How to Save Big Money on Your Taxes This Year – Part 2… The Christine Chronicles

Hello and happy Friday:

We are gearing up for the holidays and a holiday party we’ve hosted now for three years. It is a Christmas costume party, believe it or not. Last year we had an ugly sweater contest and sexy shoe contest. This year folks have to dress up as their favorite sitcom character from the 50s through the 90s. I’ve already heard from many of the attendees about what they’re planning to wear so it should be lots of fun.

Today is the second in our series on tax planning; this post is about bookkeeping. We recently hired a bookkeeper in our practice and I can’t begin to tell you the detail in which she has reviewed our financials, discovering a payroll glitch to boot. If you’re looking for a wonderful bookkeeper, please contact us and we can make a referral for you to contact Cybertary directly! Sharon Holbrook does a fantastic job.

Until next week.

Christine

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How to Save Big Money on Your Taxes This Year – Part 2

Welcome back to our series on how you can save big money on your taxes. Just a little time and effort focused on strategically reducing your taxes can pay big dividends.

Last week, we discussed the first step in saving big on taxes: strategize with your tax advisor at key points during the year.

Step two in saving big on your taxes is to meet monthly with your financial manager or bookkeeper and have a clear system for categorizing your expenses.

Your financial manager or bookkeeper should have a full understanding of your business, including how you earn revenue and the types of expenses it takes to produce and deliver your service or product.  He or she should also be producing weekly and monthly reports that help you read the financial health of your company.

If your bookkeeper is more data entry clerk than financial manager, look for someone new or get your bookkeeper trained up, fast.

In a future article, we’ll cover the weekly reports your financial manager should provide. Today, we’ll focus on the monthly reports and meetings because that’s where you’ll save big on your taxes.

Each month, when you review your profit and loss statement (P&L), what you are looking for is variances from the prior month and for expenses that are improperly or not at all categorized. You want to categorize all expenses properly so you can measure trends and so you can write off as many deductions as possible against your taxable income.

In late October, your financial manager should send a year-to-date P&L to your Tax Advisor who will then create projections based on how much you’ve earned so far over expenses, and how much you expect to bring in for the rest of the year.

Then, you’ll be able to strategize to minimize the amount due. Most of these strategies do need to be engaged in BEFORE year end, so be sure you’ve got this process started by late November, at the latest.

This article is a service of Christine E. Faulkner, Creative Business Lawyer®.  We are a business-focused law firm with a mission of guiding your business to grow with health and creative structures. Call to schedule your LIFT Foundation Audit to identify whether your business has holes in its legal, insurance, financial or tax structures and create a plan to fill the holes.

Mention the How to Save Big on Your Taxes series and we’ll waive the $1250 LIFT Audit fee.

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