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5 Tax and Financial Planning Actions for the New Year

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5 Tax and Financial Planning Actions for the New Year

By BarbaraWeltman, Guest Blogger
Published: December 19, 2013

With 2013 almost over, it’s time to focus on 2014 and get the year started off right. Here are some actions to take now or in early January that will help you optimize your tax and financial results for the coming year.

1.  Revisit your recordkeeping practices

Records are vital for both business and tax purposes. They help know whether or not you’re profitable and provide key information to help you take business actions, such as adjusting prices, cutting expenses, or raising money.

What’s more, in order to take all the deductions and credits to which your business is entitled in 2014, you’ll need good books and records. Often business owners fail to pay attention to this detail until it’s too late and the IRS is questioning write-offs claimed on a return.

Set up a recordkeeping system that satisfies tax law requirements, and make sure that employees know what to do. Check IRS Publication 583 for details on recordkeeping rules for tax purposes. Consider using apps that can help with recordkeeping, such as those for capturing receipts for travel and entertainment expenses. Some may be available for use with, or provided by, your current bookkeeping software or cloud solution.

2.  Note your odometer on January 1

If you use your personal vehicle for business, you can deduct the cost of business driving only if you have the records to back this up. This means noting your odometer at the start of the year and then tracking your business trips regularly.

Again, consider using an app for tracking mileage. Some are free; others entail a modest fee.

3.  Review your business plan

Your business plan should include projections for sales and expenses in the coming year. If you haven’t yet updated these for 2014, do so now, advises SBA blogger Tim Berry. The projections aren’t carved in stone, but they serve as a very useful benchmark against which to measure your results.

It’s a good idea to check projections monthly so you can make adjustments as needed in a timely manner. For example, if you’ve been expecting gasoline prices to remain low but they suddenly spike, you may need to reduce another expense, such as advertising, to keep your budget in check.

SBA tools can help you create a business plan.

4.  Fix your withholding/estimated taxes

If you work for your corporation, make sure that withholding for 2014 will cover your projected tax obligations. Be sure to take into account the 0.9% additional Medicare tax on taxable compensation over a threshold amount that depends on your filing status (e.g., $200,000 for singles; $250,000 for joint filers) as well as the 3.8% additional Medicare tax on net investment income.

If you’re self-employed, your estimated taxes will have to cover roughly what you expect to owe for the year. These taxes should include not only the additional Medicare taxes if you’re a high-income taxpayer, but also self-employment taxes (to cover your Social Security and basic Medicare tax obligations).

The IRS offers guidance on withholding and estimated taxes in Publication 505; the 2014 version should be available early in 2014.

5. Plan to work closely with your tax and financial advisors

Make it a New Year’s resolution to stay in touch regularly with these professionals. While there are fees for these services, likely they will save you money and trouble in the long run.

Conclusion

The economy and taxes are continually changing. Make it your top resolution to stay informed about new developments that can affect your business and impact your actions throughout the year.

About the Author:

Barbara Weltman

Guest Blogger

Barbara Weltman is an attorney, prolific author with such titles as J.K. Lasser's Small Business Taxes, J.K. Lasser's Guide to Self-Employment, and Smooth Failing as well as a trusted professional advocate for small businesses and entrepreneurs. She is also the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® and host of Build Your Business Radio. She has been included in the List of 100 Small Business Influencers for three years in a row. Follow her on Twitter: @BarbaraWeltman.

Comments:

Its really great to see this article. Thanks
Hi Barbara, Great financial planning. I think this way we can also easily minimize our business cost. Am I right. Thank you. Redards, shuvro chowdhury
Nice blog and nice post! The topic here I found is really effective.
Great advice. Tax season is a scary event. Any advice in terms of a useful software to track records.
Truly informative post as what to be done in coming year, the main criteria should be to save tax through useful means. But consultations needs to be carried with corrective dept., so that people finds eligible ways to save & pay tax properly for betterment of the country.
Stick to your basic business practices and you find your self out of any tax and finance related issue. Being a trusted business man is like school going kids. Follow your teachers and guidelines, you will be having good grades.
Useful information. Lucky me I found your web site accidentally, and I'm surprised why this twist of fate didn't came about in advance! I bookmarked it.
I think all actions which are given by you its really helpful for our business. Thank you so much.
very useful to my business! Great thanks
Taxi, so i say very hard everything when my life ... at http://www.dailydenled.com

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