End Of Year Business Spending in Lincoln, NE 2017
We are quickly approaching the end of the year, and many business owners are already preparing for the upcoming tax season. During a time when spending is most often thought about in relation to the holidays, it’s also a common time for business spending, depending on where you are at with your budget and in turn, how that will impact your taxes.
First, it’s a matter of to spend or not to spend, and which would be in your best interest. Then, if it’s determined you should indeed spend, exactly how much to spend in order to yield the best results for your business. Finally, you must decide what to spend that money on. So before you get spend happy, it’s important to work closely with a professional to determine your strategy moving forward.
For example, if your profits for the year are larger than expected, it might be a good time to make some larger purchases for which you can record future depreciation. Your accountant will be able to advise you as to if you have the cash on hand to make those purchases and to ensure that you fully understand the depreciation rules.
“Since each client’s business is unique, knowing their business and what would work for them is important for year-end planning,” advises Kelly Barada, CPA with SP Group, P.C. “We take a close look at the activity for the current year and discuss projections for the coming year. An important question we address is, ‘Does it make sense to spend money this year to save on taxes or does that have a negative impact on the next year?’ Sometimes spending money to save money is not a great option or fit for our clients. We address each client individually and look at their overall situation when making recommendations for year-end planning. Going through this process together enables us to build long-term relationships with our clients and their families that lead to sustained success.
When we look at the client’s books for the year and what the next year may look like, we also discuss their goals. Once those goals are established, our team examines options that will benefit them best. Sometimes these options include purchasing new equipment, paying expenses ahead of time, paying out bonuses, and setting up or putting money into a retirement plan. As a result of the unique circumstances each client brings to the table, it is important not only to look at the business year-end, but also their personal tax returns. This presents options for end-of-year business expenses, too.
If the current year has higher income compared to what the client thinks it will be in the future years, then paying ahead can benefit a cash-basis business for the current year to offset the higher income. It really depends on the goals the client is trying to achieve. There are many ways to reduce income in the current year, which reduces tax due. We look at those options in relation to each client and what would be of the most benefit to them.”
She concludes, “At SP Group, P.C. we want to build a strong and long-lasting relationship as our team develops a plan for our clients’ success. SP Group, P.C., in partnership with our clients, reviews their tax situation before year-end to alleviate any surprises come April 15th. We have found this brings extra value to our clients that will have a positive impact on their future. Our pride is in the success of our clients and the path we have traveled together as we’ve grown alongside them. We feel our four core values: Relationships, The Power of Team, Life/Work Balance, and Competitiveness combine to provide the extra insight necessary to maximize the benefits of year-end planning.
Our team of seasoned and knowledgeable professionals wants to make the experience simple and hassle-free. We do so by providing our clients with the service they deserve from a team that truly cares about them. I believe our firm does a really good job of working with our clients by planning before year-end arrives. Tax planning, and looking at the whole picture in doing so, is an important service we offer to our clients. We analyze different options to save on taxes and discuss the current year along with what they expect in future years. We recommend starting this discussion at the beginning of November each year so there is adequate time to evaluate the options and then to act on the decisions that are made before year-end. That being said, we also suggest that our clients contact us throughout the year as things come up so we can look at how they affect the tax year involved.”
As for other professionals you’d want to consult with or utilize related to end-of-year spending, when it comes to having enough cash flow to use towards purchases before the end of the year, collecting on accounts receivable is one of the best ways to make that happen. By enlisting the help of a professional, such as AR Solutions, you’ll have someone dedicated to working on that aspect of the business while you are still fully attentive to the other things that need to be done prior to year-end.
Once you have all of the information and access to the necessary funds, if you get the go-ahead, time is of the essence to spend those dollars. While many business owners have a good idea of where they would want to allocate the funds, if you don’t, although there’s a sense of urgency there’s no need to throw money around haphazardly just to reach a certain dollar amount spent.
There are items for which it’s a certainty that they’ll be needed and used, so you can’t go wrong as long as the amount purchased is kept somewhat in moderation compared to what you would normally use. This might include things for your facility such as light bulbs or toilet paper, or office supplies such as printer cartridges, paper, and you can never have enough pens (where do they all go?).
You can also purchase gift cards, which can be used at a later date when the need arises. This goes for office supplies, but anything related to your business, really. For example, you could purchase a gift card to a business location where you frequently meet with customers or colleagues, or to a venue where you like to entertain clients.
Another wise investment to make in your business that can pay dividends is in marketing. It’s an area that many businesses and organizations tend to neglect, much to their detriment. Why not put your excess funds to work by finding ways to generate top-of-mind recognition and building out strategies throughout the coming year to reach your target audience and interact with them? There’s always something new you can be doing to attract customers and influence those in the marketplace who you want to do business with – capitalize on an opportunity to do just that and the dollars you invest will be working for you to generate more income.
There’s also the option of putting your funds towards the greater good of our community by contributing to causes that are important to you. ‘Tis the season – there are many needs to be met here in Lincoln during the holidays. While anytime is a good time to give, there is a special occasion coming up, Giving Tuesday, so mark your calendar for November 28th!
Spending wisely in areas where you can benefit most will allow you to end the current year strong and prepare you to start the coming year off on the right foot. But first, get all of the information you need to make an educated decision. Since time is of the essence, doing so sooner rather than later is advised. Be sure to set that appointment to consult with your accountant and financial advisor so you can establish a plan and make it happen before the ball drops – literally!