Top 2015 Tax Resolutions to Implement Now
The annual filing of taxes and closing of books is an event not unlike New Year’s. Filled with resolve and motivated by previous experience, we often go to great lengths to ensure that the coming year is better than last. And not unlike New Year’s resolutions, we often find that the most successful financial and tax preparation resolutions are done with significant planning and due diligence. As you close out your 2014 “financial year”, you may find yourself wondering what you can do to better prepare for next year. Whether your concerns are for business, personal, or both, the following resolutions may help you get started and ensure your 2015 financial year is the best planned yet.
- Prepare for Obamacare
Whether your company falls under the 50 employee threshold or not, preparation for Obamacare should be under way now. For those businesses responsible for putting new insurance coverage in place, this means starting by figuring out how to pay for it. Put together a comprehensive budget, including new costs of insurance, and build from the bottom up to see how this may ultimately affect the cost to deliver services.
For companies that already offer employees insurance, keep premium increases in mind as sharp renewal increases will have the same effect on your annual budget. According to a 2014 Forbes article, the nearly 5.6 million firms with less than 50 employees that already offer health insurance have experienced significant renewal rate increases for 2015 coverage.
- Keep An Eye on Section 179
Section 179 increased the annual tax deduction limit for capital asset investment exponentially—to $500,000—in a one year period. (Note: Exceptions and limitations apply – so consult your tax advisor for specific details). When considering the time value of money and the likelihood that cash in hand will better serve your business today rather than over a depreciation schedule, Section 179 helped business owners make calculated investments in necessary equipment, expansions and purchases. However, when nearly all of 2014 was marked by a question mark about retroactive renewal—and the renewal was finally passed in December 2014 but only for one year, it left businesses with the exact same problem for this year.
While you shouldn’t put off purchases you need to manage, support or grow your business, it does leave more of a gray area for purchases you are on the fence about. Keep an eye on Congress and stay in touch with your accountant if you are trying to decide whether to make major purchases this year. You can’t currently lean on the benefits of Section 179 but you don’t want to miss the opportunity if it becomes available to you.
- Don’t Let the Tax Tail Wag the Dog
If you have a habit of spending profit so the business won’t have to pay taxes, take a hard look at what you are getting for the money. Instead of purchasing items you don’t need and having zero cash leftover for your business, consider that paying business taxes may actually be a greater benefit to the business. If you aren’t sure, ask yourself: “Would buying $100,000 worth of items we don’t need be better or worse than paying $30,000 in taxes and having $70,000 in cash in the bank?” You might be surprised by the answer. Of course, if you do need to buy things, be mindful of the date. You cannot backdate purchases so make sure your purchases are completed before the end of 2015 to take full tax advantages.
- Start Asking “What’s The Impact?” Early!
All too often we see clients forgetting to communicate with their bookkeeping services and accountants until it is simply too late. In the tax world, dates really do matter. When something happens that may trigger a financial impact, notify your accounting professionals. This applies to business and personal tax issues. Waiting until it is time to file taxes puts an unrealistic burden on the accounting professionals to read minds and make numbers work—and it may mean you miss the boat on tax deadlines. Trying to take advantage of a tax deduction won’t work if you don’t try to take care of it until after year-end—and you may miss out on even better insights and recommendations from professionals who will be able to suggest all your opportunities when they arise.
If you do nothing else, make sure you have a solid accounting team in place this year. Business owners and executives need the support of quality services to ensure that opportunities (and potential pitfalls!) don’t go overlooked until it is too late. Resolve to make 2015 your best tax year yet!
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