In their 2015 Holiday Season Recap, Stitch Labs estimates 40% of annual retail sales occur during the holiday season. As that revenue starts pouring in, you’ll want to be sure your business is set up to turn sales into profit. With that in mind, I’ve enlisted the help of my friend and inDinero tax manager, John Finley, CPA, to share his go-to game plan for a lucrative end of the year.
Download our three-piece business tax pack for your guide, checklist, and workbook for saving time & money on taxes this year.
Without further ado, here is how to create and implement a smarter tax strategy at a startup or small business:
John Finley, CPA & inDinero Tax Manager shares his tax tips for a profitable holiday season
The Holiday season can be stressful, frenetic, and profitable. These tax tips can help to increase profits and reduce stress.
– John Finley, CPA & Tax Manager at inDinero
1. Reserve time for year-end tax planning
The last quarter of the year can be hectic. Make sure to reserve time for year-end tax planning. Meet with your accountant to identify and consider opportunities that may reduce tax liabilities. Also, make sure you are aware of all year-end tax filing requirements and the dates returns and payments are due. Missing a filing deadline or payment due date can be costly.
2. Pay attention to payroll taxes
The Holiday season may require additional workers. Be sure to classify individuals correctly as either employees or contractors. Payroll tax can be complicated, and mistakes are costly. Keep timely and accurate payroll tax records. This will allow you to file and pay on time.
3. Keep good records
This is a particularly busy time of the year. Don’t let your record-keeping slip. Up to date books and records will allow you to monitor the progress of your business, allocate resources wisely and make smart decisions with current data.
4. Don’t use business accounts for personal expenses
You may be entertaining family, friends, business associates and customers. Be sure to segregate business and personal spending. The IRS allows business deductions that are ordinary and necessary. Personal expenses are not deductible. Be sure to keep contemporaneous records to substantiate business deductions.
Recommended Reading: What to do if you commingle personal & business spending
5. Don’t go it alone.
You’ve got enough to do this time of year, and tax compliance is complex and best handled by professionals. Stick to managing and building your business and let your CPA take care of tax. In addition to managing all tax work, a good service provider like inDinero, with an experienced team of CPAs, can identify valuable planning opportunities and keep you in compliance with federal, state and local tax requirements.
BONUS: Two Last-Minute Ways to Save on Taxes Before December 31
If as you get closer to the end of the year and you're bringing in more revenue than expected, you may be worried about incurring a high tax liability. Here are two ways to turn that extra profit into and smiling faces all the way up to the NYE ball drop:
- Give back this #GivingTuesday – Monday, November 29, 2016, marks the 4th annual Giving Tuesday. Read more about how to work a little social responsibility and community giving into your tax strategy here.
- Reward your employees with holiday and performance bonuses – Want to boost workplace morale through the end of the year and into the next? Here’s your guide to cheery employees & lower small business taxes this holiday (read more).