December 9, 2014 BY Infinit Accounting
How to Easily Handle Your Company’s Finances this Holiday Season
The last month of the year can be the busiest and most overwhelming for business owners. There’s a lot to be accounted for, plotted then projected into the incoming year with planning, not to mention preparing for annual taxes. However, the process of year-end preparations for your business accounting and tax planning doesn’t have to be overwhelming. Here are five year-end accounting tips on how to easily handle your company’s finances this holiday season:
Update your accounting books.
You should have a complete understanding of your company’s financial situation by year-end so you need to make sure your books are updated and more importantly, accurate. Have your bookkeeper update your financial records and have your accountant generate the necessary financial reports. Making sure this gets done gives you an advantage later on when it’s time to prepare for tax returns.
Review your accounting books.
Once your accountant generates the reports, schedule a time where you can go through these reports together. Review profit and loss statement reports and balance sheets to strategize for tax returns that may be beneficial for your company. Deferring income, making purchases, contributing to charity or to a retirement plan are examples of these strategies.
Utilize tax deferring strategies.
Deferring taxes is part of tax planning. Simply put, deferring taxes means accelerating deductions into the current year and deferring income into next year.
Increase expenses. Part of deferring taxes is increasing your expenses to maximize tax deductions for the year. You can do this by purchasing items your business will need in the immediate future such as office supplies and equipment, paying bills early and settling business-related expenses like subscription pre-payments, travel bookings and equipment maintenance. In short, spend cash this holiday season!
Defer income. It would be better if you can hold off from receiving payments until January of next year. This is because any payments your business during the January as compared to December will cut your tax bill. Income deferred until the first month of the new year will not be taxable up until April the following year.
Take advantage of your gift tax exclusion and charitable contributions. Anything you give to charity – be it money or appreciated securities – can be a tax deductible. Plus you are entitled to $14,000 of gift tax exclusion annually; so don’t waste it! Spread the love this holiday season and give!
Contribute to a retirement plan. Making payments to your retirement plan or setting one up can reduce your income for the year (and subsequently, your taxes). Discuss the best strategy with your accountant as there are contribution limits for your plan type.
Close your accounting books.
Once you have verified that your accounting books are updated and have gone through it with your accountant, it’s time to close the books and start preparing for the new year. You can start building your budget for next year based on your company’s past financial reports and review if your current accounting methods are working for your business or is it time to look for new technologies or accounting methods.
Closing the books is also a way to plan ahead for tax payments and forecast significant expenditures that will come for each month so you can set an estimated income goal for your business.
Consult a professional tax adviser.
Don’t wait until the end of the year to discuss taxes with your accountant, make sure to consult with him so he can guide you on the steps to take to minimize taxes, like the tax deferring strategies mentioned above.
These five tips can be applicable to any business, but tax tips will apply differently based on each business situation and accounting method. Apply these tips this holiday season and you will enter next year with a sense of calm and confidence, ready to face the new year ahead.
Written by Infinit Accounting
Infinit Accounting’s content team consists of finance professionals and experts who regularly contributes articles related to the finance and accounting and outsourcing industry.
Filed Under: Finance & Accounting, Small Business Tagged With: business finance, finance and accounting for the holiday season, handling finance on holiday, holidays finance, How to Easily Handle Your Company’s Finances this Holiday Season, manage finance during holiday season