It takes most people until Thanksgiving (or later!) to realize what many business owners typically think about starting in October: The end of the year is nigh. Are you ready for a tax checklist?
Yes, the end of the year is just over a month away. At this point, as a business owner you’re probably already looking forward to the fiscal year ahead. You’re crunching the numbers, reviewing your costs, and hoping to lock down just a few more last-minute sales to buoy your business into the New Year.
Unfortunately, the holiday season rush can take a toll on your books, payroll, and finances in general. Between rush shipments, sales quotas, and even holiday parties, we’d bet that the last thing on your mind is your business tax return.
After all, tax season is a few months away. Right?
Not quite. For many small businesses, the tax year starts in January and ends in December, so the end of the year is exactly when you should turn your attention back to your business tax return and take steps to maximize your tax savings—as well as avoid mistakes that slap your business with a costly tax bill.
With that in mind, here’s a short end-of-year checklist for your business tax returns. Use it as a starting point for your end-of-year financial review, and give your business a leg up come Tax Season.
Your business is too important to let a simple mistake put you in hot water with the IRS. With an eye toward taxes, here are some specific areas to review before the clock strikes midnight on New Year’s Eve.
Your payroll taxes are one of the last places you want to make an error, because the consequences add up—sometimes significantly—with every passing paycheck. And the longer you wait to fix the error, the greater the potential of putting your business in the hole with the IRS.
Before the end of the year, make sure you have been accurately withholding from your employees’ paychecks and paying all appropriate payroll taxes to the IRS.
Your company’s cash flow is literally the lifeblood of your business, and regardless when your business draws its fiscal year, you want to make sure you review your accounts receivable and accounts payable before the year closes.
If you have outstanding invoices you’ve distributed, or you have yet to pay a vendor for services rendered, now is as good of a time as any to send a follow up—or a payment. You’re sure to ease their minds, and your accounts will be that much closer to caught up so you don’t have to deal with things in the new fiscal year.
In particular, paying your unpaid bills by the end of the year will ensure you maximize your business’s operating costs or expenses, which will ultimately help lower your tax bill when it’s time to file your business tax return.
The end of the calendar year—or your fiscal year—is a time to consider your deductions. Before the end of your tax year, you have time to make moves, charitable donations, and complete other actions that will lower your tax bill next year.
You can make deductions for all sorts of things, from advertising and promotion, to business meals, depreciation of certain real assets, and other travel expenses. So the end-of-year hustle to drive business growth and acknowledge your team for their hard work (Hello, holiday parties!) may actually be deductible when it’s time to file your business taxes.
If you make the right decisions before the end of the tax year, yes: You can prevent your business from falling into an unexpected tax hole. More importantly, though, you may be able to save your business money come tax time!
We know you have enough on your plate right now, but sometimes the most important things you can do for your business are the ones that take a little extra time and care. If you’re sick and tired of going it alone, we’re experts at bookkeeping and business tax returns. Just send us a message today to get started.
Looking for an end-of-year checklist for your personal tax return? Well, look no further.
Sign up for our newsletter and be the first to find out when exciting IRS news happens. Yes, exciting. We're really into taxes.