Just because the year is almost over does not mean that you should sit back and watch all the results of your efforts during the year come flowing in. Things will not fall into place all by themselves. Running a business involves keeping an eye on all aspects of your operations no matter what time of the year it is. Lest you be mistaken in thinking that the year end is time to wind down, it’s actually one of the busiest times of the year when it comes to our business financial planning.
Whether or not you meet all the goals you set out for your business at the start of the year, you have to sit down and start pushing your year-end figures. It’s too late to reforecast your production or sales goals. It’s not too late, however, to look for ways to improve your bottomline and to minimize your tax accountability. If you don’t have a financial expert on-board, it’s time for you to hire a good accountant and financial analyst to help you close your year’s books and project your next year’s cash flow.
The most urgent concern now should be your year-end taxes for both your business and personal returns. You have to be responsible enough to pay your taxes, but you don’t have to pay more than you actually have to. There are legal ways of reducing the amount of taxes that you pay so that you can put more of your money into your business. Some of the things you should consider in your year-end business financial planning include:
Capital Expenditures – you can draw money from your books for capital expenditures like equipment purchase and software upgrades. You can continue to amortize such an expense in the coming year. In the meantime, you prevent the money from being eroded by taxes by pulling the expense forward when you purchase the equipment and software that you need before the end of the year.
Employee Benefits and Bonuses – giving money away to your employees will considerably bring down your taxes since you can log it as expense. Also in the same category are health and life insurance contributions, giving meal and transportation subsidies, moving expense benefits, and employee loans. These can all go down as fringe benefits on your W-2s and will thus not be computed as part of your taxable income.
Advance Payments – looking at your payables once the New Year rolls in should give you a chance to get a little more money out of your taxable income. You’re going to pay for them anyway, it might be wise for you to start advancing your payments now so you can enjoy savings on your year-end business financial planning.
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