As the year draws to a close, business owners in the Central Valley are tasked with closing out their books, making end of the year purchases for write-offs, and preparing for the new year. Proper tax preparation can save you time, money, and stress. As we know, preparing your taxes correctly and appropriately will spare you from any future hiccups. At Demera Demera Cameron, your trusted Fresno accounting firm, we love numbers and have experience in various industries, knowing the best tips to help you navigate Quarter 4 tax prep efficiently.
1. Organize Your Financial Records
Keeping your financial records organized is the foundation of effective tax preparation. Ensure all receipts, invoices, and financial statements are neatly filed and easily accessible. Using accounting software like QuickBooks can streamline this process and help you stay on top of your finances throughout the year if you do not have an accountant.
Additionally, you’ll need to prepare various financial end-of-year reports, including W-2s for employees and 1099s for any contractors you may have hired on. Start gathering the necessary information early, if you haven’t been keeping track of this, to avoid last-minute stress. Accurate and timely reporting is crucial for maintaining good standing with tax authorities.
2. Review Your Profit and Loss Statement
Your profit and loss (P&L) statement provides a snapshot of your business’s financial health. Reviewing this document will help you identify areas where you can reduce expenses and maximize deductions in the future if you notice a sector of your finances that you are discontent with. It’s also a good time to assess your overall financial performance and make any necessary adjustments.
The end of the year is also an excellent time to review your business structure. Depending on your business’s growth and changes, you may benefit from restructuring as an S corporation or LLC. This can have significant tax implications and potentially reduce your tax burden
3. Maximize Tax Deductions and Credits
Take advantage of all available tax deductions and credits to minimize your tax liability. Common deductions for businesses include:
- Office supplies
- travel expenses
- employee salaries
- Work Opportunity Tax Credit
- Employee Retention Credit
- Employer-provided childcare credit
- Opportunity zones
- Clean vehicle credits
- Energy efficient commercial buildings deduction
- Credit for builders of energy-efficient homes
- Advanced energy project credit
- Research credit
- Abusive tax shelters and transactions
- and Rehabilitation credit
Consider any of these industry-specific deductions that may apply to your business model. However, you should also be aware of the limitations of the deduction of business interest expenses.
4. Plan for Estimated Taxes
Most business owners are required to pay estimated taxes quarterly. Estimated taxes are payments paid to the IRS throughout the year on earnings that are not subject to federal tax withholding. Prior to the payment deadline of Jan. 15, 2025, ensure you have set aside enough funds to cover your Q4 estimated tax payment. This will help you avoid penalties and interest charges from the IRS.
5. Stay Updated on Tax Law Changes
Like all laws, tax laws are constantly evolving, and staying informed about any changes that may affect your business is essential. Subscribe to updates from reliable sources, read finance legislation news, or consult with your accountant to ensure you are aware of any new tax regulations.
6. Consult with your CPA or a Tax Professional
Navigating the complexities of tax laws, managing your finances, and making no errors in your tax documents can be challenging for some. Consulting with a tax professional from Demera Demera Cameron as soon as possible can provide you with personalized advice and ensure you are compliant with all tax regulations relevant to your business niche. Our experts can help you identify potential tax savings and develop a strategic tax plan for your business, crossing all your t’s and dotting your i’s to relieve extra worries from your shoulders.
By following these tips, you can ensure a smooth and efficient tax preparation process for your business. At Demera Demera Cameron, we have been committed to helping Central Valley businesses thrive for over 80 years. Contact us today to schedule a consultation and let our experienced team guide you through your Q4 tax prep.
