Top 5 Reasons for Year-End Planning

by | Jan 31, 2014 | News

By:  Michael Flerchinger, The Nichols Accounting Group

Red Angus, December 2013

Benjamin Franklin once said the only two things certain in life are death and taxes. Doing year-end tax planning won’t save your life, but it’ll surely help you defer a portion of your tax bill – which can feel like financial resuscitation. This is usually done by properly timing your income and deductions. While there are some ways to reduce taxes after your year-end has already passed, they are generally of limited use and not as powerful as prospective decisions. The following are five reasons why planning matters.

1. Tax bills to Uncle Sam have fewer zeros

Meeting with your CPA before yearend will allow you to determine what your target net income should be and discuss the necessary steps that will allow you to arrive close to that figure. You might defer income, accelerate payment of expenses, or make a decision as to whether you should buy that new equipment in December or January. Although there may be a difference of only a few days, the tax savings you can realize by allowing it to offset income in the proper year may be significant. Your CPA can also help you understand what next year’s tax laws may look like, and help you determine how they may impact your situation.

2. Your books and records will be up-to-date

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