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Get Ahead of the Game: Prepare For Year End Now

| September 26, 2010 | 5 Comments

The end of the year is quickly approaching and now is the time for conducting some simple tax planning and evaluation of your small business finances.   You may be thinking to yourself that dealing with your business’s numbers is the last thing you want to be doing.  Or you may feel that it’s a daunting task.  But, it doesn’t have to be.  Here are a few things to consider that will help your year-end process run smoothly and with less stress.

Year-End Tax Planning

It is not too early to start planning and preparing for the tax season.  In fact, getting a head of the game can save you money, time, and frustration, when dealing with the taxes for your business.  Take into consideration these simple tips as the 2010 tax year comes to a close.

  1. Avoid waiting until 2011 to start the preparation process for your business taxes. Be proactive and start the process by setting up a meeting with your accountant in December.  Meeting with your accountant before the New Year provides plenty o f time to assess your tax situation, ask questions, and allow plenty of time for making adjustments.
  2. Tax deductions – to ensure that you maximize tax deductions, review last year’s tax deductions taken to determine if you’re still eligible for those same deductions.   This is also a great time to determine if you may be eligible for new tax deductions.  Hint: Bring this up in discussion during the year-end meeting with your accountant.
  3. Year end is also a time to start thinking of ways to legally reduce your tax liability. Do you have a favorite charity that you want to generously contribute to?  If so, consider making that contribution before December 31st.  If cash flow can support it, consider increasing your expenses by giving employees (or yourself if you’re running a one person shop) a year-end bonus or paying bills early.  The idea is to reduce your taxable net income and increase your tax deductions, thus mitigating your tax liability.  Note:  Consult with your accountant or a tax professional to ensure that there are no negative implications for the new tax year and for creating the best tax strategy for your business.

Review the Financials

  1. Between now and December 31st (the sooner the better) take some time to review your year-to-date financials.  This will provide a snapshot of your net income/net loss up to this point.  Also consider projecting/estimating where your financials will be at the end of 2010.  This will provide a basis for starting the 2011 strategic planning for your business.
  2. Think strategically – What are the goals and objectives of your business for 2011?  Do you plan to hire employees?  Do you plan to move into an office?  Do you want to increase your sales or increase customer satisfaction?  If so, what’s your plan for achieving those goals?  Get it on paper and set up a budget or forecast that is inclusive of what you want the New Year to bring to your business.
  3. Seek Help – yes, you are an entrepreneur, but you don’t have to do this alone.  There are professional s that can partner with you in planning and evaluating your business finances.

The key to the year-end is early preparation.  Get ahead of the game and you’ll experience more business success in the New Year!

Antonina Geer, is the CEO of Simplistic Financials. She helps entrepreneurs simplify their books and increase their bottom line by understanding their numbers and how to grow them.

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  • Joanna

    About charitable gifts for tax deductions: Years ago I finally realized that I don’t have to give to every organization I believe has value. I simply cannot do it. My heart is bigger than my purse. So I rest assured that other people in the world give as well, and together we support what we can.

    I support three environmental programs, two food for the hungry programs, two museums and one local women’s shelter. These are part of my regular giving throughout the year. I did my long term thinking about this a long time ago! :) It’s working fine.

    Long term thinking simplifies the complexities we face in the moment.

    Joanna Poppink, MFT
    Los Angeles psychotherapist
    http://www.eatingdisorderrecovery.com
    author: Healing Your Hungry Heart

  • Joanna

    About charitable gifts for tax deductions: Years ago I finally realized that I don’t have to give to every organization I believe has value. I simply cannot do it. My heart is bigger than my purse. So I rest assured that other people in the world give as well, and together we support what we can.

    I support three environmental programs, two food for the hungry programs, two museums and one local women’s shelter. These are part of my regular giving throughout the year. I did my long term thinking about this a long time ago! :) It’s working fine.

    Long term thinking simplifies the complexities we face in the moment.

    Joanna Poppink, MFT
    Los Angeles psychotherapist
    http://www.eatingdisorderrecovery.com
    author: Healing Your Hungry Heart

  • http://www.southeastgrind.com Southeast Grind

    Great article! I’m curious as to how I can be more prepared for the meeting with my tax professional. What financials and questions do you recommend bringing to the table?
    Cheers,

  • Antonina Geer

    Hi Southeast Grind! Normally your accountant would tell you what documents he/she needs. However, the key is providing information that is clear and well organized, so as not to incur any additional fees. I recommend bringing records of your business income and expenses. For example, a copy of your income statement (also referred to as a profit and loss statement), balance sheet, and any statements that may pertain to any investment accounts, interest, etc. I also recommend using this tax planning meeting as a business planning meeting as well. So, go prepared with a list of a few questions. For example, ask your accountant to review your financial statements (it shouldn’t take long for him/her to do this), also ask your accountant for tips on how to optimize your cash flow and/or ask for tips on cutting costs. Your meeting is also a great time to inquire of other services rather than taxes and bookkeeping. Hope this helps!