Getting Ready For Year-End Tax – What You Need To Do
Yes, we know. It really does seem like yesterday that we were getting ready for year-end tax, but it’s here again and there is no avoiding it. The good news is that while the close of the calendar year heralds the closing out of your books, it doesn’t mean you have to lose your mind in the process. In fact, right now is the perfect time to check-in with your accountant to see if they need anything from you or whether you can do anything to ensure you end the year on a fiscal high.
In this article, we’ll take a look at the things you can do to make the year-end tax process as smooth and dare we say stress-free as possible.
Did you know that any income you receive as a cash basis taxpayer before December 31 counts towards income for the current year? If you can, try to defer income to January 1 so that it is counted as income for the following year. Depending what your income levels are each year, this could save you a significant amount of money.
Review Your Financial Reports
Do you know how well your business did this year? Ensuring your books are as up to date and accurate as possible will help you to make better decisions and set clear goals for next year. If you are unsure of any aspects of your business finances, ask your accountant or bookkeeper to run through the numbers with you.
Check Your Inventory
If your inventory experiences a drop in market value, you might be able to make additional deductions. This will largely depend on the methods of accounting you use, and again, your accountant will be able to advise you.
If you have any purchases you need to make against your business, do it now as it will help you to maximize your deductions. Whether you need to stock up on office supplies or upgrade equipment, it’s time to go shopping. If there are any vendor payments you can pay in advance, do this too. Work with your accountant to make a list of purchases you can make now that will increase your deductions for the year.
Start Paying Into A Retirement Plan
Any payments you make into a retirement for tax year 2018 will reduce your taxable income. If you have an IRA you have until April 15th of 2019 to make your contribution. Also, you have until April 15 to set up an IRA plan. A Keogh plan must be set up by December 31 the contributions must be made by the due date of the tax return or the extended date. A SEP plan must be set up by December 31, you have until April 15th to make the contribution
If you haven’t set up a retirement plan, speak to a financial advisor to find the right plan to suit your business.
Contribute to a Charity
Making a donation to a charity is not only great for your business reputation, but can also make a lot of sense when it comes to your business finances and making deductions. And a donation doesn’t always have to be money; you can donate toys, clothing and other goods, too. Just remember to keep all receipts and documentation as proof of purchase and donation.
Start Getting Ready For Next Year Now
Tax preparation should always be an ongoing process rather than a panicked scramble to get things done. In fact, by preparing throughout the year, you can get a jump on the next year and ensure things run a lot smoother each time tax season comes around.