November 27, 2013
Year End Business Checklist
It's that time of year again when the leaves have fallen, the air is crisp and we are gearing up for the upcoming tax season. While the holidays will be upon us shortly, there is still time before the close of the 2013 calendar year to perform some business and tax related planning. To that end, we are providing you with a listing of items to consider before year end.
- Review your company's YTD financial statements - Is your bookkeeping and accounting up to date? Do the results make sense in relation to the prior year and your current business environment? Have transactions been recorded to the proper accounts? Want help with this process? Sechrest & Bloom is offering a FREE half hour accounting records review to all of our business clients. Call Patty at 978-263-7771 for details!
- Check the YTD net income on your P&L - Where do you stand for the year? If you have a larger than expected profit, consider making a major purchase that can be expensed this year. The section 179 deduction allows taxpayers to expense certain tangible personal property in the year placed in service rather than depreciating over the asset's useful life. The section 179 limit is $500K for 2013 but is set to go back down to $25K for 2014 and future years unless extended by Congress. Additionally, the fixed asset capitalization threshold has been lowered by the new capitalization regulations that take effect January 1, 2014. Generally speaking, any purchase of tangible property that exceeds $500 must be capitalized and depreciated beginning in 2014.
- Form 1099-MISC reporting - Do you have all of the necessary information in your accounting system to complete Forms 1099-MISC? These forms must be issued to all individuals or unincorporated entities your business pays $600 or more for services or rents during a calendar year. Note, however, that payments made with a credit or debit card are NOT subject to reporting on Form 1099-MISC as such payments are now reported by the payment settlement entity on Form 1099-K.For all vendors that meet these criteria, make sure the vendor profile is complete with name, address and SSN/EIN. If not, gather the information before year end as these forms must be mailed to the recipients by January 31st. Sechrest & Bloom is available to prepare 1099-MISC forms on your behalf but will need all information no later than January 15th.
- Consider year end bonuses and retirement plan contributions - Year end bonuses are a great way to reward employees for a job well done. Please remember that such amounts must be included in an employee's W-2 so be sure to carefully report the information to your payroll service provider. Retirement plan contributions (profit sharing, pension, SEP, employer 401(K) and SIMPLE plan matching contributions) are a great way to save for retirement on a tax deferred basis and can also be an effective tool for managing your company's taxable income. Did you know that retirement plan contributions (excluding employee deferrals) do not need to be funded until your tax return is filed or due, even for a cash basis filer?
- W-2 Reporting - As a business owner, certain items must be included in your W-2 as other compensation not subject to Social Security or Medicare taxes. If your business is an S Corporation, the cost of employer paid health and dental insurance premiums must be included in the W-2s of all > 2% S Corp shareholder/employees. The personal use of a company owned automobile is a taxable fringe benefit that must be included in an employee's W-2 as well. Forgiveness of employee loans is also taxable compensation. It's expensive to correct W-2s and payroll reports, so check soon with your payroll service provider to find out their reporting deadline. If you have specific questions regarding what items may need to be included in your company's W-2s, please contact us.
- Inventory - If your company has inventory, take a physical inventory count prior to year end and make any necessary adjustments for book to physical count differences in your accounting system before year end.
- Accomplishments - List all of your company's accomplishments during the year and share with your staff. They will appreciate this and feel part of your team.
- Website - Check all of the links on your company website and be sure they are active. Also, review your website content and update as appropriate.
- Goal setting - Write out goals and objectives for 2014.
Call us for help if you need more information or guidance on completing the steps above.
Year end tax packages will be mailed the week of December 9th. Please be on the lookout and review prior to year end. A little advanced planning could save your company money by reducing your tax liability and/or tax preparation costs.
We wish you an enjoyable Thanksgiving holiday spent with family and friends!