Before you know it December 31st will be here and that means you’ll have run out of time for major tax savings, which could be available to you if you start strategizing now. The US tax system is based on privilege for the educated and organized — meaning those who are educated and organized tend to pay less taxes — and I’d love to help that be you this year. If you own a business or are self-employed, then you may have already begun preparing for tax season… or maybe not. The Tax Cuts and Jobs Act of 2017 (TCJA) continues to impact taxes this year, which is why we recommend that you begin planning sooner rather than later. While April 18th seems quite far away preparing will help avoid scrambling for documents later.
As strong proponents of preparing for the future, we believe that prepping and planning leads to greater success. As fall is here and winter is coming (especially for you folks up north), the December holidays are around the corner. Your time will be better spent preparing yourself and your business for the craziness of holiday shopping, spending time with loved ones, and eating all the food your heart desires. The last thing on your mind will be preparing for taxes. Taxes, the only other sure thing in life (besides death). Once our accountant friends finish demonstrating their superpowers for us, they will have a brief break of about 10 weeks before a whole new, and potentially more complex, tax season begins.
Let’s Talk Deadlines:
What are we up against? Mainly, our greatest challenge is ensuring we get our documents compiled in time for the experts to do their job.
April 18, 2023 Personal and most Business tax filings are due
January 31, 2023 1099’s are due to your independent contractors
March 15, 2023 S Corp tax return is due
These deadlines mean you should start sending documents to your bookkeeper and tax advisor sooner rather than later. If you have been following along on our blogs, we constantly recommend that you should meet with your accountant more than once a year. Business taxes can quickly become complicated and as we mentioned before, accountants can assist with strategic planning and help you maximize your exemptions, deductions, expenses, and acquisition. If you have not begun the yearly hunt for receipts and documents, start now and schedule your year-end tax planning session with your accountant or your trusted advisor. It is IMPORTANT to remember that YOU are responsible for proving and validating tax deductions. Click HERE to schedule an introductory or email us at hello@yolofskylaw.com
What is Year-End Tax Planning, and do I need it?
The main reason to participate in year-end tax planning is to get a closer look and to predict your tax. Attending a year-end planning session will allow for you and your accountant to make tax projections which can help you to better organize your finances for the last quarter. If you and your accountant find that you will owe more than you were anticipating, you still have a couple of months to strategically plan. Your accountant should be able to guide you and find ways in which you may be able to reduce your tax bill. Making contributions to your retirement account, charitable donations, and purchasing certain business assets are some ways to reduce your tax liability.
Another major part of tax planning is the tax structure for your business. How your income is categorized and taxed depends in part on your structure. You could be missing out on deductions and planning opportunities if you are a sole proprietor rather than an S Corp.
Meeting with your Accountant
The best time to request a meeting with your accountant is now. As a general rule for year-end planning, you should meet with your accountant in October or November. December is obviously the latest and we don’t recommend a December meeting for two reasons. First, it will be difficult to implement changes for 2022 in the last weeks of the year. Second, schedule coordination in December is more difficult than usual because of the winter holidays, office parties, and similar festivities.
Most accountants will be fully booked once November rolls around so make sure that you have some time scheduled so you can meet with your accountant and discuss the important questions.
Gathering Documents
To prepare for your meeting, you’ll need to gather important documents that will help your accountant run tax projections and better analyze your tax time liabilities. These documents include payroll, general expenses, invoices, service agreements, and receipts. Also, if you’ve made changes in your personal life, such as buying rental property or renting out your home, you’ll need to send those documents as well.
As a small business owner, you may be the one wearing the bookkeeper hat, or you have a bookkeeper on your team. Whoever keeps your books, they must ensure that you are caught up with all transactions and have up-to-date reports such as your profit and loss statement, balance sheet, and cash flow statement. This will help you to easily show your accountant your business income and any expenses.
During your meeting with your tax advisor, it is important to spend time projecting your income and expenses for what is left of the year. Make sure to ask any questions you have to get the answers that will guide you in making wise decisions about your finances.
At the meeting, it is also important to schedule when you will be submitting your documents for your tax return. Make sure to review your draft return no later than mid-February to ensure that you have time to look for anything that seems off before you sign. While mid-February may seem incredibly optimistic for some, being prepared and organized means less scrambling during tax season.
Preparing for taxes doesn’t have to be difficult if you have good “financial hygiene” practices throughout the year. If you don’t, make this is the year you get them set up. If you are ready to do so, start by sitting down with us. As your trusted advisor we can help you identify your needs and work with your bookkeeper and tax advisor who will make tax time a breeze for you. Then, you can stay focused on innovation, income, and creating a great product or service for your clients and customers – the important things. Remember, it is never too early to start your tax prep. Call us at 954-237-4011 or email us at hello@yolofskylaw.com