Planning for End of Year Taxes & Next Years’ Goals

December is the time to review financials and make last-minute adjustments to reduce taxable income where possible. It is also the perfect time to start planning for the next year and establish goals, setting your business up for success.

Verifying Financial Information and Bookkeeping:

  1. Bank and credit card accounts: make sure these are reconciled and unpaid receivables or owed payables are taken note of
  2. Review payroll reports (employee payrolls, time sheets, deductions, and bonuses)
  3. Review company balance sheet and income statement to calculate total value of the business and profit or loss margins
  4. Verify Cash Flow Statements: look for any challenges that occurred and pinpoint reasons why. Take note of any patterns to help forecast and plan for cashflow in the future.

Reducing Taxable Income:

  1. Maximize depreciation claims: make the necessary entries and adjustments
  2. Try to expedite any expenses, especially big purchases, before the new year
  3. If possible, delay invoices and hold off on billing customers until after the fiscal year

Organizing End of Year Taxes:

  1. Explore commonly missed tax credits to see if there are opportunities to lower your current tax burden. Learn more here
  2. Review adjusted gross income, taxable income, deductions, and credits for the year
  3. Adjust retained earnings where necessary (cumulative profit)
  4. Close the books
  5. Review fringe benefits (any extra compensation given to employees) that need to be reported on W-2
  6. Account for state taxes, for example franchise, sales, or employment taxes
  7. Print financial reports and income tax reports to maintain records
  8. Print and mail W-2, W-3, 1099, 940, 941, and 1096 forms by February 1
  9. Order required supplies and tax forms

Extra Steps for Taxes with Employees:

  1. Pay payroll taxes and other liabilities
  2. Print and distribute W-2s and W-3s
  3. Process 940 and 941 forms
  4. Verify W-4 information

Preparing for the Upcoming Year:

  1. Reflect on last year’s goals: identify any shortcomings and possible solutions
  2. Analyze the past year’s numbers and make necessary budget adjustments or create a new budget
  3. Set new goals relating to growth of staff, leadership, new hirings, marketing, etc. Communicate these goals in writing, set deadlines, and build “roadmaps” to check progress

By staying audit and tax ready for the upcoming year, it will keep financial information accurate and up to date. This will allow you to save money by reducing billable hours for your CPA.