installed, be sure that you have the latest version that reflects the legislative changes.

Missing ACA-related regulations. The rules regarding year-end reporting for health insurance have become more complex with the passage of the Affordable Care Act. Employee and employer portions of health insurance costs must now be reported on associates’ W2 forms — a rule that Noftsinger said employers may miss.

Incorrect employee classifications and calculations. The IRS has been cracking down on employers that knowingly or accidentally misclassify employees as independent contract workers. Ng emphasized the importance of providing everyone on your payroll with the proper tax filing form for their classification, whether it’s a W2 (employee) or 1099 (contractor/freelancer). Ng also noted that, for companies with out-of-state employees or multistate locations, employers need to be in compliance with state-specific filing rules and tax calculations.

“Set up your employees properly in their current state to ensure state taxes and unemployment insurance are properly calculated, and the appropriate tax form is generated for each employee,” Ng said.

If you’re considering outsourcing your payroll processing to an outside firm, Noftsinger advised finding a processor that you can trust.

“Hold them accountable to making sure your relationship is important enough to them to provide a quality service,” Noftsinger told Business News Daily.

Most important, as you take your business into the new year, be sure to maintain good habits and keep up your records and files right from the start.

“Don’t treat year-end as an event,” Ng said. “If you have good payroll, housekeeping and reconciliation processes in place throughout the year, you will mitigate headaches at the end of the year.”

Simple Ways to Open a Business Bank Account

Opening a business bank account is a critical task for a new business owner. Even if you are a sole proprietor, having a business account is the best way for you to keep track of your finances and your business records. Putting this simple barrier between your personal and professional finances helps to make day-to-day transactions easy to follow and document.

“It is just good accounting practice to keep your business [finances] separate from your personal, and setting up a business checking account is the first step to making this possible,” said Kevin Ravenscroft, president of Timberwood Bank in Tomah, Wisconsin. “You can track your income and expenses for IRS filing purposes, more easily identify potential business deductions from the IRS, maintain clear records for potential audits, and you may be able to limit your personal liability.”

Ready to open your account? Here are a few important factors to consider before you head to the bank. [Smart Business Banking: How to Get Your Finances In Order]

Choosing a bank and account services
Business banking is different from consumer banking, so the bank where you have your personal checking account may not necessarily be the right one for your business. When deciding where to open your business account, consider the financial institutions in your area. Talk with each of them to discover their specialty and see if it is a fit for your company. Some banks are small business specialists, whereas others focus on property or equipment loans.

Today’s business banking customers can also find lines of credit and cash management services in addition to checking accounts. Starting a relationship with bank personnel familiar with your field or industry gives you another resource for inquiries and the ability to tap into their experience and expertise when it is needed. They may have suggestions or be aware of programs that you did not know about to make your business bigger and better. However, be aware that some bankers might try to encourage you to use their products and services — even if you don’t necessarily need them — just to make more money. Be sure to do your research and ask questions so that you understand what you’re signing up for.

Business banking costs
Many banks offer business checking accounts for free, with a minimum balance requirement and a limited number of transactions. At JPMorgan Chase & Co., for example, business owners with revenues of up to $10 million can open an account with just $25. At First National Bank of Omaha, business owners can take advantage of a Business First Free Checking account that requires a $100 minimum opening balance but has no minimum balance requirement.

As your business grows, you may need to change the type of checking account your business uses. While enhanced accounts might also charge a fee, the benefits of being able to handle an increased number of transactions efficiently and having access to more bank services offsets the cost. However, David Ely, professor of finance at San Diego State University, cautioned business owners to keep the total cost of balance requirements and fees in mind.

“You’re not just looking at the terms of the deposit accounts, but also look at it in terms of fees,” Ely told Business News Daily. “Consider the cost of the full relationship.”

What you need to open your account
Documentation requirements for a business bank account vary depending on the type of business. Sole proprietors are considered more like a consumer, so required documents should be minimal: A tax ID and social security number are generally all you need. Corporations, however, need more documentation, including articles of incorporation and a certificate of good standing with the state.

If you are using a name other than your own, known as a “doing business as” (DBA) name, you need to register that name with the state and provide the form to the bank. You may also need to provide proof of address, usually a bill received at your address or some state communication addressed to your company.

By opening a business bank account, you can give your small business a firm foundation as it succeeds and grows. If you are unsure of what type of account you need or what’s required to open an account, speak with a financial professional in your area.