Here’s a little reminder of what to do for small businesses at the end of the year. This specifically written by Rhonda Abrams for the USA, but has good general advice but do consult your CPA for ideas in your geographical location.
December is always a hectic month, but it’s an important one for your small business.
A few easy steps now will save you money and help you be more successful in 2012. I’ve whittled your December end-of-year to-do list down to three critical areas.
1. Reduce your taxes. You can pay Uncle Sam less in April by being smart in December.
First, call your tax adviser. I do. Every December, I call my CPA — Steve Thielmann in Campbell, Calif. — and we go over year-end tax planning. We go over my profits and losses and examine certain types of business expenses. He gives me guidance on how to legally lower my tax bill now if possible.
The basic rule is accelerate expenses, delay income. In other words, you want to do whatever you legally can to lower your total profits for the 2011 taxable year.
Let’s look at the first part of that equation: accelerate expenses.
One thing I do is to make sure my independent contractors — and I use a lot — get all of their invoices to me by Dec. 20 for work done this year. Prepay January rent and some January expenses if possible. Pay your registration or exhibit fees for upcoming conferences. Print your brochures now. Make charitable donations. And here’s a fun part: Go shopping. Now’s a good time to replenish your office supplies, furniture and equipment.
For the second part, delay income, don’t send your invoices til after Jan. 1 if you can. Of course, if you need that money to pay your bills or a customer might flake if you delay, get those invoices in the mail.
2. Set up a qualified retirement account. If you don’t already have a retirement plan for you and your employees, ask your tax adviser about one now.
Many plans need to be established by Dec. 31.
3. Update systems. The beginning of a year is a natural, and ideal, time to put new back-office operating systems in place.
It’s great to start fresh on Jan. 1, and it also makes record keeping far easier if you change when the calendar year changes.
Again, use this guide as a reason to contact your taxation financial advisor for what to look out for in your country.
