December 31st is only a few weeks away, which means it’s crunch time for small business owners to review the past year and ensure their salon suite business has everything in place before 2020 arrives. Now is a great time to review tips and strategies on how to save money on your taxes and improve your bottom line for next year. We recommend five key strategies to ensure the process is as painless as possible:
- Meet with your Accountant: We cannot stress this enough. Not only is it critical to meet with an accountant at year end, but you should also have meetings quarterly with your accountant to ensure your business financials are healthy and you’re maximizing tax deductions. If you are looking for an accountant, ask A Suite Salon, we have local resources available to you.
- Understand and utilize Tax write-offs: Understanding what tax deductions you can take are key in decreasing your taxable income, thus decreasing the amount of tax you owe to the federal government. Now that you operate your own business many items that would not seem like they were tax deductible in fact are and could save you hundreds or thousands at tax time. Items such as supplies, rents paid, local sales and business taxes, and travel distance are all items that can be considered. Ensure you are keeping good records and discussing with your accountant so no money is left on the table.
- Review Your Expenses and Spending Habits: Although you have been doing this throughout the year, it is imperative at year end to evaluate where you are financially. You must know what you have spent to know if you are going to meet your financial goals for the year and know what you need to earn/spend going into 2020. Keeping good records is key and will save you tremendous amounts of time when you need to gather all your items together. Having a single business account where you collect all money and pay for all business expenses will also help when it comes time to organize for taxes.
- Evaluate your Product Inventory & Supplies: Take a look at all of your products. What are you using, what sells well, and what is collecting dust? Ask yourself questions about how your products are displayed and if you are offering too many products. If you are going into year end with significant profits, it may be a good time to restock any depleted inventory. Many suppliers offer discounts at year end to move inventory, and you benefit from deducting the product purchase in the current year and reducing your tax liability.
- Start a Retirement Plan before Years End: This is one of the smartest financial moves a small business owner can make. There are many options for a retirement account, from a Self –Employed 401K to a SERP or an IRA, so have a frank conversation with your accountant or a trusted financial planner to determine the best option for you. Either way, take control and reap the benefits of your hard work. Set a realistic goal for investing into this plan. For example, set a goal to save $2500 in 2019, and then establish a plan to make it a reality. Auto debit a contribution to your investment/retirement account each week for $50 or each month for $220. If you are ready to start saving but not ready to get too complex refer to our blog Salon Suite Owners: Make Money From Your Smart Phone’. In this blog we include some great tips on easy ways to start putting money away that will not break the bank.