Year End Finances
Now that December has arrived, we all have one thought on our mind, Christmas. The season of giving is in full swing, and we are spending our free time and weekends shopping. We are attempting to get our family, friends, and coworkers quality gifts at low prices, and we are trying to show that there is love and thought behind our actions. The last thing on our minds right now is one of the most important, tax season is on the horizon. December is the end of the fiscal year for most of our business endeavors and if we do not spend time looking into financial information, it could cost us eventually.
Business Owners
The foundation of the American dream is owning a small business. It is the goal of countless Americans and millions of people realize this dream every year. We all want our companies to be successful and profitable, but we must be cautious are careful when managing the companies’ finances. Small business, which are set up as Limited Liability Corporations, require the owners to pay taxes on company profits. Additionally, these same business owners can take deductions on their losses. To minimize the tax burden, companies need to report as little earnings as possible. Please note, it is important not to lie on tax returns and we are by no means suggesting doing so. However, there are ways to reduce a company’s earnings at the end of the year.
Reducing Earnings
One of the easiest ways to reduce company earnings at the end of the year is to raise a company’s expenses. This can be done in several ways but the easiest is to buy things you need. If you need a new computer, upgraded software, or a new company vehicle now is the time to buy it. These required resources are legitimate expenses and spending the money when you have it will ensure you keep your business operation modern and up to date. Additionally, there are certain luxury expenses that can be purchased to help increase your reported expenses. If you have too much money on hand now would be a wonderful time to upgrade your office furniture and décor. A more modern and easier to clean look for your guests in your reception area, better chairs with higher quality features and lumbar supports for you and your employees, and new desks with a more modern look or even a sit-stand feature. You can even get new floors, paint, or modernize your offices breakroom amenities. All these things are nice upgrades and its better to do them now, this will enable you to save on next year’s tax bill.
The other way to increase a company’s expenses to lower profitability is to increase payroll. Offering overtime to get the back burner projects completed now will help your business overall and help your employees earn extra cash for their holiday shopping. December can be a tough time because many employees want additional time off to spend with there families and loved ones. For this reason, it is important to access your situation now and make the big decisions before it is too late. In early December employees might be willing to work a bit longer for the money; however, at the end of the year they might be less interested. So do not wait too long. Finally, the other way to reduce overall expenses with payroll is to pay out bonuses. However, it is important that it is accounted for properly so make sure to spend time talking to a certified accountant. Paying our bonuses is a nice gesture but income tax must be paid by the individuals receiving it. So be careful and make sure to do everything by the book and do not pay, as the business owner, too much of a bonus to yourself without professional advice first. Doing so could potentially increase your personal tax liability.
December is a magical time of the year and we all the love the fun of shopping., decorations, and time with out family. We must remember to also be smart during this time and think about our financial futures. Over the next week or two spend time looking at your company finances and make sure you are setting yourself up for success in the feature. If you have any questions make sure to reach out to your accountant and if you decided you need some high quality furniture to help upgrade your office please feel free to contact us at sales@furniturewholesalers.com for suggestions, advice, and quotes.