With Halloween behind us, it’s easy to get spooked by year-end to-do lists. But this is the perfect time for small business owners to take stock of business and make some time-sensitive decisions.
The earlier you assess your business year, bookkeeping, and record keeping, the more likely you can enjoy a relaxed holiday season and financially sound new year. Here are several moves to make before ringing in 2018.
Focus on Potential Tax Breaks
Managing your financial records is critical throughout the year, but those records need even more attention at year-end. If you haven’t been keeping good records during the year, organize what you do have and then comb your memory (and sort through those piles of receipts) for other deductible outlays you’ve made throughout the year — whether they are travel and entertainment expenses, business insurance, vehicle depreciation, lease payments, industry conferences — even dry cleaning while on the road for business.
Keep in mind that capital expenditures and the business portion of certain personal expenses, like your mobile phone bill, may figure into lowering your tax bill. If you manufacture or sell products, you may be able to deduct expenses for things like storage, freight, and labor used in figuring your cost of goods sold.
Do you need new computers, tools, equipment, or office furniture? If you’ve being thinking about making a significant purchase or other business expenses, consider doing that before January 1 so you can lower your 2017 taxable income. It’s likely well worth your time to investigate the list of potentially deductible items, including continuing professional education, web design, debt collection, group health insurance, postage, and franchise taxes, to name a few.
Open and Contribute to a Retirement Plan
A company retirement plan can help you become a preferred employer, save for your own retirement, and lower your business taxes by making deductible contributions. You may be able to deduct your contributions to employees’ retirement accounts, but your business could also be eligible for tax credits for expenses associated with opening a new plan.
If you’re running the show all on your own, you can choose from a few different types of plans geared toward small businesses, including a tax-deferred solo 401(k). These plans allow a solopreneur, as both employer and employee, to sock away tens of thousands of dollars a year while saving on taxes now.
Write or Review Your Business Plan
Personal New Year’s resolutions may fall by the wayside, but your business needs resolutions that you can stick to. If you already have a business plan, this is a good time to review and update it. And if you’re operating without a plan, it’s important to develop a solid strategy for 2018.
The Small Business Administration (SBA) offers resources to help you develop a business plan, including a detailed traditional plan or a “lean startup” version.
“A good business plan guides you through each stage of starting and managing your business,” the SBA notes. It’s also “the tool you’ll use to convince people that working with you — or investing in your company — is a smart choice.”
Check local universities or the SBA website to see if there’s a Small Business Development Center nearby that can offer free or inexpensive business plans, marketing, graphic design, legal, and market research consulting. Mentors, workshops, and online resources from the nonprofit SCORE also help entrepreneurs with strategies to build their small businesses.
Tend to Your Records and Budget
Avoid starting the new year with old paperwork burdens. Disorganized books, late tax payments, and missed 1099 or W-2 filings not only can infuse your business with a sense of chaos, they may well hit your bottom line.
Catch up on recordkeeping and get up to date on accounts receivable and payable. Make sure you’ve sent out invoices and tracked income and expenses, and prepare to meet January deadlines for sending out employee and contractor tax forms. And, if you don’t use cloud-based accounting software yet, consider making that move now to ease your recordkeeping and improve efficiency.
Finally, if you haven’t done it yet, assess your finances and nail down your 2018 budget. Your business plan can derail quickly if you don’t have the cash to support operations and expansion goals.
Need help getting the books cleaned up and in order for end of year? Could you use expert bookkeepers to help you reconcile the books, track spending, and manage payroll, so you can focus on business operations in 2018? BKE specializes in bookkeeping for small businesses. Contact us and we’ll review your books for free.