Is Your Business Ready for Year End? Three Things to Consider.
Cyber Monday. The day when everyone blows all their hard-earned cash on the best deals the internet can find.
We figured the biggest web-shopping day of the year was a good time to pose the question: how do your business finances look coming into year end? Before you hit that “submit” button on your giant Amazon cart, we’ve got some food for thought.
We sat down with Brent Carlson, CEO CEO of a full service financial firm that helps small business owners (or those aspiring to be) get their dollars signs in order, manage assets, and prep you for tax time. Since we worth closely together, it made sense to grab him to discuss this very topic.These guys are a great asset for us – and can be for you – so stop what you are doing and consider:
Our Top Three Action Items to Prepare for Year End
1. Incorporate Your Business
You hear us say this a lot. But when a third party, in this case Brent Carlson, pops this out as the no-brainer first answer to the “how do you prepare your business for year-end” question, you know it is without a doubt a must-do.
There are countless benefits to forming and LLC or S-Corp to separate your business from your personal assets. We won’t go into them in detail here (because we already have in our previous blog article Top 5 Reasons to Incorporate Your Business), but the highlights are: protect, separate, save.
If you’re still wavering on whether to incorporate your business, then it is time to incorporate your business. If you’re conducting business without this protection, you’re putting yourself and your family at risk. That’s reason enough!
However, incorporating before the end of this year also means you will be able to capture some of the year’s business expenses and deduct them from your taxes for additional savings. And, you could avoid the higher self-employment taxes you’re likely paying as a Sole Proprietor, depending on how you elect to incorporate. Since what you keep is just as much a part of your bottom line as what you make, this is an excellent – and easy! – way to improve your bottom line.
2. Get Your Books in Order
If tax deductions and savings are one of the biggest incentives to incorporate your business before the end of the year, then ensuring you have good records for those deductions is a close second key action.
Do you have three months of bank statements piled up to reconcile? Do you haphazardly keep financial records and piece together receipts two hours before the tax deadline? Do you know how to appropriately write-off a client meal or business travel?
If you hesitated or answered “no” to any of those questions, then it is time to hire a professional BOOKKEEPER!
Keeping neat financial records has many benefits: you know how much money you’re making. You know what you’re spending. And, in one fell swoop, you can hand it over to your CPA at tax-time without a worry (or 40-hours worth of work!). A pro can help you keep all of that in order without taking time out of YOUR day.
PLUS – pros know what you can write off and how to best capture every deduction you can to save at tax time.
The help of a bookkeeper each month is likely more affordable than you’d ever guessed. Like, saves you twice as much in the opportunity cost of YOUR time kind of affordable.
We partner with Brent and his team at Corporate Capital to match small business owners with the bookkeeping help that suits them best. If you would like a free consultation to see how this could benefit you and your business, contact us. You can also fill out this form, and we’ll be in touch to talk further!
3. Participate in Year-End Tax Planning
There’s a reason this is number three on our list. You must have #1 and #2 in place before you can utilize the knowledge that comes from year-end tax planning.
Tax Planning helps people like us avoid surprises come tax time. When you have a general idea of what kind of income you expect your business to bring in, you can counter that anticipated influx with appropriate expenses. Or, at the very least, you won’t be completely caught off guard when you owe the IRS a boat load of cash on March 15th.
In other words, Tax Planning allows a business to take income into lower years and expenses into higher income years.
Here’s an example: Let’s say you’re rolling on a banner year this year. Income is higher than it is ever been, and your bottom line has never looked better. The downside: Make more money; pay more taxes.
That doesn’t have to be the case when Tax Planning comes into play. Professionals can help you figure out ways to offset an income spike by pre-paying expenses like marketing, rent, or health care, so that your taxable income for the year lowers.
Alternatively, they can also help you offset a bad year by pushing out expenses to help the appearance of the business’s performance.
It is not too late to make some headway on tax planning before the end of this year.
But don’t try this on your own! This is exactly what people like Brent specialize in, and we highly recommend you consult a professional before you start shifting your income or expenditures around. The last thing you want to do is look shifty and trigger and audit! But, it can be done.
At EasyBizStart, we are all about helping you run your business as smoothly as possible. Whether it is mitigating legal risks, improving your communications, or keeping as much of your income as possible, we have the solutions to help you success. Contact us for more information on any of the above or with any other concerns you've got in your business. Startnow@easybizstart.com | 775-800-5501