This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.
Between now and the end of the year, businesses should take various actions to help their bottom line for 2010 and to get ready for 2011. Here are some actions to consider:
If you have a corporation (C or S), hold your annual meeting of the board of directors before December 31 (even if only you and a spouse constitute the board). Failure to hold the meeting, which is required by state law, can enable creditors to "pierce the corporate veil" and hold you personally liable for corporate debts. Below are some items to put on your meeting's agenda. Enter any items that have been approved into your corporate minutes.
Even if you're not incorporated, it's still a good idea to meet with owners and financial advisers to discuss similar actions for your company.
Determine whether you expect 2010 to be a profitable or losing year. Your conclusion will dictate tax moves to make before the end of the year to optimize your tax position. For example, if you expect to be profitable in 2010, you may want to adopt a qualified retirement plan and make certain equipment purchases before the end of the year to maximize write-offs that reduce your taxable income.
Year-end tax planning is complicated this year due to the fact that tax rules for 2011 are uncertain. The Small Business Jobs Act of 2010, which is currently pending, would make some changes in 2010 tax rules. There may be additional clarification forthcoming about tax rules after 2010, so stay in touch with your tax adviser to learn which strategies are best for your company's situation in light of any tax changes.
Now is the time to gather information you'll need to complete your budget for next year. Get data on:
Also make projections for increases (or decreases) in other anticipated expenses for 2011, such as utilities, workers' compensation, and other budget items.
Schedule an appointment with your accountant or other financial adviser to review your company's financial picture and to discuss actions to be taken now.
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