Don’t make these mistakes
Wednesday, December 2nd, 2009Hope you had a great Thanksgiving Holiday. Mine was spent in Atlanta, GA with family and friends. It was very enjoyable and we all had a blast.
With the year end rapidly approaching, I have devoted this blog post and the next one to share with you the top five mistakes that I see many business owners make that you should be mindful of. Here they are:
1. Thinking that tax planning can wait until the following year
As we approach the year end, you should already be thinking about the following April 15. It is essential to schedule end of year meetings with your CPA and financial advisor to plan year end strategies and to determine the amount of your tax liability or tax refunds. In the event of a tax liability, it will allow you to prepare for the taxes owed well in advance. The mistake to avoid is to not defer meeting with your team of professional advisors until next year.
2. Ignoring December 31st when making major purchases
If you are planning on making equipment purchases, either by buying new equipment or any other purchases, make sure you always have tax savings in mind. Purchases made before December 31st may save you on your 2009 tax bill. However, if you make a purchase in January or February 2010, you will have to wait more than an entire year to see the tax benefits.
3. Making decisions based solely on “tax” consequences, not “economic” consequences
This is a big one. Although making purchases before the end of the year will save you on your taxes sooner, it is only worthwhile if you actually have the cash flow to afford it! Small business owners often apply for loans to purchase equipment, assuming they are justified by the tax write-off. But, if you don’t have the money to pay off the loan in a timely fashion, it will cost you more in the end. Tax benefits should always be considered secondary to your small businesses’ cash flow capabilities. (I see many small business owners not cognizant of this fact and thus have dedicated one of my upcoming emails to share with you ideas to enhance the cash flow in your business.)
