Hopefully, you’ve had a profitable year. While it has definitely been a challenging economic environment for business, we all press on to the achievement of our goals, adjusting course and planning for the future. As we close out the year, adjusting course and planning for the future includes performing a year-end review to make sure you are allotting income and expenses in the most effective manner.
When we perform a year-end review for our clients, we start by making sure the books are closed out through the end of November. This is a good opportunity to cross the t’s and dot the i’s, and get the first real baseline assessment of financial performance for the year that has passed.
One of the most important parts of closing out these first 11 months of fiscal tracking is running a thorough check to make sure we’ve recorded and filed all payroll and sales taxes. This involves verifying that you have all of the correct information from your employees so you can file 1099’s, W2’s, and other required forms. No closing can be complete without first meeting all federal and state requirements, and no other considerations can be made or planned for if these are out of line.
Once we are assured that the books are complete and accurate and all paperwork and taxes are current, we look to projections for the last critical month of the year – December. It’s important that our projections for this solitary 31-day time period are accurate as they can ultimately be the x-factor in optimum income and expense planning.
With all of this information, we are able to put together a solid picture of the planned total income and expenses for the year and look at how it will potentially flow through to the business owner(s). We assess the resulting tax liabilities and discuss with them the best way to handle the transactions of the final month as we attempt to create the optimum tax situation and balance liabilities between the two adjoining accounting cycles.
While accountants generally recommend pushing any collections and income off to next year, for 2012 we are advising just the opposite. With the changes that are likely to occur at the federal level, it will be much more beneficial for businesses to maximize income now and push expenses to next year. The reasons for this change are the potentially significant increases in income taxes and codes at all levels.
If you have any questions about how to perform a year-end review and plan for the optimum tax outcome, or want to discuss our outlook on the coming federal tax code changes, call 866-496-2042 to schedule a free consultation.
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