How to Prepare Your Business for End-of-Year Tax Savings Through the 4th Quarter
It is the end of the 3rd quarter. As summer continues to move forward, you should begin to draft plans for your 4th quarter and how to plan for tax savings for the end of the year. While it may seem a bit premature, summer comes and goes fairly quickly. Before you know it, September will be here. It will be time to think about upcoming holiday bonuses, paid time off for employees, gifts for clients, and a holiday bonus and party to ensure you get all the tax savings your company deserves throughout the fourth quarter and before the end of the year.
Many companies begin a Christmas in July blowout sale this time of year. It allows employers an opportunity to order supplies and purchase small client gifts now, at discounted prices, for the end of the year. It also forces employers to think about the holidays six months before they arrive.
While Christmas in July may seem like an annoying idea that simply works to get consumers to spend money, it is actually a great way to remind business owners that the 4th quarter should be about business tax savings, from the beginning of September until the end of the year. Read on to learn some great tax-saving strategies that you can begin in September and carry out through the end of the year.
1. Reevaluate Employee Benefits for the Upcoming Year
September is a wonderful time to review your employee benefits package. Take a look at the overall costs associated with your employee benefits and whether you should change your benefits to a more cost-effective or comprehensive package. Review the tax implications and savings of your benefits plans to see if a change would not only benefit your employees but benefit your bottom line.
You may find that you are missing large tax savings by limiting some of your employee benefits. If you do not work with a benefits plan administrator, you may want to reconsider this option. A plan administrator can help ensure you and your employees receive the best possible benefits for your company and budget.
2. Review Your Payroll Taxes
Payroll taxes can be quite complicated. It is easy to overpay or underpay them for both your company and your employees. The 4th quarter is a great time to review your payroll taxes to ensure you are paying them appropriately so you do not owe a large bill at the end of the year. However, it is also good to ensure you are not overpaying your payroll taxes, so you are not shorting yourself money throughout the year.
A qualified payroll company can help you pay your payroll taxes accurately and keep money in your company and employees’ pockets, where it belongs.
3. Pay Off Your Accounts Payables
Take the 4th quarter to pay off your accounts payables. Those large annual bills are best paid throughout the 4th quarter. They help offset your annual revenue to lower your tax bill. As you get towards the end of the 4th quarter, the last-minute payment of these bills will help you spend that extra income on a business expense you can write off.
In the same vein, it is the perfect time to make the big purchase you have held off on making. For instance, if you need to replace the computer network within the company, the end of the year is a great time to make that investment. As a necessary business expense, it is a wonderful write-off on your taxes that will also help your business succeed in the upcoming year.
4. Let Your Employees and Customers Know They Are Appreciated
Employee bonuses and customer gifts are a wonderful way to show everyone how much they mean to the company. However, more importantly, they are a great way to offset your tax bill. Employee bonuses and customer gifts are wonderful tax write-offs.
Your employees can use their bonuses to make their holiday season a little better. However, at the same time, you can use the bonuses as an additional tax benefit to offset your annual revenue.
Many clients enjoy a token of appreciation that comes along with client appreciation gifts. Client appreciation gifts can be given t any time throughout the 4th quarter to thank clients and offset your quarterly or annual tax bill. Sometimes, standing out by offering a gift at Halloween or Thanksgiving will help keep your customers happy. At the same time, you can spend the money when you have it and make sure you have an expense to help you save money on taxes.
While July may seem a little early to think about 4th quarter tax savings, the end of the year will be here before you know it. Planning ahead to anticipate fourth-quarter expenses and tax strategies will help your business glide through the end of the year with success.
The HR and Benefits specialists and Workplace HCM can help you ensure you take care of your employees and your bottom line before the end of the year. Call us at 856.334.9711 to learn more about tax savings strategies that help your bottom line and your employees succeed.