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.
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.