The two hottest small business tax planning topics in these final days of any year are:
- after-the-fact payroll, and
- defined contribution employee benefits.
What this means is that simply by dating and documenting actions taken before December 31, the business and business owner can lock in valuable tax benefits. While some corrective or mediating action may be available after the new year, none is as effective as timely action now. Every year some small businesses scramble to set up a payroll to shelter some income from self-employment tax and some businesses look for large six figure deductions by starting or modifying a pension plan.
From the accountant’s perspective, these business maneuvers require a tight focus in an otherwise hectic season when our minds are pulled in the direction of holiday celebrations. The best approach is to maintain open clear communications in the work process and confirm that the work moves along and is completed as planned. I take extra precautions to stick to a strict work plan to ensure that all required work is completed and checked before year end.
If you have questions about last minute tax savings, act sooner rather than later to ensure that you’ve given yourself the best chance of success.