'Tis the Season for Year End Planning
'Tis the Season
It’s that season again. No, we’re not talking about pumpkin spice latte season, or eggnog season, or even peppermint ice cream season (the one time of year they sell pink peppermint ice cream with chunks of candy embedded in it) for those of us who keep track of important food milestones.
It’s year end business planning season. This is the time of year when you focus on generating maximum business profits with minimal income tax consequences. And yes, it’s legal to make full use of all tax planning opportunities to which you are entitled. But you need to plan now to take advantage of the tax savings before that final box of peppermint ice cream is gone (if your year end, like most is December 31st ) .
Ready to start preparing? Then read on to learn more about deductions, credits, and documentation to consider before the clock strikes midnight on the last day of your taxable year.
- If you need to buy equipment, do it now before the end of the year. (But only if you need it and have available capital to fund it. We never recommend spending money for purely tax reasons.) Take advantage of first year bonus depreciation and the 2019 increase in the section 179 deduction to $1,020,000*. Under this IRS code section, you are allowed a current year deduction for an investment in certain types of long-lived tangible personal property used in a trade or business. (These assets cannot be purchased from a related party.)
*Note: Once your total investments in these assets for 2019 exceed 2,550,000 million, the 179 deduction will start being phased out.
- Review your accounts receivable and payable to determine if there are any bad debts that qualify for deduction or payments that need to be made if you are filing on a cash basis. Learn more about bad debts here.
- If you have employed new practices in your cellar or vineyard, you may qualify for a Research and Development Tax credit. More details are available here but please consult with your tax advisor for specifics.
Don’t wait until the end of the year to gather up any documentation required for your year end information returns or tax return filing:
- Personal use of business assets
- Meal expenses over $75—be sure to document WHO was there, WHAT was discussed, or other purpose of the business meal
- Mileage log for business autos
- Reimbursement policy and receipts for employee business expenses
- W-9 forms for all subcontractors (for preparing 1099 forms in January)
- Review donations of wine for your business (and gather documentation of any individual charitable contributions for your personal taxes)
Call us at 707 963 4466 if you would like assistance with tax planning.