Source: The College Investor
If you’re a business owner, the end of the year can be a very busy time. With the holiday season on the horizon, you may be juggling the demands of your business while making space to spend time with family and friends.
There are several things you can do by the end of the year to end on a high note and get ready for tax season. With only 12 weeks left, here are some things business owners should do before the end of the year.
1. Pay Your Taxes
First and foremost, you’ll want to make sure you pay Uncle Sam. Throughout the year you should pay quarterly taxes, however, life happens and that might not be practical for all business owners. Be sure you pay your taxes by the end of the year to avoid penalties and take advantage of any savings you may qualify for
For more information, check out our guide to tax due dates.
2. Deduct Or Depreciate Equipment
Did you know you can take a deduction for equipment you purchase for your business? According to Section 179, you can take a deduction of up to $1 million in your first year of business for qualified equipment.
If you own a landscaping business this might mean lawn mowing equipment. Or, if you’re a freelancer, that could mean a new computer. Make sure you purchase your new equipment and put it into service by the end of the year to qualify for deductions.
3. Max Out Your Retirement Deductions
Speaking of deductions, saving for retirement might not be top of mind for business owners but it can help you lower your taxable income. In 2024, individuals can deduct up to $7,000 in a traditional IRA. If you have a SEP-IRA you can contribute up to 25% of your compensation from your business.
There are other contribution limits and certain rules you’ll have to follow to take your retirement savings as a deduction. Spend some time reviewing the requirements so you can max out your savings and qualify for any deductions.
4. Review Your Saas Subscriptions
The end of the year is a good time to audit the number of subscriptions you’re paying for. According to one survey, the average person has between 4 to 5 subscriptions and pays around $1,000 per year for them.
As a business owner, you may have several subscriptions including one for managing your emails, one for maintaining your website, and everyone’s favorite: accounting software. All of this adds up and could be taking a bite out of your profit margin.
Review your subscriptions and take note of what you actually use. Cancel anything you don’t use regularly and take an opportunity to switch your subscriptions to annual payment plans. Not only will this save you money, it’ll also reduce the number of recurring transactions you have, simplifying your bookkeeping too.
5. Take All Your Write-Offs
Do you know all the tax write-offs you’re eligible for as a business owner? Besides deducting equipment, you can also deduct things like:
- Health insurance premiums
- Car mileage
- Uber or Lyft rides
- Meals
- Home office
- Phone bill
- Professional fees, including courses
These write-offs can help lower your annual tax bill. Some expenses will need a business justification so make sure you keep your receipts. These are eight deductions you can take as a business owner.
6. Donate To Charity
You might notice a number of your favorite charities have donation drives at the end of the year. Depending on how your business is structured, you might be able to make a tax-deductible charitable contribution. This can help you give back to organizations that align with your business while also reducing your tax bill.
7. Schedule A Meeting With Your Accountant
Aside from paying your taxes, the other important thing you should do at the end of the year is schedule a meeting with your accountant. They will help you go through your books to clean up anything that needs to be addressed before tax season begins. Plus when you review your books with a professional, they’ll help you plan ahead for the new year.
8. Do An End Of Year Performance Review
If you’ve ever worked for a large company, you’re probably familiar with performance reviews. These are usually given to help evaluate whether or not you’re reaching your professional goals and if you are, whether or not you should be considered for a promotion.
Business owners might not be required to do performance reviews but that doesn’t mean you can’t do one yourself. A performance review can help you evaluate how your business is doing and how well you’re doing at managing your business.
During your review you can ask questions like:
- What went well in your business?
- What do you want to do better in the coming year?
- What major events are on the horizon that you should be mindful of?
- How do you plan on achieving your goals?
To prepare for a performance review pull your balance sheet and cash-flow statement to get a sense of how your business is doing. If you have employees, survey them to see what’s working and what can be improved on.
9. Show A Little Gratitude
The end of the year is typically a time of giving. As a business owner, it’s a good way for you to show gratitude to the people who keep you in business.
Let customers, clients, employees, and business partners know how much you appreciate them. You can send them a gift, give your employees an unplanned cash bonus, or schedule a holiday get-together to show thanks.
10. Plan For The Year Ahead
At the very end of the year take some time to plan for the new year that’s about to begin.
Consider taking a week or two off at the end of December to do some strategic planning. Think about your goals, the needs of your business, and anticipate any obstacles you might encounter in the coming year.
Bonus: Don’t Forget The BOI
This year there is something extra that you need to do if you own a business in an LLC or corporation. It’s called the Beneficial Ownership Information report. You need to file it by December 31, 2024 or else you could face penalties! See our full guide to it here: What Is The BOI?
