Top 6 Tips for Making the Most of Your Taxes

In a recent episode of The Profitability Podcast, hosts Joey and Mackenzie sat down with CPA powerhouse Haylie Hardin, founder of Go Hardin, to discuss essential year-end strategies for business owners. With over 400 clients in her portfolio and a family legacy in accounting, Haylie brings her experience to the table. This Texas-based CPA has built her practice on the foundation of being a trusted advisor who helps business owners navigate the complexities of financial management.

As we approach the end of 2024, many business owners are scrambling to get their finances in order. Whether you're a seasoned entrepreneur or just starting out, understanding how to manage your taxes and financial planning effectively can make the difference between struggling and thriving in the coming financial year.

1. Celebrate Your Wins While Planning for the Future

Before diving into the technical aspects of tax planning, take a moment to celebrate your year’s accomplishments. As Haylie emphasizes, being a business owner can be isolating, with no boss offering promotions or congratulating you on a job well done. Taking time to acknowledge your accomplishments helps you understand where you've been and where you want to go.

This is the perfect time to start planning for the upcoming year. Consider your personal and business goals, and how they align with your financial strategy. Working on yourself is just as important as working on your business – when you show up better as a person, your business naturally benefits.

Creating a vision board or visual representation of your goals can be an effective way to stay focused throughout the year. Unlike traditional resolution-setting, this approach allows you to maintain a broader perspective on what you want to achieve, incorporating elements of your personal life, business growth, and professional development.

2. Get Your Financial Records in Order

One of the most crucial steps for year-end planning is organizing your financial records. Don't wait until tax season to start gathering documentation – doing it now can save you significant stress and potentially money. Without accurate numbers, it's impossible to make informed decisions about your business's future.

Having well-maintained financial records allows you to understand your year-to-date sales, track your growth, and identify areas for improvement. It's not just about compliance – it's about having the data you need to make strategic decisions for your business.

Those who find bookkeeping challenging should consider working with a professional. While it might seem like an unnecessary expense, the cost of poor record-keeping can be far greater in terms of missed opportunities and tax-planning mistakes.

3. Choose the Right Payroll Provider

Selecting an appropriate payroll provider is crucial for your business's smooth operation. Here are the key factors to consider when evaluating payroll providers:

Accuracy in tax filing and timely submissions
Quality of customer support
User-friendly interface for both employers and employees
Ability to handle benefits administration
Integration capabilities with your existing systems
Cost-effectiveness for your business size

The ideal time to switch payroll providers is at the year's end or beginning, allowing for clean record-keeping and minimal disruption. While mid-year switches are possible, they often create complications with tax documentation and reporting.

Your payroll provider should be a partner in your business's growth, not just a service provider. Look for companies that offer proactive support and regularly update their features to meet changing business needs

4. Plan Smart for Employee Bonuses

Holiday bonuses can be a powerful tool for employee retention and motivation, but they need to be handled correctly. Start planning for bonuses early in the year by incorporating them into your annual budget. This allows you to set aside funds gradually rather than struggling to find the money in December.

Don't forget that bonuses must be run through payroll, not distributed through personal payment apps or gift cards. This ensures proper tax withholding and compliance with labor laws. Consider timing the bonuses so employees can make the most of them during the holiday season.

Employee retention is increasingly challenging, with younger workers expected to change jobs more frequently than previous generations. Strategic bonus planning can help create loyalty and reduce the substantial costs associated with employee turnover.

5. Monitor Cash Flow Religiously

Just because your budget shows healthy profits doesn't mean your cash flow will align perfectly. Understanding the timing of your income and expenses is crucial for maintaining healthy business operations.

For businesses with recurring revenue, cash flow monitoring might be a monthly task. However, if you're in a more volatile industry or running close to the line, daily monitoring might be necessary. This isn't forever – it's about maintaining control during critical periods and ensuring you can meet all your obligations.

You want to maintain enough cash reserves to handle unexpected expenses or delays in receiving payments. This becomes especially important when considering major purchases or investments in your business's growth.

6. Make Strategic Year-End Purchases

It can be tempting to make last-minute purchases for tax deductions, so it's essential to approach this strategy thoughtfully. Only invest in items that your business genuinely needs and will contribute to its growth or efficiency.

The common myth about buying vehicles for tax purposes needs particular attention. Unless your business requires regular driving for operational purposes (like real estate agents or construction contractors), purchasing a vehicle solely for tax benefits often doesn't make financial sense. Consider the ongoing payments and maintenance costs against the actual tax benefit.

When making year-end purchases, focus on necessary equipment or technology upgrades that you've been planning throughout the year. This ensures your investments align with your business strategy rather than just tax considerations.

Taking Action

As we approach the end of 2024, now is the time to implement these strategies. Start by reviewing your financial records and setting up meetings with your financial advisors. Create a compliance calendar that includes important dates for tax filings, retirement contributions, and other financial deadlines.

Consider building a professional team that includes:

A trusted CPA
A financial advisor
A legal counsel
A reliable bookkeeper

Investing in professional help is an investment in your business's future. By implementing these strategies now, you'll be better positioned for success in 2025 and beyond. Don't wait until tax season is upon us – take action today to ensure your business starts the new year on strong financial footing.