Here is an article originally posted in 2011, but the advice is still valid as we head towards the end of 2012.
It's important to take certain financial actions before the end of the year if you want to maximize their impact on your 2011 statements and taxes. In this article for the OPEN Forum, Kate Lister offers 18 tasks to review and act on by year-end.
If 2011 was a down year for your business, try these strategies to make things look a little better:
- Make one last effort to collect from delinquent accounts, even if you have to negotiate on the amount.
- Ask for progress payments on ongoing projects, and try to secure downpayments on upcoming projects.
- Delay paying certain bills until 2012.
- Try to sell slow-moving inventory or unneeded property or equipment that is fully depreciated.
If 2011 was a good year, you might consider:
- Waiting to deposit new checks until after the new year.
- Purchasing qualifying property or equipment under Section 179, if you can put it into service by year-end.
- Paying employees a bonus, or making a charitable contribution.
And no matter how business was in 2011, you should always:
- Download and/or print copies of year-end statements.
- Try to pay down lines of credit.
- Examine your inventory and write off any obsolete items (and perhaps consider joining an inventory-sharing service like WarehouseTWO to reduce your unwanted inventory).
- If your personal income will be relatively low this year, consider converting your traditional IRA to a Roth IRA. Fidelity has a calculator here to help you decide if this is a wise move.
- Take a look at your investments to determine whether it’s time to cash out.
Most experts agree that tax rates will increase after 2012 and tax breaks will be harder to come by. Be sure to consult a professional about whether these strategies are right for you.
You can read the full article here.