As the year comes to a close, small business owners have a valuable opportunity to wrap up their financial matters and strategically plan for the future. This guide outlines a checklist to streamline year-end processes and maximize financial opportunities:
- Balance S-Corp Owner Wages and Health Insurance Reporting:
- Confirm the submission date for the last payroll of the year with your payroll providers before the last week of December.
- Ensure S-Corp owner wages comply with IRS guidelines and are reasonable for the business.
- Accurately report health insurance premiums to optimize deductions.
- Prepare for 2023 Informational Returns (Forms 1099 – INT/DIV, 1099-MISC/NEC, 1099-R, and W-2, etc.):
- Review payment records for contractors and employees in 2023. Note that starting January 1, 2024, electronic filing is required for taxpayers filing 10 or more informational returns.
- Verify the completeness of 1099 vendor records. Request missing identifying numbers or addresses from vendors using Form W-9.
- Report Cash and Non-Cash Fringe Benefits:
- Review records of personal use of business assets (e.g., vehicles, phones) and separate personal expenses for tax purposes.
- Identify other potential fringe benefits that should be reported on a W-2.
- Boost Deferrals to Retirement Plans (401(k)s):
- Review year-to-date retirement plan elective deferrals (e.g., 401(k), Simple IRA) for owners to maximize retirement savings.
- Address State FTE (Flow Through Entity) Tax and Other State Estimates Before Year-End:
- Make state FTE tax and other estimated state tax payments before year-end to maximize deductions and avoid penalties.
- Ensure Documentation for Deductions and Credits:
- Organize necessary documentation (receipts, invoices) for deductions and credits to facilitate a smooth tax season.
As a small business owner, taking proactive steps now will set the stage for a financially prosperous new year. Contact ShindelRock for experienced tax advisors to help you make the most of this year-end financial review.
