Top 5 Tax Strategies for Year End
Consider Deferring Income
Depending on this year’s margins and profits, some Owners opt to defer income to the following year. Situational circumstances dictate when this strategy should be implemented. Tax brackets, for example, could impact this decision.
2017 Budgets and Forecasts
This is a critical time to create next year’s budget and execute forecasting strategies to determine the health of the company. By comparing YTD expenses and future business goals, a realistic guideline can be established and expectations set for next year.
Properly Code Expenses
Coding expenses in your financial management software is critical in your reporting process and equally important to your CPA or tax preparer. This is a common pitfall for many Bookkeepers. We often see coding errors or expenses that have been overlooked or incorrectly assigned. As a result, tax deductions are missed, financials do not accurately tell the story of current performance and future performance is difficult to predict.
Structure Annual Bonuses appropriately
Year-end bonuses are often poorly structured in some organizations, with no formal calculation. While some companies award bonuses based on employee longevity with the company, others choose to reward productivity and performance. Employee bonuses are not only relevant to morale and retention but can be a meaningful way to recognize a hard working team and off-set taxable revenues. Year-end is an appropriate time to review all bonus and incentive programs to ensure they are working as intended. CEO’s should also review the anticipated timing of the payment, as well as the impact on cash flow and taxes.
Ensure Internal Controls and Financial Reports are Accurate
Last, but likely most important, are your business’ controls and reporting processes. Proper internal controls help prevent fraud, protect the assets of the company and promote integrity of all the employees. Companies often find themselves exposed in areas of payroll, cash management, inventory and accounts payable without even realizing it. In addition, accounting processes and procedures can be inefficient and prevent the production of financial reports. Accurate and timely financials provide the visibility and transparency needed to make the best decision for your business now, and in 2017. Year-end is a great time to review the internal controls and accounting processes so that the new year can begin with these new policies intact.
CFO Strategic Partners has helped hundreds of client implement strategic actions to grow and maintain the health and success of their business. Many of our clients are now working on year end financials and implementing tax strategies to reduce their burden in 2016. We would welcome the opportunity to further discuss your needs.