At the end of the fiscal year, it is in your best interest to engage in strategic spending to optimize your financial position and tax liabilities. This often involves investing in necessary equipment, technology upgrades or infrastructure improvements that can be deducted as business expenses, thereby reducing taxable income. Additionally, businesses may choose to reward employees with bonuses or offer end-of-year incentives to boost morale and retain talent.
However, it’s crucial for organizations to strike a balance between prudent spending and avoiding unnecessary expenditures, ensuring that each investment aligns with their long-term goals and complies with relevant tax regulations and reporting requirements. This end-of-year spending strategy can help businesses both manage their tax liability and position themselves for growth in the coming year.
So, how do you go about smart end of year business spending? First, you need to talk to the local professionals of Lincoln to see what your options are, and which of those options are going to be best for your business.
Increase Your Income and Reduce Tax Liability
To increase income and reduce tax liability at the end of the year, consider strategies such as accelerating income recognition through early invoicing, deferring non-essential expenses into the following year, optimizing depreciation methods for assets, managing inventory levels and making charitable contributions as deductible business expenses. Additionally, investing in capital expenditures before year-end can provide tax advantages. These strategies can help businesses maximize income while minimizing tax burden, ultimately improving overall financial positioning.
To ensure that you are saving yourself money as opposed to creating a headache for later down the road, it’s essential to consult with a tax professional or financial advisor to tailor these approaches to your specific business situation and to ensure compliance with current tax laws and regulations.
“No matter if your business is having a good or bad year, year-end planning is extremely important,” said President and Founder of Cruise & Associates (cruise-associates.com) Rob Cruise. “If you are having a good year, the planning can help you know what needs to be done to help reduce your tax liability. If your year is not going as well as you hoped, the planning will help you determine some changes that need to be made to help make next year more profitable.”
At Cruise & Associates, their goal is to meet your accounting needs and ensure your finances are streamlined and efficient to increase your income and reduce your tax liability. Specializing in income taxes, tax planning, bookkeeping, payroll, business controls and wealth management, they listen to your needs and work one-on-one with you to develop the right plan for your end-of-year spending. Through their consultations, you can create a plan that is unique to your business.
A Smart Way to Use Extra Income
The end of the year is a great time to strive to generate extra business awareness and income. This can involve optimizing sales and marketing efforts to capitalize on holiday season demand, offering year-end promotions to attract more customers or even revising pricing structures to maximize profitability. Additionally, businesses may explore cost-saving measures, such as renegotiating supplier contracts or streamlining operations, to bolster their bottom line. Beyond these immediate actions, businesses should also consider long-term investments such as memberships in organizations that will bring them business over time.
Becoming a member of the Lincoln Chamber of Commerce (lcoc.com) will better connect your business with the city of Lincoln and to other businesses, helping you maintain credibility and collaborate with local leaders who are building businesses and the community. As Lincoln’s leading business organization, the Lincoln Chamber of Commerce ensures your voice is included in the larger conversation focusing on important community issues. The Chamber works with lawmakers and local officials to advance pro-growth policies and is continually working to make Lincoln the best place to do business.
As a Chamber member, you will receive access to networking events such as morning meetups and after-hours gatherings as well as annual events such as Savor the City and The Social Scramble. The Lincoln Chamber of Commerce is passionate about supporting local businesses, so join today to put your business in a position for growth in 2024.
Implement a Business Spending Plan for Next Year
Planning business spending early provides financial control and enables the creation of an effective budget in the coming year. With early planning, businesses can allocate resources strategically, ensuring that funds are distributed wisely among various departments and projects. This proactive approach not only helps in covering essential expenses, but also allows for the allocation of resources to growth initiatives and unforeseen challenges. Ultimately, early planning sets the foundation for financial stability, efficiency and long-term success, providing businesses with the agility and preparedness necessary to navigate the ever-changing economic landscape.
EOS Worldwide (eosworldwide.com) uses EOS, the Entrepreneurial Operating System®, to help businesses agree on the same vision, gain traction towards executing their vision and build a healthy leadership team that will help the business excel. EOS Worldwide strives to get your business working towards the same goal, starting with building a business vision and deciding on top priorities that will help your business run more smoothly and profitably.
“Looking at expenses related to strategic planning and business coaching are great things to evaluate before the end of the year,” shared Professional EOS Implementer Katie Koester. “Often businesses wait until the new year has started to get a plan together. Having the plan started in November gives them the ability to hit full execution as a year starts. Having that clarity sets them up for better completion and overall success.”
If you haven’t already started planning your 2024 budget, don’t wait any longer to get a jump start! Don’t just think about the end of this year, think about the entirety of next year and what you can do to obtain different results by the end of next year.
The cost of renting a commercial space, such as an office, storefront or any other type of facility is typically tax deductible for businesses. This deduction can help reduce a company’s taxable income, which can lead to lower tax liability, while also setting the business up with an improved place of operation in the next year. If you are considering expanding or relocating to a larger space, investing in commercial real estate can be a strategic financial move.
Whether your company is a start-up looking for a new home or an existing company needing to expand, relocate, open an additional location or enter into a lease renewal, Greenleaf Commercial Real Estate (greenleafcommercial.com) has the market knowledge and industry experience to ensure that all your needs and requirements are satisfied. They can assist with site selection, site tours, cost of occupancy analysis, space planning, lease and terms negotiations, tenant improvements, comparative lease analysis and letters of intent. This type of support can save your business money and time as you transition into a new year.
“At Greenleaf Commercial Real Estate, our approach revolves around comprehending the distinct circumstances and objectives of each client, enabling us to customize a strategy that aligns with your specific goals. We prioritize open communication and unwavering accountability throughout the entire journey, aiming to not only meet your expectations, but exceed them. With our team of seasoned professionals, we are dedicated to assisting you in achieving your vision for your business and contributing positively to your community. Trust and confidence are the cornerstones of our client relationships, and we are committed to earning and maintaining yours every step of the way,” shared Adam Lowney, Senior Sales Associate.
What Will You Use in the Next 12 Months?
If you’ve had a great financial year and are looking to set yourself up for another great year, it can be wise to upgrade technology, equipment and employee benefit plans at the end of the year. Saving tax money while also streamlining your business sounds like a great idea, right? When done correctly, it greatly benefits businesses. However, there are instances where paying taxes can be cheaper than upgrades that aren’t necessary. So, how do you know what purchases are smart to make at the end of the year?
“I always ask my clients if what they want to purchase is going to be used in the next 12 months, and how important it is that they use it in the next year,” shared Chris Robinett, CPA, with SP Group, P.C. (spgrouppc.com) “If the technology or equipment they are wanting to purchase will be used frequently and benefit their operation, then I tell them to go ahead and make the purchase. However, if it isn’t something that is going to be used regularly or make a significant impact in their operation, it becomes a cash flow issue and I advise against it.”
Smart expenditures vary with every industry, and with every business within that industry. As such, it is important to have a team of trusted advisors who know the right questions to ask and that will provide an objective opinion. The professionals at SP Group, P.C. are the type of trusted advisors you want on your side when it comes to the financial standing of your business.
Address Business Needs
November and December are the most common months for businesses to project future income and how that flow will affect their financial standing. During end-of-year financial meetings, it is important to discuss how the year went as well as prepare for March/April tax payments. One of the most common ways to mitigate tax payments is to purchase equipment or prepay known expenses, though it isn’t always the best option for overall financial standing.
According to Lutz (lutz.us), there are factors other than reducing taxes that are just as important when considering end-of-year spending. “Many businesses are so focused on reducing their tax liability that they put themselves in a bind somewhere else, usually in terms of cash flow. While reducing taxes is important, it’s crucial to balance this objective with other financial considerations,” shared Tax Manager Tom Docter. “Year-end tax planning is more difficult and more important this year than it has been in almost five years with the depreciation changes and pass-through entity tax at the state level. It’s imperative to meet with your CPA firm before the end of the year to determine cash flow needs in December, March or April.”
Some factors that are just as important as, if not more important than, reducing taxes when considering end-of-year spending include effective cash flow management, strategic planning and the fulfillment of essential business needs. Nobody likes surprise tax bills, so even if businesses decide not to go through with any year-end spending, the comfort that comes with planning and understanding upcoming tax payments is worth the time it takes to meet with their CPA.
Flexibility of Location
Your business location plays a crucial role in the development of an annual business plan. It’s vital to assess whether your current space aligns with your operational needs, especially in a rapidly changing business landscape. If your workspace is approaching or exceeding capacity, it may be time to consider expansion or reconfiguration. On the other hand, if changes like remote work, drop shipping or customer pickup options have become a long-term strategy, you might find yourself with surplus space or different space needs for your business.
Before moving or changing the setup of your location, you’ll want to talk with a commercial real estate agency about meeting your needs for the coming year. One that comes highly recommended is Guiderock Commercial Realty LLC (guiderockrealty.com).
“We advise businesses to maximize their options with their real estate decisions,” shared Guiderock Commercial Realty Owner Cathy Kottwitz. “Flexibility is important for a business that wants to excel, so we suggest two key steps when thinking about commercial real estate. First, start planning real estate decisions early. Second, seek advice from industry professionals, such as attorneys, bankers and commercial real estate agents. These two pieces of advice can help a business maximize their real estate options and ultimately help them achieve their goals for 2024 and beyond.”
Not only does Guiderock Commercial Realty help clients choose suitable spaces but also is a strategic partner in assessing future expectations and unforeseen events. By providing clients with a range of tools and solutions, they strive to ensure that businesses are well-prepared and equipped to navigate the changes that lie ahead.
Organizing your Finances
The end of the year means diligently managing payroll responsibilities such as providing employees with annual tax statements like W-2s and 1099s, distributing year-end bonuses and adjusting benefit contributions. Tax withholding calculations should be reviewed to align with current regulations and individual employee circumstances. Compliance with tax regulations at various levels and the filing of requisite forms are essential, while reviewing fringe benefits and deductions ensures accurate year-end financial records. Payroll at the end of the year demands meticulous attention to detail to ensure both legal compliance and employee satisfaction.
TAC Payroll Solutions (tacpayrollsolutions.com) provides full-service payroll solutions, bookkeeping services and more while keeping up with the ever changing payroll laws and regulations at a fair and reasonable cost. They are dedicated to providing your business with the personal attention it deserves to end 2023 on a high note and start 2024 on the right foot.
Owner and Manager Terry Clark has over 20 years of experience in multi-state payroll and bookkeeping. With the latest software technology available, Terry’s attention to detail and experience and knowledge as a member of the Lincoln community, TAC Payroll Solutions is more than equipped to help you organize your finances for a successful business.
“It’s always my goal that the employer has confidence in me so they know their finances are being properly organized,” said Owner Terry Clark.
End-of-year business spending is a strategic and multifaceted endeavor. It involves careful evaluation of financial goals, tax implications and budget priorities. Businesses can leverage this period to invest in growth, optimize their tax position and address essential operational needs – all just in time to start the new year off with a bang.