There are so many things for business owners to consider at the end of the year. From year-end profitability analysis, to staff bonuses, to marketing initiatives to capture year-end spending … do not neglect this wonderful opportunity for the calendar to work in your favor.
Especially when it comes to marketing and sales: the opportunity to bring in new revenue should be a major consideration for you in the next three weeks.
From special deals to old leads, to company-wide promotions, to positioning YOUR business to be the happy recipient of people’s (and business’) spending during these final weeks, opportunity abounds for you and your business.
But only if you take it by the horns.
So allow me to give you one more consideration, among many — your year-end taxes.
Because I know you have much to consider during this year-end period (ahem, see above), I will keep this short and sweet.
Key Year-End Tax Moves Businesses Should Consider
“Moving on, is a simple thing, what it leaves behind is hard.” – Dave Mustaine
There are plenty of “standard” pieces of advice that any business should consider at year-end, when it comes to tax planning. Remember: once the calendar turns into 2019, the opportunity to make much of an impact on your tax bill vanishes.
And what I have for you in this short article is, by its very nature, only generalized advice — and your business might call for a more customized approach.
So shoot me an email by clicking the email button at the top of the page if you want to discuss a private tax planning appointment for these year-end tax moves, and we’ll see what is available. Or you can also call us: (303) 327-9749
All that aside, here are some possible tax moves for your business to consider before 12/31/18…
1) Entity considerations. Pass-through businesses (partnerships, S Corporations, etc) have a possible 20% income tax deduction. But only if you qualify. Does your taxable income hit under the income threshold? If so, your deduction could be very easy. More than that, you have things you need to do before year-end to try to save some of it. I wrote about this a couple weeks ago in some detail, so let me know if you need that piece again.
As we look into this, you may decide that you should have a C Corp. The tax rates are a flat rate of 21% and professional service companies get the same tax breaks. (That’s new, and that’s big.) Don’t jump too fast into a C Corp, though. They can be tough to get out of if you’ve made a mistake.
2) Year-end purchases. Depending on where your revenue and income is compared to years past, you might want to accelerate certain purchases or subscription payments. That said, although there is nothing that definitely tells us that rates would be changed any time soon necessarily (with a still-divided Congress), it wouldn’t be terribly surprising if they go up in the future. Which means that you might want to wait on some of those traditional year-end catch up sprees.
But one more thing to consider in the mix: online sales tax. If you have some large items to purchase online, some states might be a better place than others from which to do so. Here’s a good place for you to look at to determine when your state will begin to require sales tax for online purchases: https://taxfoundation.org/post-wayfair-options-for-states/. Many states kick in on January 1, but others already have.
Now, on the personal side, there are some other things you should consider. I’ve written about these separately to our individual and family clients, so I won’t go into a large amount of detail here, but they include:
1) Double-checking your withholding (assuming you are taking a W-2 payment from your business)
2) Evaluating your charitable giving and looking for smart ways to make an impact on your own taxes, as well as your gift recipients
3) Making sure you understand mortgage deduction rules for YOUR mortgage because there are new limitations this year on how large of a mortgage you can use to write off debt payments
4) Catching up on retirement contributions
5) Giving tax-free gifts ($15K and under to family and friends), as well as ensuring you use any FSA funds set aside through your business
Again, your particular situation might require some more particular attention, if you want to make more of a dent. Send me an email or call us: (303) 327-9749 to see if we have a tax planning appointment available.
But most of all remember … we’re in your corner.
Feel very free to forward this article to a business associate or client you know who could benefit from our assistance — or simply send them our way. While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners.
Dickmann Tax Group