I recommend that all business owners execute all items on this list before the end of the year.
- Waiting to plan until January is too late!
- Business Owner? Have you done a year-to-date projection of net income to make sure your estimated taxes are adequate? I recommend this highly BEFORE 12/31. Planning must be done during the year. Don’t wait until next year. That will be too late.
- Do you have PDF copies of all your bank statements AND canceled checks from this year on a secure server in your office?
- If not, download them immediately and back them up OFFSITE.
- My suggestion is to make sure the bank provides copies of all canceled on the downloadable monthly bank statements. Don’t be forced to click and print them online. You should get all your monthly banking transactions on one monthly pdf statement you can download. Going forward make sure you will be getting copies of your canceled checks with the statements by calling customer service.
- Payroll Service
- Now is the time to review your payroll service. Every year get quotes from your current payroll processor and others to make sure you are getting all the services you require at the right price points. A fresh set of eyes, especially in the complex world of payroll is NECESSARY every year at this time.
- 401k Fees.
- Does your company have a pension plan? Or are you a participant in one? Please read this important memo about 401k fees. This memo will save you money. Click here –> http://bit.ly/1wdH8yG
- Look at your Profit & Loss report. Where do you stand? If you have a larger than expected profit, are there any major purchases you should make now that can be depreciated? Make sure you have the cash. Call me if you are not clear of the depreciation rules.
- Section 179 Depreciation increases have been extended!
- Businesses can deduct up to $1,000,000 of equipment purchases.
- Heavier SUVs and trucks may qualify, in case you need a new vehicle now.
- Don’t miss out on this great FULL deduction opportunity before 12/31!
- Most small businesses are allowed to use cash-method accounting for tax purposes. Assuming your business is eligible, cash-method accounting allows you to micro-manage your current year and next year business taxable income in order to minimize taxes over the two-year period. If you expect your business income will be taxed at the same or lower rate next year, here are specific cash-method moves to defer some taxable income until next year.
- Some companies who can be cash basis, are filing as accrual basis unnecessarily. This can have you paying taxes before you should be. If you are not sure, call me.
- Charge recurring expenses that you would normally pay early next year on credit cards. You can claim deductions this year even though the credit card bills won’t actually be paid until next year.
- Pay expenses with checks and mail them a few days before year end. The tax rules say you can deduct the expenses in the year you mail the checks, even though they won’t be cashed or deposited until early next year. For big-ticket expenses, consider sending checks via registered or certified mail, so you can prove they were mailed this year.
- Before year end, prepay some expenses. As long as the economic benefit from the prepayment does not extend beyond the earlier of: (1) 12 months after the first date on which your business realizes the benefit or (2) the end of the next tax year. For example, this rule allows you to claim 2021 deductions for prepaying the first three months of next year’s office rent or prepaying the premium for property insurance coverage for the first half of next year.
- On the income side, the general rule for cash-basis businesses is that you don’t have to report income until the year you receive cash or checks in hand or through the mail. To take advantage of this rule, consider waiting until near year end to send out some invoices to customers. That will defer some income until next year, because you won’t collect until early next year. Needless to say, this idea should only be used for customers with solid payment histories.
- Verify loan accounts and Lines of Credit and cleanup them up if necessary
- Are you sure that your balance due for your debt equals what the lender has on their books? Year end is the time to get them to submit to you in writing their principal balance and interest rates on debt they have with you. Again, get this in writing.
- Verify your 1099 information is setup properly in your accounting system. If you don’t have proper information from each vendor, ask for it now, then create a form to use every year. You should have a completed form W-9 from each vendor you pay. REMEMBER, starting in 2020, the 1099-MISC was replaced with the 1099-NEC form for reporting Non-Employee Compensation paid.
- Begin to think about year end bonuses or special gifts. Will you give these this year or in January? It matters when you write the check.
- Look for fringe benefits you should report on W-2’s. Some of these could include health & life insurance, transportation subsidies, moving expense reimbursements, educational reimbursement programs, and employee loans you’ve forgiven.
- Take a physical inventory of your products and make adjustments in your accounting system as necessary.
- Write a list of all the company’s major accomplishments for the year. Be prepared to share this with your staff, they will appreciate it.
- Write out your goals and plans for the next year.
- Create budgets for the next year if you work on a calendar year fiscal basis.
- Check all of the links on your website to make sure they are active.
- Professional Relationship Inventory
- All of us should have a REAL PERSON to contact in the professional categories shown below. If you have NO contact, or only a customer service number, contact me so I can help fill in the blanks. A customer service number is NOT enough when your family or business is in serious need.Further, do you have a personal relationship with someone in each of these categories? Someone you can reach out to immediately when a need arises in their area of expertise? Please print this memo out, and use it as a worksheet. Remember, any blank answers need to be filled in. Call me to help you do that.The first one is easy. Remember, if your tax preparer is NOT a CPA, please leave that line blank.
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Professional Category Name CPA ( I Know A Good One) Real Estate Agent Attorney – Real Estate Attorney – Estate Attorney – General Business Banker Payroll Representative Insurance Broker Mortgage Broker Internet Marketing Expert Investment Advisor Exterminator Therapist Contractor Dental Plan Expert Health Insurance Expert Title Agent
- FINAL AND MOST IMPORTANT! If you are not 100% satisfied with your current accountant, call me for a free consultation. 732-673-0510.
Happy New Year! Next Year Will Be Our Best Year Ever!
Click here to ask me any question you may have.
Please reach out to me without hesitation with any tax, business or accounting question, and to schedule a consultation.
Tax Laws are complex.
It is very easy to make mistakes that can incur penalties.
Do you have a Tax, Accounting or Business Question?
Call Me Immediately. (732) 673-0510.
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Remember,
“If We Aren’t Working For You, Then You Aren’t Working At Your Best”
Chris Whalen, CPA
(732) 673-0510
81 Oak Hill Road
Red Bank, NJ 07701
www.chriswhalencpa.com
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