A year-end to-do list for small businesses from Halsey Resources
It’s easy to get spooked by year-end to-do lists after Halloween. However, this is an ideal time for small business owners to review their operations and make some important decisions. You’re more likely to enjoy a relaxed holiday season and a financially sound new year if you assess your business year, bookkeeping, and record-keeping as early as possible. Here are things to consider before 2022 arrives.
Identify tax breaks that may be available
Maintaining your financial records throughout the year is important, but at year’s end, those records require even more attention. If you haven’t kept good records, organize what you have, (find those receipts) from other deductible expenses you have incurred. There are travel and entertainment expenses, business insurance, vehicle depreciation, lease payments, conferences, etc. Look for anything you might have missed.
Capital expenditures and the business portion of certain personal expenses, like your mobile phone bill, may lower your tax bill. When calculating your cost of goods sold, you may be able to deduct expenses like storage, freight, and labor.
Need new computers, equipment, tools, or furniture for your office? Consider making a significant purchase or incurring other business expenses before January 1 to reduce your 2021 taxable income. Continuing professional education, web design, debt collection, group health insurance, postage, and franchise taxes are among the deductible items you should look into.
Contribute to a retirement plan
Contributions to a company retirement plan can help you become a preferred employer, save for your retirement, and reduce your business taxes. Contributions to employees’ retirement accounts may be deductible, but your business may also be eligible for tax credits if it opens a new retirement plan.
Employers with employees have the option of funding a SEP IRA entirely through their employer contributions or a SIMPLE IRA, which accepts pretax contributions from their employees and tax-deductible contributions from their employers.
There are a few different types of plans geared toward small business owners, including a tax-deferred solo 401(k). Solopreneurs can save tens of thousands of dollars a year through these plans.
Review or write a business plan
Your business needs resolutions that you can keep, not just personal resolutions that will slip through the cracks. It’s a good idea to review and update your business plan if you already have one. If you don’t have a plan, it’s important to create a solid one for 2022. It is possible to develop a traditional plan or a “lean startup” plan through the Small Business Administration (SBA). Visit their website: https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan
Organize your records and budget
Don’t start the new year with old paperwork. The disarray of your books, late taxes, and missed 1099s and W-2s can not only hurt your bottom line but also make your business seem chaotic.
Maintain accurate records and keep up with payables and receivables. Prepare to send out employee and contractor tax forms by January deadlines by sending out invoices and tracking income and expenses. If you don’t use cloud-based accounting software yet, consider making the switch now to simplify recordkeeping and improve efficiency.
Last but not least, if you haven’t yet done so, determine your 2022 budget. If you don’t have the cash to support operations and expansion goals, your business plan can quickly go astray.
Are you overwhelmed thinking about getting caught up by the end of the year? Can expert bookkeepers help you reconcile the books, track expenses, and manage payroll so you can concentrate on business operations in 2020? Our bookkeeping services cater to small businesses.
