IF YOU'RE EARLY, YOU'RE ON TIME!

The old adage that “early is on time and on time is late” is a pretty common mentality for a lot of us. This is probably truer in business than it is socially.

Now is the perfect time to get started on year-end work for your accountant or tax professional. Here is a brief to-do list that we bean-counters would like our clients to focus on to help both of us out come tax time. For us, on time for tax preparation is actually late!

KURT GUTH, EA | President | American Tax Service, Inc.

HAVE AN ACCOUNTING SYSTEM
If you are not using some form of accounting system, what’s the hold up? Even a simple spreadsheet template that acts as a profit and loss report is very helpful.

Not only does your accountant need this data aggregated since we aren’t iyour business every day, but it gives you a basic understanding of how you are doing month-over-month and year-over-year.

Are you profitable? Can you take a salary or a draw? Can you afford to expand staff or purchase equipment? Are you spending too much in one area and didn’t realize it? Will you owe taxes, and should you pay in some through estimated tax payments now? I am constantly amazed that so many owners don’t have the data at their fingertips to answer these questions.

Now would be a good time to implement a spreadsheet template or to start using some accounting software

MEET WITH A TAX PROFESSIONAL
Now that you have your data in a useful format, talk with a tax professional about year-end. You can now answer some of those questions posed above and tackle some tax planning.

If you will owe taxes, your tax professional can estimate how much and help you get some paid to Fed and State through estimated tax payments.

He or she can also help you decide if buying equipment or contributing to a retirement account can defer some of that tax. These are some of the easy topics—tax planning can get much more complex, especially at the rate in which tax laws change.

I want to stress that if the data shows you will owe taxes, make those estimated tax payments! Future you will thank you. Making the payments will help you avoid stress at filing time, allow you to extend if you need to, avoid penalty and interest, and put you in a good position for the new year.

ADDRESS TAX COMPLIANCE
Now that you have addressed the general health of your business you can turn to compliance, which is more than just filing your income tax return.

If you have a payroll, you probably already have someone that is paying attention to compliance.

The real pain point here are vendors and contractors. The IRS has gotten pretty serious about non-employee compensation and the issuance of 1099 forms. If you have to issue 1099-NEC forms, you should have W-9 forms on file for each vendor that qualifies. If you do not, start now so that you aren’t missing information as the January 31st deadline looms. Again, a tax professional can help navigate the specifics related to the issuance of these forms.

REDUCE TAX STRESS
So, to be early is to be on time! Use some form of bookkeeping system and pay attention to year-end compliance. Seek the help of a professional before we start the tax season and become simply too busy to address planning items.

All these things will help you reduce year-end stress and set you up for success for the coming year. Then you can be late to your holiday parties if you want, but I still wouldn’t advise it.

TK