Spending Wisely to End the Year
As we come to the end of 2020, we will remember a year full of new norms. The way we purchase goods has changed, the way in which we socialize has changed, and the way we work has changed. The past year was full of new challenges for many of us and we must remember to be thankful for our successes; however, we also must remember to protect our assets. Tax season is around the corner and it is important that we make wise fiscal decisions to end the year. One of the ways to minimize tax burdens for any small business is to end the year with as little cash on hand as possible. That doesn’t mean to waste money but to reinvest it or use it in productive ways.
Pay all Expenses and Prepay Bills
The first thing any responsible business owner should do at the end of the year is to pay as many bills as possible. If you have the cash, do not wait until next year to pay otherwise the money can be counted as profit and you can be taxed on it. That being said, prepay as many invoices as you can. If you need office supplies order them and even pay up front if you do not think the bill will arrive on time. See if you can prepay for January’s rent and any other early year expenses as well. This will ensure your company can start the year with as little debt as possible and should put you in a favorable position to start the next fiscal year.
Year End Cleaning
The past year has put a major focus on maintaining a clean work area. We have created procedures to disinfect commonly used surfaces and set up procedures to maximize work place safety. This was the best way to combat the spread of a virus. This change in habits should hopefully have a long term effect on society. It is never a bad thing to be clean; it is how to combat almost any illness. However, when cleaning our own areas we often overlook certain things. We have been so focused on high touch areas that things like bookshelves, window blinds, or even vacuuming the carpet gets over looked. Spending some of our extra financial capital at the end of the year on a professional cleaning service is a great way to make your money work for you. Your office will not only be sanitary but also properly cleaned. Your employees and clients should notice the difference and it is a great way to show to everyone that you care. Finally, cleaning is something that always needs to be done. You can do it yourself but getting some outside help and a new approach to it will likely yield wonderful results.
IT investments
Most of us take technology for granted. We come to work every day and we expect our computers to work well and never have any problems. We often overlook the fact that computer technology is an asset that is always depreciating. Software becomes dated and hardware gets slower and less efficient with age. In order to remain a functional and modern company it is important to upgrade. Now is the perfect time to do some research. How old is your current computer or computer system? Is your accounting software outdated, does a new version or an upgrade for it exist? These expenses are never thought about and can be very expensive, so it is the perfect thing to look into when you are trying to reduce on-hand cash. Buy the upgraded software or a new computer. These are necessary expenses and you might as well make them and account for them properly. This will allow you to get something you need and reduce your yearend tax burden at the same time.
Bonus Payouts
Another great way to shed some cash from your business bank account is to payout bonuses. This use of funds can be more complex based on how many employees your small business has. Additionally, this type of payout may be subject to a tax penalty based on where you live and the local and state tax laws. However, this option rewards employees for hard work and shares some of the company’s profits. Additionally, odds are you are a company employee and will get an extra paycheck as well. When looking into this type of option it is important to involve a certified public accountant. These professionals will be able to advise you on the best way to make these bonus payouts to minimize tax burdens and avoid others legal hurdles.
Office Upgrades
Naturally, it is important for us to point out that upgrading your office furniture is another great way to spend some extra cash. When was the last time you got a new chair? Does your office have a modern and stylish waiting area? Do you need a formal conference room? There are many ways to upgrade your furniture with a varying degree of price tags. Chairs wear out and styles come and go and it is important to upgrade. A comfortable chair with proper support can help improve employee morale and productivity. A modern reception area make clients and guest feel comfortable when they wait for their scheduled appointment. New desks offer modern features like height adjustable work surfaces, new modern color schemes, and more inviting desk fronts to conduct small gathers. Even simple upgrades like new end tables, coffee tables, or lamps can help improve any space. If you have an extra room in the office or simply need to upgrade or redesign a certain space we are here to help. Contact us at sales@furniturewholesalers.com for questions or advice.
We should all pay our taxes. It is our obligation as a member of society. We want the benefits of public programs and in turn we should have to pay our part. That being said we can take steps to reduce what we have to pay. We should be able to and can reinvest our company’s money in things for our business. It is good for our future, it is good for our personal tax liability, and it is good for our employees. So before the year’s end spend a few minutes to think about how to make your company’s profits best work for you and your company’s future.