As year-end approaches business owners and managers should be preparing for year-end.  Year-end planning is crucial to minimize 2014 taxes, comply with year-end reporting and leave you in the most favorable position going into 2015.

Minimizing 2014 taxes is important but owners and managers should consider what their expectations are for 2015 when deciding whether to accelerate expenses in 2014 to minimize taxes or to defer purchases until 2015 for a larger tax benefit overall.

Year-end reporting includes reporting fringe benefits on W-2s.  Items which need to be considered are taxable portions of company paid life insurance, employee’s personal use of a company owned automobile and reimbursements of meals, entertainment, and incidentals under a non-accountable plan.  Shareholders and their family members in a s-corporation are required to have health insurance premiums reported on their W-2.  Business owners are required to report certain amounts contributed to health savings accounts, retirement plans and health insurance premiums paid on behalf of the employee on the W-2.  Not planning for the addition of the year-end amounts to the W-2 can result in additional costs for amending or correcting year-end reports and tax penalties due to late reporting of taxable fringe benefits.

Because your business may change from year to year and because the tax law changes from year to year, it is important to analyze your business expectations for the next several years to determine if the timing of expenses, purchases and expansion plans can improve your overall tax situation.  As thresholds for the deductibility of a specific expense change, management may determine they are able to time purchases to coincide with these changes.  Tax basis taxpayers may be able to defer collections of revenues, so the income can be recognized in the same year as large expenditures are expected.

Consider contacting Gordon Keeter & Co. to discuss your year-end compliance, reporting and tax planning issues.