Year-End Tax Planning Gives You the Advantage

Make Tax Planning Part of Your Year End

…in this world, nothing is certain except death and taxes.  – Benjamin Franklin

Filing and paying annual income taxes may be an integral part of doing business, but that doesn’t mean you have to like it, nor pay more than your fair share. Whether you face the task with acceptance, resignation, or dread, you know it’s inevitable once the year ends, and you close your books. The question is, when do you start to address your year-end tax planning?

Running a successful business means keeping abreast of new rules, laws, regulations, and lately, mandates which impact not only costs, but how you manage both day to day, and long-term activities. You have enough on your plate without trying to keep up with the changing environment for income taxes too.

Your customers or clients depend on you to be the expert in your field. Call on HKMP to keep you abreast of changes in tax laws which impact you both positively and negatively, allowing you to focus on your own areas of expertise, while protecting your business interests, and cash flow. Don’t miss the opportunity to take advantage of HKMP’s expertise to review your books and records prior to year-end, and advise you of opportunities to minimize your tax liability. Our knowledge and experience will ensure you make informed decisions like scheduling expansion, and major purchases in years when tax laws are more favorable.

Take Advantage of the Right Timing

Timing is everything. Whether it’s capital investments, year-end bonuses, hiring, or inventory, you want to make informed decisions. In many of these areas, you’re already doing your research, and mapping out a plan before reaching final decisions. Yet all too often, the impact on both your current and future tax liability is overlooked. In many ways, it’s as important as ROI.

One area which has seen significant change over the last 40 years or so is depreciation. Not only have Section 179 limits changed over the years, but so have limits on first-year depreciation. Looking back, a mere 13 years, the Section 179 limit has grown from $250,000 in 2008 to $1,050,000 in 2021. Not all years have seen increases, but don’t you want the option of deciding whether to escalate or delay a major purchase if the limit increases the following year?

Many companies experienced decreased revenue, and increased costs for the last two years thanks to COVID. As you prepare your budget for 2022, knowing how those costs will affect both actual and projected net income will keep more money in your pocket. Better still, you’ll have more money to spend on the original dream with which you launched your business in the first place.

Year-end tax planning areas

Protect Your Investments With Year-End Tax Planning

Would you wait until January of February to create next year’s budget? Probably not, as you know you’d start the year blind to objectives and opportunities. You don’t wait until January or February to start making estimated tax payments either, as you don’t want your cash flow to take one, large hit. You certainly haven’t achieved your current level of success by ignoring the numbers, or failing to see how they measure up to your projections and expectations.

Tax laws can be shark-infested waters. If you’re unprepared, they can bite off far more than you’re willing, or even able at times, to give. Knowing there’s an expert ready to take the wheel and guide you through those waters unscathed protects your assets, leaving you free to focus your attention and resources on the present challenges, and future opportunities.

Ask yourself this. If your dream was important enough to create a plan, and map out at least part of the route to making it a reality, isn’t it equally important to allocate time, energy, and resources to protect what you’ve built?

Scout Ahead to Minimize Setbacks

To put it simply, year-end tax planning is the security team’s scout who heads out before dawn to ensure the way forward is clear of perils and pitfalls. He alerts you to blocked roads, washed out bridges, and potential ambushes, giving you time to set up defenses, and re-map your route. Without him, you’d walk right into those ambushes, or find yourself mired in quicksand, causing expensive delays and missed opportunities. Clearly, the money you spend on his services will be recouped many times over.

You could choose to fly by the seat of your pants, hoping your business grows, and thrives. You can navigate the expensive mistakes, in the belief they’re simply a cost of doing business. Or you can build a team which includes people who are there to protect what you’ve built, and clear the way forward. I’m guessing you didn’t take unnecessary chances when you first started out, nor did you try to do more than you had to by yourself.

If you’re ready to clear a few obstacles from your path, HKMP is the scout you need to navigate the tax waters, and avoid the sharks.

How to Start Using Data Analytics to Improve Your Business

When they hear terms like “data analytics” or “business intelligence,” many small business owners tune out, thinking this only applies to large corporations with huge budgets. But this often isn’t the case. Small and mid-sized businesses (SMBs) can reap benefits and improve business by using data analytics. How? By better understanding the basic concepts behind data analytics.

What is Data Analytics?

Data analytics describes the large volumes of information generated by businesses as a byproduct of their normal operations. Even relatively small businesses today can generate so much data that it’s difficult for traditional data processing methods to analyze it.

With the growth of digital formats and ever-expanding business uses of the internet, including e-commerce and social media, many SMBs now find themselves flooded with data. This problem is sometimes referred to as the three Vs of data: Volume, Velocity and Variety.

By harnessing this data and using it effectively, SMBs can accomplish a wide range of objectives and gain a strategic advantage over their competitors. For example, effective data analytics can help businesses:

  • Market to customers more effectively
  • Monitor and track marketing results more accurately
  • Identify customers’ needs more quickly
  • Design and manufacture products that meet these needs
  • Manage inventory more efficiently
  • Improve sales and revenue forecasting
  • Streamline operations
  • Reduce costs and thus boost profits

Get Started with Data You Already Have

It doesn’t take a big budget or dedicated staff to start using data at your business. In fact, you might already have some of the most useful tools right at your fingertips. Reports prepared by your sales team, email marketing reports, social media data feeds and website analytics, to name a few.

Start your data analytics initiative by asking questions that are directly related to your business goals. If your goal is to increase market share among a specific customer segment, you first need to know what your current market share is and the market share of your key competitors. If you want to boost net revenue by lowering manufacturing costs, you need to know the cost of goods sold for each of your top-selling products.

True data analytics involves more than just statistical summaries of data, though. You also need to be able to identify patterns in data and understand what’s causing them. This can help you anticipate what might happen in the future and formulate your strategic plans accordingly — a process known as predictive analytics.

Popular Data Analytics Tools

Some of the most popular data analytics tools among SMBs include the following:

SAS — This software suite retrieves, mines and manages data from a wide range of sources including the internet, social media platforms and internal databases. It then performs statistical analysis to transform data into business insights that can help improve business decision making. 

Kissmetrics — This tool is designed specifically for marketing analytics. It mines internal and online databases to identify common customer behaviors that help you target your marketing efforts more effectively. Based on Kissmetrics data analytics, for example, you can target email marketing campaigns more precisely and get detailed campaign metrics that go beyond opens and clicks.

InsightSquared — This tool seamlessly connects to software you’re probably already using like Salesforce, Google Analytics and QuickBooks to provide you with sales, marketing and staffing analytics. InsightSquared can harvest data from Salesforce to help you spot sales trends and improve sales and pipeline forecasting, lead generation and tracking and profitability analysis.

Google Analytics — This popular (and free) digital analytics platform gives you everything you need to analyze your website data from all touchpoints. Using Google Analytics, you can determine:

  • Where your website traffic is originating from
  • How long visitors stay on specific pages on your site
  • Where and how they engage with your site
  • The amount of visitors who access your site via a mobile device vs. desktop.

This kind of data can help you improve your website’s form and functionality.

Microsoft Power BI – This suite of cloud-based business analytics tools gives you a 360-degree view of your most important data with the ability to build custom, dashboards. Even better, many businesses might already have this tool as a part of their Microsoft software suite.

The Time Has Come to Improve Your Business Using Data Analyics!

Don’t be intimidated by the data analytics lingo or assume that data analytics is only for big businesses. If you want to harness the power of your data to make data-driven decisions, don’t hesitate. Start exploring the potential benefits of launching a data analytics initiative today.