While each New Year has unique challenges and opportunities, several constants must be met for your business to successfully close out the current year and set the stage for the next one.
This article will cover the steps you need to take to prepare for the next year, including tax and benefit planning. Below, we’ve summarized the essential points you should consider for a tremendous year.
Payroll
Some payroll duties should be completed before the end of the year to set the stage for an easy tax season. Managing your W-2 form and 1099s is a crucial step.
Employees need to get their W-2 forms early in the new year so they can use them to get ready for tax time. You should check your W-2 forms as soon as they become available after the end of the year to ensure all the information is accurate. Check the amounts on the paychecks and make sure that the employee’s name, address, and social security number are correct. The same holds for 1099s issued to independent contractors. If you use a payroll service like Countick, they will take care of this for you; otherwise, double-check the paperwork before distributing it to employees. If you still need to figure out other things, it’s best to talk to a tax professional
Benefits
It’s that time of year again when you must start thinking about what perks to give your employees next year. Making the right choice here is essential since offering competitive incentives can help you find and keep top talent.
Since the availability of specific providers and insurance policies varies from state to state, if employees move out of state for remote work, this may be harder. It may be worthwhile to consult an expert to make an informed decision.
Budgeting
In times of economic uncertainty, a well-thought-out and detailed budget are even more crucial to the success of a business. You can only fulfill your operational goals or keep the lights on if you know how much money you need to operate, and you can only do both with a budget.
In the fourth quarter, you should begin planning your annual budget. Here is some simple advice on how to create a solid financial plan:
• Make accurate predictions by making use of the most up-to-date information. It would be best if you could rely on the numbers in your books and, ideally, some historical context.
• Think about the possible results of the changes you expect to happen in the company or the ongoing trends you expect to see. This can be useful for projecting the trajectory of your company over the next 12 months.
• Prepare for a range of outcomes, including a prolonged economic downturn. Consider how revenue, hiring, and customer attrition would change depending on the economy.
If a company has yet to make a budget, it may be hard to make one that works well. If you need more confidence in handling the money, ask a leader in the field for help.
Completing Your Books
An essential part of getting ready for taxes is closing the books and finishing the year’s financial statements.
During the closing process, you or your bookkeepers check the books to ensure the numbers add up. You also take care of loose ends, like invoices or contracts, that haven’t been paid. The year-end close can be a quick review or a tedious grind, depending on how effectively the books are maintained throughout the year.
Closing the books is a necessary step before starting your taxes. If you think your books need many changes before the end of the year, give yourself plenty of time before you file your taxes. A qualified bookkeeper will be able to assist you with this.
Staying on top of your books throughout the year is the best action. Good financial statements give you information that makes running your business all year easier. This is a much more significant benefit than just avoiding a rush at tax time.
Taxes
You may have a tax preparer if you have filed business taxes. However, if you don’t have one or are interested in making a change, you should begin your search immediately.
Remember that the intricacy of your tax issue may have increased since you handled it in your last year (especially if employees moved to different states), you may want to consult with a professional for 2023 if your business handled taxes in its last year.
For the most part, you’ll be able to fill in the blanks on your tax return using data from your books. When looking for people to do your taxes, ask if and how they will talk to your bookkeeper to get the necessary information. To save time and effort, you and your bookkeeper or tax preparer can work together under the same roof if your bookkeeper or tax preparer offers additional services, such as Countick.
However, if you employ the services of two distinct companies, you should verify their individual needs and the nature of their cooperation or prepare to play the intermediary role.
Finally, start early. If you intend to apply for complicated tax credits like the research and development tax credit. It takes time and works to keep accurate records and gather all the proof needed to qualify actions and costs. The Internal Revenue Service also often investigates claims for R&D tax credits thoroughly. Set aside sufficient time to construct your case thoroughly since doing so will make you far more prepared for any audit that might come your way.
