Should I Do Tax Planning?Duluth, Georgia Christian CPA Firm Advises on Year End Tax Planning
It is that time of year again when we need to take a look at your financials to do some tax planning for the year. I have recapped below a list of the items we will need in order to properly evaluate and plan for your year-end taxes as well as address any year end tax planning ideas.
As the end of the calendar year approaches, it’s time to think about what can be done to minimize the amount of taxes paid to the IRS by your business. Although tax planning should be a year-round process, there are several year-end strategies you can take, particularly if you are an S Corporation.
Here are some things to think about as the end of the year approaches:
- Try to keep your inventory as low as possible on December 31st. Since you are taxed based on the value of your goods in stock, it makes sense to minimize your inventory.
- Accrual-based taxpayers may want to consider delaying end of December billing until early January. Since income is recognized when it is billed, you can delay the tax effects from this year until next year.
- For the same reason, it makes sense to book all tax-deductible expenses and accounts payable before the end of the year, rather than waiting until next year. This includes your personal expense report for December. Cash-based taxpayers must pay these expenses, while accrual-based taxpayers need only to receive and enter the bills.
- There is still time to set up a qualified retirement plan. A defined-benefit plan can be a good way to reduce taxes while preparing for your retirement.
- Please be sure to turn in an expense report and obtain reimbursement by years-end for any business expenses you might have incurred personally such as business mileage on your personal vehicle.
Additional Year End Planning Tips
If you have kept track of your business mileage, please keep in mind IRS rules state that you must have kept a log of the miles you have driven to take this deduction.
Although not directly related to current year tax deductions, small business owners should take additional steps to ensure the success of their businesses next year. If you expect a big change in your future year’s income, you should consult with an accountant now to minimize the tax impact. If you are a subchapter S corporation, you should plan to have the annual meeting of your Board of Directors as close to the new year as possible.
While this generic tax advice can be helpful to any small business, there are probably some specific steps your business can take to reduce taxes at the end of the calendar year.
“We have helped many small businesses in Atlanta and North Georgia minimize their tax liabilities and increase their profitability. We would be happy to sit down with you and discuss your situation. Please feel free to call or contact us.”
— Duluth Georgia CPA, John Dillard CPA