Year End Tax Planning For Your Business Begins NOW!

The end of 2008 is quickly approaching and Abo and Company, like many pro-active CPA firms, have begun scheduling for year-end tax planning. Some of the critical issues to consider include:

• Adequate W-2 payroll: Remember, "S" corporation shareholders are required to pay themselves "reasonable compensation" for work performed on behalf of the company. Failure to do so is considered an abuse by the IRS, as social security and Medicare tax assessments are underrepresented.
• Pension plan funding: How much (if any) is the appropriate amount to sock away this year? This will depend heavily on your corporation's earnings level, your "basis" in the company, and your other liquidity needs.
• Tax saving initiatives: You may be able to fill crucial business needs and cut your tax bill for 2008 simultaneously.

When is the ideal time to complete your tax planning? Quite simply, the sooner the better. If an outlay of cash will be required (retirement contribution, payroll taxes, etc.), you will have ample time to facilitate this need if we identify it now. You will, however, need to consider the following to ensure that accurate planning can be achieved:

• Your year-to-date books need to be in good shape. For example, your cash balance should be reconciled, out-of-pocket unreimbursed expenses summarized, loan/liability balances adjusted for, etc. Request your CPA (hopefully Abo and Company) to assist you in this "clean-up" process.
• You should project, with reasonable accuracy, your business activity for the balance of the year.
• Try to quantify any major business purchases that may be needed before the close of the year (equipment, business vehicle, etc.). Remember, simply incurring a capital lease debt before the close of the year may allow for the full deductibility of the asset cost.
  

If you are ready, many accountants like Abo and Company, can accomplish the tax planning a number of ways. You could either call and schedule an appointment, or often simply e-mail/fax your books (Quickbooks Accountant's Copy, Excel sheets, etc.) after considering the preparation issues above.