15 things to do before the end of the year

When December rolls around, I think about all the year-end things to do in my small business. Yes, I know, I should be dreaming about Santa Claus and sleighs, vacations and hot chocolate, but I’m thinking about how to make or save more money – and most importantly how to save on taxes – in these last days of 2021.

If you, too, would rather make the most of this year rather than dealing with parents who came over Thanksgiving and won’t be leaving until January 2, here are 15 things to do now.

1. “Speed ​​up spending, delay income.” It’s the year-end tax mantra to help lower your 2021 tax bill. In most cases, you want to reduce 2021 income (without actually hurting your wallet, of course). If you run your business on a in cash rather than accrual accounting, you can send your December invoices at the end of the month to delay payment until 2021. This way you will defer the tax levy for one year. If you can legally write off an expense in December, you’ll get the deduction a year sooner.

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2. Call your accountant. Every small business is unique. Get the tax advice that’s right for your business. You may have had lower profits in 2021 than you expected in 2022. Or you may be entitled to special tax benefits (see below).

3. Learn about the Employee retention credit. It disappears on December 31! If you’ve suffered significant business losses or been forced to close due to COVID and have retained salaried employees, you may be eligible for a federal tax credit. So make that call and ask your accountant if you qualify.

4. Set up a retirement account. While you have until the tax filing deadline to set up and contribute to a SEP-IRA or a solo 401K, why not take care of it now and get a head start on your retirement planning?

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5. Buy those new computers or software. Come on, are you still using those old 2010 PCs? It’s time to upgrade, especially if you’ve had a good year. As a general rule, computers should be depreciated over time, but with Charging of article 179, you can probably delete them all this year.

6. Buy a vehicle. If you need a new car, van, or truck for your business, you may be able to write off a large portion of the cost, or even the full cost, of a vehicle weighing 6,000 lbs or more. It’s due to something called “bonus depreciation. “If you need a vehicle, get advice from your accountant quickly.

7. Set up new banking and operational services now. If you are planning to change banks or want new accounting, HR, courier, or other services, the easiest way is to make the switch on January 1. So prepare it now.

8. Switch to the annual subscriptions of your online applications (“SaaS”). If you are using cloud-based business apps, be sure to pay annually rather than monthly to save money. If you pay now, you can deduct these expenses this year. (I use a bunch of them, like my accounting, email newsletter, website hosting, payroll, and many other services.)

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9. Buy inventory. While there are limits to how you can write off inventory, especially if you are using accrual accounting, if you can legally deduct some now for inventory you know you need, this is one way. get a deduction sooner.

10. Cancel any subscriptions you are not using. This includes any additional licenses you pay for cloud-based apps.

11. Offer your customers end-of-year offers. While you may want to defer your income for tax purposes, it is always good to earn more money. So if you have extra inventory or just want to get more money into your account, consider last minute deals.

12. Use your health care dollars. In many health, dental, and vision plans, you are entitled to certain annual benefits that expire on December 31. Use them now.

13. Thank your customers, employees and business friends. Your success depends on it. Let them know you appreciate it.

14. Make charitable donations. Now is a good time to remember others. And you go benefit from a tax deduction, too much.

15. Pat yourself on the back. The past two years have been tough – really tough. You’ve been through a lot. You deserve recognition. Small business owners don’t have anyone else to say ‘good job’, so I’ll do it, ‘Great job, small business owner! But be sure to congratulate yourself as well.

â–º Special tax reduction: Here is an additional incentive to donate this year