As summer comes to a close and we head into September it is time to begin the year end tax preparations. September 15 is the deadline for the 3rd quarter estimated taxes. This is a good time to take a look at how your business is doing so far and how you expect it to do through the end of the year. I like to compare this year’s results versus last year’s results as well as versus our forecast for this year.
Once you have done the analysis for your own business purposes, it is a good idea to meet with your tax accountant, especially if your results are significantly different from the prior year and from forecast. You may need to adjust your third and fourth quarter estimated tax payments. You will want to make sure that you are taking advantage of any tax breaks available to you. You will also want to make sure that you are aware of any changes in tax laws that relate to you.
Often we see owners of S-Corps, particularly in the first year of the S-Corp, have not had enough withholding from payroll and will need to run a special “bonus” payroll with the bulk of the bonus going to taxes. Most of my clients would prefer to adjust their payroll for the last 4 months of the year instead of being surprised with this December 31 “bonus”. From the tax accountant perspective they prevent having additional fees and penalties, but from a business cash flow perspective this can be a cash flow problem that you were not expecting.
Don’t sit back and wait for the tax accountant to make suggestions to you. Take a proactive role and ask for their advice and suggestions.