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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9 replies on “Year-end Business Financial Planning”
My husband just had an appointment last week or so with our financial advisor about his stocks and his pension. I am glad that it is doing awesome 🙂 It is great to prepare everything knowing that he will retire from work in a couple of years from now 🙂
I am not business inclined. I don’t have the skills. I’ll leave it to the experts. LOL!
I do not think I will ever run a business in this lifetime 🙂 I am so stupid when it comes to numbers…if there is anything I could multiply without using a calculator, it is LOVE 🙂
kidding aside, these tips are a must read for year end business financial planning 🙂
I am exempted from this..lol But some thoughts to ponder..
you are right, businesses do prepare all the inventory and tax information this time of year for the tax refunds and such that they need to comply before the next year.
Year e end inventory will tell you the result of your efforts in the business. Year end report is very important.
I can’t imagine how it’s like to run a business, let alone a big one. I’m sure, money matters will be an utmost priority in managing a business. It’s good to know the info you shared. It has given me an idea on what to expect and prepare when I hav emy own business to run and financial reports to prepare.
When I do our year-end business financial planning I also include the forecast for the next year’s operation 🙂
Hay! Your post reminds me of my corporate days at P & G. The task of pencil pushing at the end of the year is not always a walk in the park but as you wrote, it has to be done as it makes good business sense.