As the year winds down, Thanksgiving and holiday festivities are upon us. While this season is full of excitement, it’s also the perfect time to prepare for tax season. The hustle and bustle of the holidays may make it tempting to procrastinate, but taking action now will save you time, stress, and money when tax deadlines roll around.
In this guide, we’ll walk you through actionable steps to ensure you’re prepared for 2024 tax filings and can set your business up for financial success in the coming year.
Step 1: Catch Up on Your 2024 Financials
If your financial records for 2024 are incomplete, now is the time to fix that. Up-to-date financials are the foundation of a smooth tax season. Here’s what you need to do:
- Reconcile Your Bank Accounts: Ensure that all transactions match your statements and are recorded properly.
- Review Your Profit and Loss Statement: Look at your income and expenses to identify any inaccuracies or missing entries.
- Seek Professional Help: If you’re overwhelmed, consider working with a bookkeeper or accountant to catch up.
✅ Tip: Make it a habit to review your financials monthly or quarterly throughout the year to avoid this last-minute scramble in the future.
Step 2: Prepare Your 1099s
If you’ve hired contractors in 2024, issuing 1099 forms is a crucial step. These forms must be filed by the end of January, so start preparing now:
- Identify Contractors: Review your records to determine who you paid $600 or more during the year.
- Collect W-9 Forms: If you haven’t already, request completed W-9 forms from all contractors. This ensures you have their tax information.
- Leverage Technology: Use tools like QuickBooks or Tax1099 to streamline the 1099 process. These platforms can track contractor payments and issue forms electronically or via mail.
❗ Warning: Without issuing 1099s, the IRS could disallow deductions for contractor payments, which could result in higher taxes.
✅ Pro Tip: Require W-9s from contractors before issuing their first payment to avoid chasing them down at year-end.
Step 3: Evaluate Your CPA Relationship
If your current CPA isn’t meeting your needs, now is the perfect time to explore other options. The right CPA can help you:
- Optimize your taxes through strategic planning.
- Provide business-focused insights and guidance.
- Ensure compliance while maximizing deductions.
When evaluating potential CPAs, ask the following questions:
- How long have you been working with business clients?
- What tax strategies do you typically recommend?
- Can you provide examples of how you’ve helped similar businesses save on taxes?
✅ Pro Tip: Look for a CPA who specializes in business taxes and has experience with advanced strategies like retirement planning, cost segregation studies, and R&D tax credits.
Step 4: Leverage Tax Strategies Before Year-End
The tax code is full of opportunities for business owners to save money. Here are a few strategies to consider implementing before the end of 2024:
- Section 179 Deductions: Invest in new equipment or technology and take advantage of immediate deductions.
- Retirement Plans: Set up a SIMPLE IRA, SEP IRA, or 401(k) to reduce taxable income while saving for the future.
- R&D Tax Credits: If your business has engaged in innovation or process improvements, you may qualify for a valuable tax credit.
✅ Pro Tip: Consult with a tax strategist to determine which deductions and credits are right for your business.
Step 5: Start 2025 on the Right Foot
Preparing for taxes isn’t just about compliance; it’s an opportunity to set your business up for long-term financial success. By starting the new year with a clear financial plan, you can focus on growth rather than worrying about taxes.
Here’s how:
- Create a Financial Calendar: Schedule monthly reviews of your financials and important tax deadlines.
- Work with Experts: Partner with a CPA who understands your business and can proactively suggest strategies.
- Build Tax Savings into Your Budget: Plan for taxes throughout the year to avoid surprises.
Final Thoughts
Taking these steps now will ensure that tax season is smooth, stress-free, and even rewarding. From catching up on your financials to implementing smart tax strategies, a little preparation goes a long way.
If you need help getting organized, issuing 1099s, or creating a tax strategy tailored to your business, we’d love to help. Just schedule a consultation.
This holiday season, give yourself the gift of financial peace of mind. With the right systems in place, you’ll be ready to tackle 2025 with confidence.
🎉 Happy Thanksgiving and Happy Holidays!
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