The clock is ticking and the year is winding down. Don’t let December 31 take you by surprise. Act now to solidify your position for the year.
1. Meet with your CPA
Work your tax advisor to map out some year-end tax planning strategies so you’ll minimize your tax bill for 2014. This may require you to spend more money to reap tax savings, so make sure you have the cash flow to support the strategies. The sooner you schedule an appointment, the more time you’ll have to take action.
2. Review your balance sheet
If you may need commercial financing next year, your year-end balance sheet may be a key factor in securing a loan. Review what’s on the balance sheet so you can make favorable changes. It could mean, for example, paying an outstanding loan.
3. Finalize year-end bonuses
Decide who will get bonuses and how much. If your calendar-year business is on the accrual basis for accounting purposes, then bonuses paid to rank-and-file employees within the first 2-1/2 months of 2015 are deductible on your 2014 return. The bonuses must be reflected in the minutes of your company’s annual meeting. Bonuses to a S corporation owner are not deductible until actually paid.
4. Face your inventory challenges
Have you been sitting on inventory that just hasn’t moved despite your best marketing efforts? In order to make adjustments to closing inventory by writing off obsolete items, you must offer them for sale at least 30 days prior to the end of the year (the date you take the write-off).
5. Fix benefit plans for the coming year
Are you offering health care coverage? A retirement plan? Now’s the time to act. If you plan to offer employees health care coverage in 2015, you must give them 30-days notice of the coverage so they can decide what to do (e.g., opt out if a spouse’s coverage is better). Also, if you don't yet have a qualified retirement plan, you must sign the paperwork by December 31 if you want to make 2015 contributions. So talk to an insurance broker for health coverage information and to a financial advisor for retirement plans so you can get started immediately.
Don’t wait until you’re thick in the midst of the holiday season to attend to your tax and financial matters. Do this now!