The end of the year involves a significant financial to-do list to prepare for the upcoming tax season, including ways to minimize your company’s tax liability. You are going to be checking your financials, making sure that everything is up to date. Working with your consulting accounting firm, you are also going to be looking for critical deductions that your business may qualify for. However, there is more than just deductions to consider as you prepare your tax return for 2019. When you use a consulting accounting firm, then you will have a professional to help you find other ways to benefit your business by navigating taxes more meticulously.
Here are Ten year end business tax planning tips for 2019.
Does Your Business Qualify for a Different Tax Classification?
Depending on what your business offers regarding products and services, your business may qualify for different deductions based on its status. If you currently have a business where its income passes through your personal return, then you might qualify for a 20% deduction. However, the new 2017 tax law may make it more cost effective for your business to change your status to a C-corp and have your business pay its own taxes because the income tax rates have been reduced for corporations.
What Is Your Plan for Paying Taxes?
While you might pay your business taxes throughout the year, it is important to look at your financials and adjust so that your quarterly tax payments do not negatively impact your cash flow. Essentially, you are going to need to put money aside during the healthy revenue period to cover those taxes or arrange for a business line of credit that puts you in a position to cover those large tax payments. A bonus for your business is that you limit the possibility of paying interest or possible penalties. Pre-planning with a qualified consulting accounting firm will help you stay ahead of your finances and negate the possibility for deficiencies.
Consider Adding a Retirement Savings Plan
As a business owner, you have several benefits regarding retirement plans for your employees. First, you can potentially qualify for a tax deduction for your contributions into that retirement plan. Small businesses may also qualify for a tax credit to start a retirement plan if you do not already have one in place. Consider looking at the options available, as a retirement plan may be the right step for your business. Reap the potential benefits of a plan that helps the bottom line as well as providing your employees and essential benefit.
Check Your Equipment Deductions
Depending on the type of equipment that you might utilize for your business, there are deductions that your business may qualify for regarding your equipment and or equipment depreciation. The equipment deductions have also increased under the new tax law, so review your capital investments for equipment to determine if any of those deductions could apply to your business. Consulting accounting firms are a great resource for determining what deductions apply to your business and how to implement them on your taxes.
Invest in Your Community
Most business owners want to be involved in their community, providing funds for various charities or other functions. As a business owner, you may have specific areas of the community that may fall in line with the socially responsible goals for your business. Keep track of those contributions, as they may be tax deductible for your business. However, if your business uses the pass-through tax payment plan, then you may not benefit as much from your charitable donations. The best way to determine if you qualify is to ask your accounting firm. Knowing your benefits ahead of time can save you money in the long run.
Look at Your Expenses Versus Revenue
Your consulting accounting firm can determine if it would be wiser to defer revenue until next year or pay some of your next year’s expenses before the end of the year. There are a variety of options available that you can consider depending on how your business is doing financially. Weigh what works best for both your businesses estimated projections as well as where you have
Consider a Financial Audit
Part of what your business may need to find potential risks in your internal accounting could be an audit. Working with a consulting accounting firm, you can do an audit or a financial forensics to make sure that potential problems in your processes and gives you some potential solutions to put into place.
Determine If You Are in Compliance
Today’s businesses are facing a variety of compliance requirements, such as the format for revenue statements. Working with a consulting accounting firm, you can determine if you are in compliance with the local, state, and federal requirements, so your business does not face any potential penalties. Trying to save a few bucks by doing the paperwork yourself can be what costs you the most. Invest in an accounting firm that will ensure your paperwork is right, that you are in compliance and will advise you on deductions, penalties and the law.
Invest in Training for Your Staff
Your staff may need some training to update their skills and make sure that they are following up to date processes and best practices. If you can get that done before the end of your fiscal year, then you can benefit from the tax deductions related to paying these costs. The reality is that spending these funds now will benefit your business and keep you in compliance.
Federal and State Tax Preparation
Finally, since this year is nearly over, you need to spend time looking at your business’ financial situation. Working with your accounting firm, you can determine what type of steps you need to take to manage your tax liabilities for the new year. Tax planning in advance is about eliminating your surprises and helping you to understand how your financial decisions can impact your tax obligations.
Working with our knowledgeable team, we can assist you in preparing for the end of your fiscal year, as well as preparing for the new year. Contact us today to set up a consulting appointment to review your business today.
Parker Business Consulting & Accounting, P.C. is a unique firm with more than a combined 75 years of experience in private industry, coupled with a strong background in public accounting. This combination enables us to provide valuable assistance based on direct experience with many of the same issues faced by our clients.