I know how hectic things are this time of year for most business owners. It is all you can do just to get things done that are needed for today. So many business owners just don’t get around to doing the little things that can save them time and/or money in the long run.
For those of you who understand it is all in the timing, I have a few suggestions of things you might want to consider doing before Dec. 31 comes calling. Of course, all tax related suggestions should be discussed with your accountant to make sure it works for your particular circumstances.
For those business owners who need to purchase large capital equipment, you might want to consider doing it this year. For purchases in 2011, deduction limits under Section 179 have increased to $500,000 as long as you spend less than $2 million in new purchases.
The Section 179 depreciation is scheduled to return to $125,000 in 2012, and the phase out threshold goes down to $500,000. Remember, not only do you have to purchase it by the end of the year, but the equipment must be placed in service by the end of the year.
Every business owner who has inventory needs to take a physical inventory at the year end. Many business owners don’t understand the importance of the physical count. This is the only way for you to really know your cost of goods sold. Only through a physical inventory can you determine how much inventory was lost through theft and or damage.
You might have some obsolete inventory that you need to either heavily discount to move out of the business or donate to charity so you can free the space and move the items off your balance sheet.
If you are self-employed, don’t
forget to plan for retirement and fund it yearly with pre-tax dollars. There are several vehicles you can use to fund your retirement: IRA, Solo 401(k), SIMPLE, SEP IRA and Keogh.
This is definitely an area where you need expert assistance to help navigate the laws and understand which plan best fits you. You need to know the last day you can contribute and still be able to deduct it for tax purposes.
The whole purpose of preparing a budget at the beginning of the year is to compare it to your actual performance to see how you are doing or how you did. I call it the “correct or congratulate” review. What did you do right? Where are your opportunities to improve? What do you need to do more of? What do you need to quit doing?
The power of the budget is in the analysis.
If you have employees, remember they value feedback. The end of the year is a great time to review their performance and discuss opportunities for individual growth, as well as set new goals.
Make sure the goals you set are measurable. Never forget that employees can be your company’s most valuable asset.
To avoid drowning in paperwork, know what you can rid of and what you need to keep. IRS Publication 583, Starting a Business and Keeping Records, is a good source on what you need to keep and for how long.
Once you do your homework and know how long you need to keep what records, eliminate what you can on an annual basis.
So remember, it is well worth the effort to develop and complete a year-end checklist. This will help you save money and better manage your business.
Lynn Vos is area director of the University of Georgia’s Small Business Development Center. Contact her at 912-651-3200.