Why Accurate Bookkeeping Matters for Year-End Tax Planning

Tax preparation primarily looks backward. Once the year is over, we determine what happened and report it appropriately.

Year-end tax planning looks forward while there is still time to act.

Depending on the taxpayer’s circumstances, planning before year-end may include evaluating areas such as:

• the timing of qualifying business expenditures;
• equipment purchases and applicable depreciation options;
• retirement-plan contributions or plan establishment requirements;
• S corporation payroll and reasonable compensation;
• timing of income or expenses when the taxpayer’s accounting method and tax rules permit it;
• estimated tax payments and withholding; and
• other business- or taxpayer-specific strategies.

Not every strategy applies to every business, and spending money solely to obtain a deduction does not necessarily make financial sense. The purpose of planning is to evaluate the available options using the business owner’s actual financial and tax situation. Our year-end tax planning services focus on evaluating the taxpayer’s current position and applicable planning opportunities while there is still time to act.

And some opportunities have deadlines that occur before the tax return is prepared.