July 16, 2013
As hard as it is to believe, the year is already half over. Although it may seem like the April tax deadline was just a few weeks ago, the reality is it’s time to start thinking about your 2013 taxes. And, if you spend some time now on mid-year tax planning, it can really pay off next April—which is only nine short months away. In addition, taking stock of where your business is halfway through the year can help you determine any changes you need to make in order to reach the goals that you set for 2013.
When you look at how your business has performed in the first two quarters of the year, one of two scenarios is likely to emerge:
- You’re having a great year. Congratulations! Things are going well and you’re at or ahead of where you thought you would be in terms of income and profits. If this is the case, you’ll want to think about ways to mitigate your tax burden, such as saving additional money for retirement in a 401(k) or investing back in your business by purchasing equipment to take advantage of potential tax write-offs. If you have larger than expected profit margins, you may want to consider increasing your estimated tax payments to make sure you don’t incur penalties for underpaying your taxes.
- You could be doing better. If your financial statements aren’t where you thought they would be or your business has experienced significant losses that you don’t believe will be offset by a stellar second half of the year, you may want to think about reducing your estimated tax payments to conserve cash. Remember, if you overpay your 2013 taxes you won’t receive a refund until next year, which could hinder this year’s cash flow.
No matter whether you fit under scenario 1 or 2, proper tax planning is a necessity to ensure your ongoing financial success. Consider the following:
Catch Up on Your Record Keeping
If the summer months are slow for your business, it is a good idea to set aside some time to ensure that your tax-related records are organized and up-to-date. Getting your travel, entertainment, and other tax-deductible expense records in order now can help ease the rush when next tax season rolls around. Keep in mind that in addition to physical receipts, you need to record the date and purpose of your business expenses. For business travel using a personal vehicle, make sure to keep a detailed record of the miles driven for business, the date on which they were driven, and the purpose of each trip. You should also track your odometer readings at the beginning and the end of the year.
Talking Taxes Now Can Save You Money Later
Don’t wait until tax season to learn what you could have done this year to reduce your taxes. Contact one of our professionals today. We’ll help you put the strategies in place to minimize your tax obligations based on the unique needs of your business. We can also make sure that your record keeping complies with the most current tax requirements.