Financial Situation | Basis Ventures

5 Year-end Small Business Tax Tips From Kingston Accountants

1. Update Your Accounting: It’s important as part of your year-end tax strategy to have a good understanding of your company’s financial situation. Spend extra time ensuring your books are up-to-date and accurate. It won’t hurt to plan time with your accountant for year-end advice, particular to your operations.

2. Defer Income: Any payments your company can receive during the first week of January as opposed to December cuts your tax bill. Every cent deferred until January 2008 will not owe taxes until April 2009. Any deferral strategy will depend on your profit and losses for the year and business legal structure (LLC, partnership, corporation, etc.)

Depending on your income tax rates in the foreseeable new year, deferral of income can make the best sense for many sole proprietors, partnerships, LLC’s, and S corporations. Ensure your cash flow can handle the deferred income.

Don’t forget to push any early 2010 charitable donations back to 2009. Make sure you get a receipt for the tax deduction.

3. Increase Expenses: Purchase items your business will require in the immediate future to maximize deductions for this year. If you can see a need for goods and services in the first quarter of the new year, buy them now, if cash flow permits.

Consider the following items for expenses:

1. Office Supplies: Stock up on fax paper, printer cartridges, stationary, and other office items.
2. Pay Bills Early: Pay your bills before the new year in areas such as; cell services, subscriptions, rent, insurance, and utilities.
3. Equipment Purchases: If you will be buying new office equipment, consider purchasing now. You’ll have to decide whether an immediate write off is best or spread out the depreciation over years. Consult with an accountant to examine your circumstance and company structure to maximize your deductions. In addition, your equipment will have to be in your office, “in use” by year-end.
4. Other Items: This category includes: pre-payment of subscriptions, travel bookings, equipment repairs, and maintenance.

4. Inventory Write-Offs: Depending on your accounting methods, you may wish to check inventory for goods that have been damaged or have become obsolete. The drop in market value of the inventory can provide your company with added deductions.

5. Contribute to a Retirement Plan: Make payments to your retirement plan or set one up before the year-end to reduce your income for this year. Check the contribution limits for your type of plan. In Canada: an RRSP. Discuss the best strategy with your financial planner or accountant.

These year-end tax tips will apply differently to each business owner’s situation and accounting method. The cash method of accounting allows for deductions and income reported for the year they are paid or received. The accrual accounting method applies income and deductions in the year incurred. Take the time to review the best strategy with a professional advisor and make the most of the year-end tax planning for your small business.

If you are looking for ways to repair credit, you are not alone. Many Americans are finding that they are left with a damaged or negligent credit file due to circumstances that are simply beyond their control – such as job loss or layoff, illness, injury, or other misfortunes that gave them no alternative than to be late on a few payments. Perhaps you have accounts in collections, judgments, liens, and charge-offs on your credit report and need a quick way to pull yourself up from the mess you are in. Let’s look at strategies that work to repair credit:

Repair Credit Strategy: Pull Your Credit Report and Carefully Examine Your Accounts

Many people who are looking to repair credit are shocked to learn that a large number of credit reports actually contain erroneous information that can be deleted by a simple dispute. How accurate is your credit report? Find out by pulling yours from Trans Union, Equifax, and Experian.

Why pull all three? Different bureaus often have a different account of your credit performance and pulling all three helps you halt damaging errors in their tracks. Examine all of the information that is being reported about you- not just the accounts that you have or have had – but the personal information that is on record, as well. Perhaps your name is John Doe and your record contains information for three other John Does – only a careful examination on your part will unearth inaccuracies, duplications, and errors that can raise your score substantially if deleted.

Repair Credit Strategy: Explain Yourself

Obviously there are items on your credit report that are accurate, perhaps even all of them. But one of your rights as a borrower and a consumer is the right to attach a letter of explanation to the item that is on file.

This letter should be carefully composed and it should outline and detail the circumstances of your financial situation, including any extenuating circumstances, that you would like potential creditors and lenders to be aware of when evaluating your creditworthiness. Although the act of explaining yourself formally will not raise your credit score, it will give you an opportunity to shed light on your financial situation that might appeal to certain lenders.

Repair Credit Strategy: Maintenance of Open Accounts

Maintaining your current accounts is important – especially for older accounts that you have established for a long period of time. Maintain these older accounts by making small purchases and paying the purchases off each month. This is a great way to lengthen the average length of credit history, which is an important factor in your credit score.

Repair Credit Strategy: Work with Collectors

If you have accounts in collection, always make your best effort to arrange for payments that you can afford. Many debt collectors are looking to resolve the issue of your collection amicably, which can work to your advantage if you will agree to send in a budget-friendly payment each month that will keep them from causing more damage to your credit report.