As a small business owner, your holiday cheer may often be a little overshadowed by the year end stress that comes with preparing to file taxes in 2011. Here are a few tips that can "ease the pain" a little.
1. Update Your Accounting: This is probably the MOST important tip in lowering your end of the year stress. You do not want to go into the new year without a very clear understanding of your company's financial situation. Make sure your books are up-to-date and accurate. Even if you have been handling your own bookkeeping throughout the year, you should still consider setting aside time with an accountant for year-end advice. An accountant can consider your unique situation and tell you the best course of action for proceeding into the new year.
2. Increase Expenses: If you foresee a need for services or products in the first quarter of 2012, now is the time to buy them! This will allow you to maximize deductions for this year. You may want to consider the following:
Early payment on bills (phones, utilities, rent, subscriptions, insurance, etc.)
Office Supplies
Office Equipment
3. Be Charitable - If you support a non-profit organization, you should ensure that your donations are made before the end of the year if you are planning to use it as a deduction. Most charities have additional need for support around the holidays, so it will be of benefit to them as well for you to make your donation early.
4. Defer Income: If your company can receive payments in the first week of January, as opposed to the end of December, this will cut your taxes owed. Of course, this income will be taxed when filing next year's taxes, but it may help if you are looking to decrease the amount owed for this year. This type of deferral strategy will depend on your company's profit and losses for the year, as well as your legal structure (LLC, partnership, corporation, S corporation, etc.)
5. Contribute to a Retirement Plan: You should try to make payments to your retirement plan or set one up before the year-end. This will reduce your taxable income for 2011. Check your plan's contribution limits. 401(k), KEOGH plan, Roth IRA, or SEP's. (For SIMPLE IRA's the deadline is set in October, too late for year-end tax planning.) Again, it is best to discuss your individual strategy with your financial planner or accountant.
If you need help updating your business accounting and want to discuss some end of the year strategies for your business, please contact me at
Thanks for sharing this post! This is why accountants are important in an organization. They have the right skills to do this complicated job. Business is about making money. If you don't know how to manage your business' profit, an accountant is what you need. The competition in the world of business today is high. Make an edge by having the right people to handle your company's profit.
ReplyDeleteBurgmaier & Associates, Inc.