A Year-End Tax Planning Checklist for Business Owners

As the year wraps up, now is the time to plan and prepare for your upcoming tax filings. What should you be thinking about now personally and professionally to make smart tax decisions? When will you need to bring in professional to ensure you are on the right track to minimize tax obligations and facilitate business growth? Use this comprehensive checklist to avoid missing any critical components of your tax strategy:

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Individual Filing Considerations

• Health Savings Account – Review HSA contributions to maximize deductible contributions for anticipated upcoming health expenses.
• Flexible Spending Account – Determine how much to set aside for next year’s FSA based on your expenses for the current year and any known expenses for the coming year.
• Stocks and bonds – Talk to a financial planner to understand which stocks and bonds to sell this year while being cognizant of capital gains tax implications.
• Monetary gifts – Make monetary gifts by the end of the year to ensure they will be sheltered under gift tax provisions because exclusions do not roll over.
• IRAs – Consider the tax implications of contributing to a traditional IRA for the first time, adding to an existing IRA, or converting traditional IRAs to Roth IRAs.
• Estate planning – Re-visit long-term estate planning goals to ensure you are on track to leave the legacy you hope to someday.

Business Filing Essentials

• Employee expense reimbursements – Approve and reimburse employee expenses for the year in accordance with your company expense policy before year-end to make the bookkeeping activities associated with these expenses easier
• Employment status - Reconcile any payments to third-party contractors and freelancers to ensure they are properly categorized under the correct worker status for tax purposes.
• Inventory – Do a physical inventory audit and write off any excess or obsolete inventory.
• Assets – Ensure long-term assets are being depreciated properly in accordance with current state and federal tax laws.
• Losses – If business losses have been incurred due to a federally recognized disaster, claim the losses immediately to expedite the tax refund and insurance payment as well as maximize your casualty loss deduction for the year.

Always consult with an experienced and reputable accountant related to year-end activities and revenue-related business questions instead of trying to handle it all yourself. Filing errors and poor judgement calls can cost a business far more in fees and penalties than hiring a third-party accounting company from the start.

Consulting with your Accountant
When talking to your accountant about year-end tax considerations, ask the questions like:

• Are there opportunities to postpone business income to qualify for additional tax breaks or claim more deductions? How will this affect next year’s taxes when the income is added to the books?
• Are there any opportunities to accelerate expenses before the end of the year (like paying supplier invoices, doing repairs and preventative maintenance, or purchasing equipment and non-inventory items) to reduce annual revenue figures?

​If you are considering selling your business in the next few years, work with a financial expert to get the ball rolling immediately.