AuthorAuthored by: Eric Grimstead
It's the first week of December. We’re in the last month of the final quarter of the year. For some small business owners this time of year can be a crazy, shopping-filled, party spree of a month.
Why you ask?
Good question! Because...
If sales and profits are up, like they have been for many this year, you may be sitting on a fair amount of cash that shows up as Net Income on your P&L.
This poses both a challenge and an opportunity (I feel like I'm in a B-school SWOT, or is it SCOT?, analysis discussion every time I use those words in the same sentence).
The challenge for some is figuring out how they can pay the least amount of tax to Uncle Sam. Fair enough, no judgment here. But let's be honest, at the end of your business life the measure of success is more about the wealth you've built not the amount of tax you've saved. Can I get an Amen?
The opportunity is finding the Holy Grail. Deducting money you spend in such a way that it is a legitimate small business tax deduction.
During this time of year, timing can make all the difference. Your window of opportunity closes quickly in these final days and weeks of December.
To use a basketball analogy, would you rather find yourself trying to pull off a buzzer-beating 3-point shot with seconds left in the game or calmly and slowly bleeding the clock with a comfortable cushion?
Now, if you're thinking about rushing out and buying a shiny new Tesla with Ludicrous Mode just to get a business tax deduction, and a Federal Tax Credit for buying an electric vehicle, be sure to invite your SBDC advisor along for the test drive:-) then talk to your CPA before signing the purchase and sale agreement.
In all seriousness, if your business has generated significant Net Income and you're looking at ways to both save taxes and invest for your business success next year...now is the time to be talking to your CPA about what options you have.
For a quick primer: here are some legit, and not so legit, options with some CPA humor thrown in
My suggestion here is to take a timeout, and be more mindful about closing out the year and getting ready for the coming year.
What should this process look like? Here are some suggestions:
Spend the first part of December reviewing your Year-to-Date P&L compared to the same time last year, noting your accomplishments, taking notes on what you’ve learned and what you’ve struggled with, seeing where you’ve dropped the ball and where you could have grown more as a leader.
Reflect on what you’d like to let go of moving forward, what you’ve been holding onto that’s not serving you. This is a releasing of baggage and struggles. Spend some time letting go, so that you can get clear for the new year.
Set Intentionional Goals for the Next Year:
What purposeful intentions would you like to set in motion heading into the new year? What would you like to create? Who would you like to be? How do you want to perform your craft? This is taking a Big Picture look at the coming year, and setting some general goals.
Create a Plan:
Goals without a plan are just dreams. Depending on how you're wired, you may need to create a monthly, weekly or daily plan. It doesn’t have to be incredibly detailed — just create structure so that you can flexibly and nimbly move into your intentions, so that you can keep checking back in with them. So that you can bring focus, as if this might be the last year of your business life.
Why This Is Important:
So many of us neglect the act of looking back, that we just continually get caught up in the minutia of our daily lives, in the busyness of projects and events, in the drama of unfolding business and family affairs. We don’t take stock, think about where we’ve been, what we've accomplished and use that experience to continue to grow.