The following is a guest post by Jeff Bullock, from one of our partner tax preparation firms Elevation Tax
This is the time of year we get many questions from clients regarding what they should be doing to minimize their current year tax liability. With a little less than a month before the end of the year, now is a great time to make sure you’ve got all your ducks in a row.
Here’s a year end tax planning checklist to keep your year end tax planning on track.
1: Understand Your Business Structure & Taxing Elections!
I can’t tell you how many times we’ve spoken to clients and found better ways to structure their business and investment activities, as well as their taxing elections. Not all entities are created equal, so be sure you understand how your business structure and tax elections fit you’re your overall plan.
2: Are Your Books Current?
Bookkeeping is often the most important, yet most overlooked aspect of a business. Bookkeeping is the foundation to a solid tax plan and proper tax preparation. It is important to make sure your books are current before year-end, and to not procrastinate until after December 31 as it will be too late to make necessary changes.
3: Are Your Mileage Logs Current?
A commonly overlooked, yet very favorable deduction, is the mileage deduction. However, in order to qualify for this deduction you must have a proper mileage log. This includes the total miles driven for the year as well as the business specific miles driven. Gone are the days of manually tracking these miles on a notepad. There are literally hundreds of mileage tracking apps for your smart phone available at the touch of your fingertip.
4: Is Your Salary On Track?
Optimizing how you take money out of your business is an effective way to minimize your taxes. Now is the perfect time to make sure your salary is in line with your business activity, as well as IRS regulations. The good news is, if changes need to be made, there is still time left in the year to make those changes.
5: How Do Your Distribution Look?
Distributions play a huge role in minimizing your taxes. Just like salary, you’ll want to make sure your distributions are in line with your tax plan as well as IRS regulations.
6: Are Your Deductions Properly Documented?
Proper deduction documentation is the first step in maximizing your deductions as it leaves less room for deductions to be missed. Proper documentation is also a great way to be prepared for an IRS audit. If deductions are documented, you should have nothing to fear. This includes documentation for travel, meals & entertainment, home office and vehicle expenses.
7: Have You Been Reimbursed For Your Business Expenses?
If you have personally paid for business expenses out of your own pocket and have not yet been reimbursed, now is the time. You will need to submit an expense report (even if you own the business) and get reimbursed for these expenses. These expenses are easy to forget, but add up quickly to help minimize your taxes.
8: Have You Had Your Annual Meeting
By having your annual meeting and recording the minutes, you can ensure that you are on track with your tax plan. All items on this list should be discussed in one way or another at your annual meeting. Make your annual meeting and minutes part of your year-end planning.
9: Speak With Your Tax Advisor!
All too often we see situations where clients are trying to plan after the fact. In almost all situations, April15th is too late to plan for last year. Talk with your advisor now. Review your tax plan and make the necessary changes before the end of the year arrives.
Your business success can’t wait.
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