Fall Tax Planning Starts Now

Fall Tax Planning Starts Now

Setting aside time to prepare for your upcoming tax obligations can be the key to a stress-free tax season.

As a business owner, starting early on taxes will give you an advantage. Fall is the perfect time of year to get a head start on planning. Scheduling a tax planning session before taxes are actually due could help save time in the long run and prevent any last-minute scrambling to meet deadlines. Work with your accountant or tax advisor to ensure you’ll have everything you need for a smooth process.   

Why Start Planning in the Fall?   

Starting to work on your taxes in the fall is one of the best things you can do for your business. Reviewing before the year’s end leaves room to make changes that could better position you to meet financial goals. For instance, if you are staging for a Q1 entity change for next year, some of that work can be done now so you can hit the ground running in the new year. Waiting until January 1st is too late, and waiting until April 15th is beyond too late. By meeting with your accounting team in early Q4, you will have more opportunities to make adjustments, should any be needed.   

For example, if you need new equipment and are looking to reduce taxable income for the year, you might choose to buy that equipment and put it into service prior to 12/31. Then, you’d be able to deduct either the cost or the depreciation for your current fiscal year. Alternatively, if you are looking to secure a loan, you may want to push that purchase until early next year to keep your net profit up. As always, meet with your financial advisor before making any big financial commitments like these. 

After January 1st, your spending, income, and choices will already count towards your 2022 totals. Waiting could cost you big or leave you well off from your business goals.   

How to Get Started on Fall Tax Planning  

Scheduling a tax planning appointment with a professional is essential if you want to get ahead on your taxes. Make an appointment as soon as you can, because tax professionals are typically strapped for time, and especially this year due to the complex 2020 tax season and IRS delays. Send your accountant or advisor any questions, concerns, and ideas in advance of the meeting so they can complete any necessary research. Also make your well-organized, reconciled, and complete data available beforehand so they have time to see where you are at. Your meeting should be for conversation, delivery of ideas, and collaboration—not for doing the math. 

What to Bring to a Fall Tax Planning Meeting  

Bringing the right data to your planning meeting is important. Any reconciliations you have should be complete through the end of the prior period. Make sure to clean up uncategorized or unallocated transactions to avoid misrepresentation—for example, $10k in uncategorized assets can swing the advice your tax professional gives you. If you are on an accrual basis, make your adjustments. Also be sure to include a recent payroll report with official YTD wages if you are an S-corp

You’ll want to bring any necessary bookkeeping data that includes information on big changes or purchases such as: 

  • Getting married
  • Having a baby
  • Buying an investment property
  • Moving to a different state
  • Inheriting money  

Let your advisor know if you’ve had any big changes like these as they can impact your tax planning. A tax professional’s job is to advise you on the best path forward, so the more data they have, the better.    

What Does a Successful Planning Session Look Like? 

A tax planning session is the time to collaborate with your tax professional. If you aren’t participating in the conversation, your time together  isn’t being maximized. Make sure you understand what’s being talked about, and don’t be afraid to ask questions. Bring members of your team that may be asked to work on the follow-through or who may be able to answer financial questions you can’t (think bookkeeper, CFO, or staff accountant). Make a point to walk away with a to-do list that has action items—a tax planning session is only successful if you take your tax professional’s advice afterward.     

What to do After a Planning Session  

After a planning session, you may want to adjust your timeline and goals, and take action where your tax professional has asked you to. Matters like large fixed asset purchases, contracts, and setting up retirement plans all may take longer than you think because it’s the end of the year. Staff shortages, shipping delays, and shortages of inventory can also hold you up, which is why it’s so important for your business that you get started early.  

After your planning session, stay in touch with your tax professional regarding your to-do list as the year comes to a close, especially if something changes. Thinking ahead when it comes to your taxes will ease some of your business-related stress as the year starts to wrap up.     


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