As the year comes to a close, there are a lot of issues for small business owners to address. This is the best time to start setting goals for the following year. It is also a busy time for holiday gift shopping since you need to come up with gifts for everyone from your employees and coworkers to your clients and vendors. On top of that, you also have to begin finalizing your books for the year.
This is the perfect time to reach out to your accountant for advice on how to finish off the year from a financial perspective. Making some minor tweaks to the way that you do business can dramatically reduce how much tax you have to pay.
If you are ready to start saving, keep reading for some helpful tips on preparing your taxes at the end of the year. Keep up to date on tax laws around europe including Belgium.
These tips will help you find extra deductions that can wind up reducing your tax liability.
Take A Look At Your Numbers For The Year
This is a good time to look back at how you did during the year. Reviewing financial reports for your business is a great way to check that your data is accurate. It also makes it easier to set goals for the coming year. Ask your accountant for copies of your company’s financial reports. You can either go through them on your own or you can sit down with your bookkeeper to check them out line by line.
Consider Deferring Income
For tax purposes, income for the year includes any money that comes in up in till December 31. If you can put off receiving that income until after the first of the year, it won’t show up on the current year’s books. Instead, it will be counted toward the following year’s income. This may make sense for your business, depending on how much income you make each year. Talk to your bookkeeper to see if deferring payments in December could benefit you from a tax perspective.
Make Any Necessary Purchases
This is the perfect time to take care of any business-related expenses. The more money you spend on items like supplies, equipment, and payments to vendors, the more deductions you have available. To maximize your deductions, sit down and write out all of the things that you need to buy for your business. Then, decide if this is the right time to make those purchases.
Evaluate Your Inventory
If your inventory’s market value has declined, you might qualify for extra deductions. The accounting method that you use for your business will determine whether or not you qualify for these deductions. Talk to your bookkeeper to find out if this is a path that is worth pursuing for your business.
Put Money Away For Retirement
The money that you contribute to your retirement plan isn’t taxed. Paying into your current plan or establishing one before the end of the year can help reduce your total income for the year. If you can, contribute the maximum amount allowed. If you don’t have a retirement account yet, a financial advisor can help you choose a plan that will work well for your business.
Make Charitable Donations
During the holidays, it is the perfect time to support charitable causes. Along with helping to make the world a better place, donating to charity can also benefit your business from a financial perspective. While monetary donations are always an option, there are plenty of other items that you can donate, as well. For instance, you can donate toys, clothes, or other items. The amount of your deduction is based on the market value of the items. Anytime you make a donation, request a receipt for tax purposes.
Begin Thinking About The Following Year
Keeping track of the finances for your business can be challenging. You may find yourself panicking a little bit at the end of each year, trying to gather together all of the data that your bookkeeper needs. To make the following year easier, come up with a system to stay organized. Imagine how nice it would be to know exactly where everything was during next year’s tax season.