Five Steps to Successful Year End Tax Planning

As the weather grows colder and the days grow shorter, it may be tempting to put off a face-to-face meeting with your CPA. You might think that you already know what to do or that tax season will simply be “business as usual,” but a year-end meeting with your financial advisors will put you and your business in position for a successful new year.

Here are five steps you should take before the ball drops in Times Square on New Year’s Eve:

Before your CPA can prepare your annual tax filings, your books will be audited to make sure that all transactions have been posted correctly. By getting this process started before year-end, you’ll have a clear sense of where you stand financially when making important decisions regarding professional investments, employee compensation, wealth management and tax planning. Since it needs to be done anyway, why not get a head start?

Some employer contributions are mandated by the terms of the plan, and you’ll need to get a handle on this pending obligation. If you choose to make discretionary employee contributions, you may have an opportunity to realize a substantial personal benefit. Be sure to fund benefit plan contributions before year-end to reap a tax advantage. If you haven’t set up an additional cash balance plan, which would significantly increase your opportunity for deferred income (and the associated taxation), talk to your retirement plan advisors about whether you should consider this option in the new year.

With a clean set of books and the associated management reports, it’s time to take a retrospective look at the past year. Reviewing the financial data your advisors have gathered for you will transform your “gut feel” for the health of your business into concrete metrics from which you can evaluate revenue streams, operational efficiency and financial controls. It also feeds naturally into an assessment of your personal financial situation, including changes that have transpired in the past year or are anticipated in the near future.

With just a few weeks left in the year, there may still be things you can do to minimize your liabilities come tax season. While you may already be familiar with the standard set of considerations based on past years’ experience and/or this year’s tax planning newsletters, be careful not to blindly adhere to boilerplate recommendations that may or may not be applicable to your unique circumstances. Let the experts help you make the right calls. While they’re at it, they can give you a heads up on cash requirements to meet your upcoming tax liabilities.

Take the opportunity to outline your anticipated financial reporting requirements (such as tax returns for bank loans and student loans). Schedule your collective resources when it makes the most sense for your business. Identify your mutual obligations to ensure thorough accounting services and tax filings with the least effort on both sides. It’s good for your practice and good for the bottom line.

Without a doubt, these final weeks of 2015 can deliver more value from a planning perspective than any other time of the year. The insights that you glean can inform actions that will benefit your business in the coming year and save you money during tax season. What better gift could you give yourself?