2019 is coming to an end and with it, taxes loom. Whether you’re filing taxes as an individual or own a company, you can take steps now to make 2020 a better year. If you just started a business or are thinking of starting one in 2020, this information is even more important.
Start Your New Year Right – Whenever That Is
First, what have you designated as your company’s financial year, a.k.a. tax year – the fiscal year or calendar year? Do you know the difference?
According to the IRS, a tax year is an accounting period for each year during which you keep records and report income and expenses. The tax year/financial year can be either:
• The calendar year from January 1 to December 31 or
• The fiscal year which is 12 consecutive months that end on the last day of any month other than December
Using the fiscal year as your tax year can be very attractive to businesses that have a seasonal aspect. School districts frequently use a fiscal year of July 1 to June 30 because it doesn’t split the school year into different tax periods. A spring-oriented business, like a plant nursery or landscaping company, might use a March 1 to February 28 fiscal year. Retail businesses will often use a fiscal year of February 1 through January 31 because December and post-holiday sales are their biggest revenue period.
However, the IRS still uses the calendar year for business taxes in most cases. It’s worth the effort to talk to an accountant before or while setting up your business so you can make the right plan.
Plan Now for a Better 2020
Whenever your tax year ends, you can take action now to make things easier in the future.
1. Start now. Whether your financial year ends December 31 or another day, it’s never too soon to start.
2. Get your financial statements together. This is especially important if you have to download them. After a certain period of time they might not be available so do it now. Gather your relevant receipts as well.
3. Make sure your accounts are up to date. You can’t manage money you aren’t tracking.
4. Review your expenses. It’s easy to be paying for services that sounded good but you don’t actually use. Go over everything and get rid of money wasters.
5. Send out invoices. Keep the money rolling in by sending invoices in a timely fashion. Add reminders to your calendar until you get into a routine.
6. Back up your data. Weekly backups are essential, though if you have a retail business then daily backups are smarter. If you’re terrible about backing up data, set a calendar reminder at least do it every other week or monthly.
The above tips work for both individuals and business owners. If you do own a business also consider:
1. Review past projects for profitability. Why keep repeating something that doesn’t pay off? You won’t know what does pay off until you go over your numbers.
2. Check your income statement. Again, you can’t know how profitable you are without this.
3. Review cash reports. It’s always good to know how much cash you have available.
4. Review employee data. Make sure it’s all up to date.
5. Review insurance policies. Check what they cover. Is it still sufficient for your business? How much are you paying? Shop around to see if you can get a better rate – but make sure you’re comparing apples to apples.
6. Create goals for 2020. Use SMART goals – Specific, Measurable, Assignable, Realistic and Time -related.
A little planning can make a huge difference in how 2020 treats you financially. Start preparing and planning now instead of waiting for the end of the calendar year rush, and you’ll be ahead of the game.
The Storage & Shredding Services You Need
Whether you need to store older documents to save room or document shredding for sensitive papers, let the professionals at Storage Quarters help you. From Storage Quarters mobile shredding service that provides you with a Certificate of Destruction to a convenient pick-up and delivery, get a free quote or book our services, contact Storage Quarters by calling at (516) 794-7300 or click here to email us today.