There is a lot going on in December with Christmas and Hanukkah quickly approaching. At this time each year it is important that we get our tax ducks in a row.
1. Make sure your shoe box is organized: Some customers still use shoe boxes but on the whole this message is to recognize that your accounting records are in order. Maybe when the weather was nice it was easy to get outside and leave the record keeping for the future. Well that time is now, take the time now to make sure that your books are in order and accurate no matter if you use QuickBooks, a ledger, or a shoe box. Get everything in place and ready for your accountant.
2. If it was a good year make a few purchases: December is a great time to make purchases your business that you will use in the immediate future which will maximize your deductions for this year, if your cash flow permits. Of few examples of items:
- Office Supplies: Stock up on paper, envelopes, laser printer cartridges, business cards, and other office supplies.
- Office Equipment: If you have been planning to buy new office equipment consider purchasing it now. For example, you may want to purchase that new computer you have been holding off on purchasing.
3. Contribute to your Retirement: Make contributions or extra contributions to your retirement plan (if you do not have one please set one up this month). Just confirm that you have not reached the maximum contribution limits for your retirement plan. (401k, KEOGH, Roth IRA, or SEP).
Of course each business owner’s situation and accounting methods vary so these tips are not for everyone especial when considering the cash method versus the accrual method. The cash method of accounting allows for deductions reported for the year that you write the check to the vendor while the accrual accounting method allows you to record an expense when you receive the product or service.