5 Year End Financial Tips for Your Small Business

by Garrett Spence
12/8/2017 9:47:14 AM

 

5 Ways to Prepare Your Business for the New Year

As they approach December 31, businesses are scrambling to reduce their tax burdens and optimize for the coming year. Here are some smart ways to do both

  1. Defer Income: Obviously, any income your business receives by December 31 will count on this year's taxes. By shifting income to after the New Year, however, you could potentially save a lot of money, depending on your individual income levels for each year. Talk to your accountant to see if this is a viable option for your business.

  2. Make Purchases: Now is a great time to invest in your business to maximize deductions. Do you need new office supplies or equipment? Are there any vendors you might be able to pay in advance? Figure out how much you stand to owe, and then see if you can reduce this amount by making a few strategic purchases. New equipment can also help you enhance operational efficiencies in the year to come.

  3. Check Inventory: If market values for your inventory have declined, you could potentially claim more deductions. That said, this all depends on your accounting methods, so be sure to talk to your accountant to see if this is a reasonable possibility.

  4. Start a Retirement Plan: You can reduce your income for the current year by creating and paying into a retirement plan before December 31. If this is something you've been putting off, talk to your financial advisor to determine if it's a good idea to do it before or after the New Year. For example, if you have already minimized your current tax burden, it will make more sense to wait until after January 1 to pay into your retirement plan.

  5. Analyze Your Margins: Search for areas where your margins are being squeezed and dig deep to see what exactly is going on. Look at employee costs and vendor prices to see if you can lower expenses. Assess the entire financial health of your company and think about leveraging your credit to get the equipment and talent you need to thrive in the coming year.

Things to Consider

In some instances, it may not make sense to invest in your business to minimize your tax burden. Since a $1 deduction typically only amounts to no more - and many times much less - than $.60 worth of tax saved, it's not a good idea to purchase things you don't need. On the other hand, if you've been waiting to finance necessary investments, the end of the year is a fine time to pull the trigger. Still, if your profits were lower than expected for the current year, you may get more benefit by waiting until the following tax year to make business-related purchases.

If you do decide to adopt an aggressive year-end tax strategy, be sure you are really spending and not just moving money from one place to another. Bear in mind that you will not enjoy any tax deductions for paying down credit lines or giving yourself a bonus. To qualify for deductions, you must be buying equipment or paying expenses that will actually help you improve or maintain your business operations.

Intelligent Office offers smart business solutions that help small companies reach their highest goals. Contact us to learn more.

Additional Resources to Help Grow your Small Business

White Paper

How Mail Services Help Entrepreneurs Succeed

In today's mobile economy, digital entrepreneurs often work from varying locations. While this can help save money and increase agility, it comes with one big drawback:

Read More >
White Paper

Virtual Assistants Provide a Competitive Edge

Countless small business owners rely on remote assistants or offsite receptionists to help with critical organizational duties. While some are content to offload simple tasks to self-employed, stay-at-home support people, others demand more comprehensive services...NULL

Read More >
White Paper

Virtual Assistants & Remote Assistants: A Comparison

While the traditional virtual assistant is likely to work from home, an executive-level virtual assistant is part of a greater brick-and-mortar presence. This fundamental difference opens the door for extensive training opportunities that broaden the professional's support capabilities.

Read More >
White Paper

Overview of Virtual Offices, Executive Suites and Co-Working Spaces

Work has changed. In an age of instant communication, cloud-based applications, and workplace versatility, the era of the traditional office culture has come to an end. Providers of virtual offices, executive suites and co-working spaces have effectively liberated the nation’s work culture, adding dynamic and energizing new choices...

Read More >
White Paper

Part 1 of 4: Introducing the SBA

For entrepreneurs and small business owners, navigating the tricky terrain of creating a sound business plan, forecasting for growth and developing an operative growth strategy can be a major challenge. Fortunately, American entrepreneurs and operators have access to one of the most effective resources in the worldwide market...

Read More >
White Paper

Part 2 of 4: Starting a Small Business

Navigating the complex terrain of creating a sound business plan, forecasting for growth and developing an operative growth strategy can be a challenge for entrepreneurs and small business owners. Fortunately, American entrepreneurs have access to one of the most effective resources in the world via the Small Business Administration (SBA).
... Click to read more

Read More >
White Paper

Part 3 of 4: Managing a Small Business

Congratulations! You have gotten your small business up and running. Now what? This part of our four-part series on leveraging the Small Business Administration to help you launch and manage a small business will focus on the operational aspects of running a business. Whether you need leadership strategies, day-to-day decision making skills
... Click to read more

Read More >
White Paper

Part 4 of 4: Marketing, Sales and Contracting

Understanding marketing and sales as well as the technical complexity of our Internet-driven society gives entrepreneurs a distinct advantage over the competition. This final segment of our four-part report will take a deeper dive into the logistics and philosophy of marketing and sales and their impact on your business success.
... Click to read more

Read More >
White Paper

DIY Marketing Tools

If a business isn’t marketing, its potential customers are not finding it. Small to medium size businesses often struggle with spending hundreds of thousands of dollars on marketing. New DIY marketing tools, however, have eliminated the need to spend astronomical amounts on online and traditional marketing. These tools
... Click to read more

Read More >
White Paper

Virtual Office for Legal Professionals

Law firms (large and small) and solo legal practitioners alike can use virtual office services and spaces to run their entire legal operations or as a supplement to a home office or traditional brick-and-mortar offices. Virtual office services can be particularly useful during trial preparation
... Click to read more

Read More >
White Paper

Finance & Tax Professionals

Finance and tax professionals, whether they work solo or as part of a larger firm, can use virtual office spaces and services to stay on top of their workloads, especially during the busy tax season. Professional virtual office spaces can be particularly useful when back-to-back client meetings are necessary...

Read More >
White Paper

Traveling Entrepreneur

As business people and entrepreneurs continually strive to grow their business, doing so frequently involves traveling around the country to attend networking or tradeshow events, meeting clients and prospects on their own turf, and getting some face-time with colleagues, contractors or employees who may operate in a remote location. Preparation
... Click to read more

Read More >
White Paper

Virtual Office Eguide

Have you ever wondered why some small businesses are successful and others are not and what do these successful companies do to gain an edge over their competition? Through our years of experience
... Click to read more

Read More >