Year-End Financial and Tax Planning Checklist for Businesses

As the year comes to a close and tax season approaches, it’s an important time to review your business’s finances. Planning ahead now can save you money and stress down the road. Here’s a checklist of important tax planning and financial steps to take when preparing for the new year.

1. Review the past year’s financial statements

Use this time to take a close look at your past income and expenses to see where you can improve or cut back. Revisit your business goals to see how well you’ve met them over the last year. A focused review will help you set realistic goals for the upcoming year.

2. Talk to your accountant or tax advisor

Professionals with tax expertise can help you understand what expenses are tax-deductible and how to minimize tax liability down the road. Need to prepare for upcoming audits or other financial compliance issues? Talking to an accountant or tax advisor is the best first step.

3. Review your insurance coverage

Make sure your business is properly covered in case of an accident, natural disaster, or other unforeseen event. Even if you’re satisfied with what you have, it’s smart to shop around for better insurance rates or coverage options.

4. Update your accounting software

Still using manual accounting methods? Take advantage of this time to switch to an automated accounting system. Not only will it save you man hours, the right software will help keep better track of your finances and avoid errors. Be sure to do your research before picking a program.

5. Create a budget for the upcoming year

Once you’ve reviewed your financial statements and talked to your accountant, you should have a good idea of your projected cash flow. Use this information to create or update your budget to ensure your business is profitable in the new year.

What your business needs for tax planning

Running a business requires additional forms and documentation. Every business is different, so pay attention to the categories that apply to yours. Remember, your business type will require different documentation and deadlines. Always talk to your SME CPA before making any major financial decisions.

Income information

All businesses must file an annual income tax return, except for partnerships, which file an information return. When meeting with your tax professional, bring a profit and loss statement, summarizing the past year’s cash flow. It’s an important tool for tracking revenue and expenses and vital for tax season.

Employee compensation

Being an employer requires important tax documentation. A W-2 must be submitted for every employee and 1099-MISC forms are needed for independent contractors you hire.

Excise taxes

Excise taxes are a required burden for some companies. It could be that your business uses a certain fuel or a high number of heavy vehicles on public highways. Review the excise tax categories and make sure you’re prepared.

Business deductions

To save what money you can, you’ll need documentation of any expenditures that could lower your taxable income. This could include:

• Typical, necessary business expenses.
• Costs of goods sold.
• Charitable donations.
• Losses from casualties or theft.

Previously paid taxes

To avoid overpaying, you’ll want records of any taxes you’ve already paid, like state and local income taxes or real estate taxes. You’ll also want documentation of any prior year refund applied to the current year or any filing extensions granted.

Key tax planning dates

To finalize your prep, mark the key dates of tax season on your calendar. Be sure to consult your tax professional ahead of your most important deadlines.

• January 31, 2023: All W-2s for your employees must be filed, as well as any 1099-MISC forms for independent contractors.
• March 15, 2023: Taxes and forms are due for business types such as partnerships, multi-member LLCs, and S-corporations.
• April 18, 2023: File your tax return! This is also the deadline for requesting an extension if you need more time.
• September 15, 2023: Taxes are due for those partnerships and S-corporations who requested an extension.
• October 16, 2023: Everyone else who requested an extension must file by this deadline.

If your business files taxes by fiscal year, rather than calendar year, you’ll follow a different date set. Depending on your business type, your return will be due the 15th day of the third or fourth month after the fiscal year ends.

Start tax planning now to avoid stress later

The year-end is an important opportunity for reviewing your business’s past and planning for the future. Use this checklist as a preparation starting point. Even more importantly, take advantage of this time by getting in touch with your SME CPA for a jump start on financial planning before the new year.