Working with an accountant is obviously a great way to get your taxes paid as a small business owner, but engaging with an accountant only when your taxes are due, can lead to an unpleasant surprise when you receive your final bill.
To avoid this, tax planning in Coral Gables should be a year-round exercise. With strategy meetings held at quarterly intervals, and tax saving strategies that can be implemented throughout the year, business owners are never left with a nasty surprise at the end of the tax year.
Effective tax planning doesn’t just happen once a year; instead, it’s an ongoing process that effortlessly integrates with the day-to-day operations of a business.
Here’s how year-round tax guidance could help you ditch tax season scrambles, and avoid unpleasant bills:
January through March
This period should involve detailed analysis of the previous year’s results, projections of the current year’s income and tax liability, as well as the identification of strategies for reducing taxes and planning of contributions to retirement plans.
Your S-Corp salary for the year should also be determined, and if any big equipment purchases need to be made, this is the right time to decide when they should be made from a tax-saving perspective.
April through June
During this time of the year, actual business performance should be reviewed so that tax saving strategies can be adjusted where necessary. It’s also the time for planning strategies that need to be implemented mid-year, along with tweaking contributions to retirement plans.
April through June is the ideal period for assessing the performance of a business when compared to any projections made, and if necessary, for making adjustments to estimated payments for the quarter.
July through September
This is when year-end tax planning is best carried out, and should involve the finalization of purchase plans for equipment, optimization of contributions to retirement plans, implementation of strategies for tax loss, and planning of changes to compensation or year-end bonuses.
At this stage, your tax accountant will decide whether bonus depreciation or Section 179 can be used for equipment purchases, and make plans for any other year-end strategic expenses.
October through December
Your tax planner will start putting year-end strategies into practice at this time of year, as well as finalizing contributions to retirement plans, making sure that estimates for tax payments are up-to-date, and starting to make preparations for tax season.
It’s important that by this point, all necessary documentation is accurate and in place, ready for tax preparation.
What can happen when you only engage with an accountant during tax season?
When you choose to work with an accountant during tax season, instead of working with a tax preparation service in Miami all year round, you can typically expect to miss out on deductions, make big decisions that aren’t opportune, put yourself at risk of overpaying on payroll taxes or instigating an audit, and miss out on money-saving opportunities for retirement plan contributions.
There are tax implications for just about every decision you make as a business owner, but by restricting the time you engage with an accountant and limiting it to once a year, you could end up making decisions that have costly tax implications.