by Melissa Wagner, CPA – Director of Financial Operations at HCSWNY
It is time to plan for the year-end activities and situations that may affect your practice.
For any practice that is a cash basis taxpaying entity, you should be working with your bookkeeper and accountant to plan the best method of running down your cash balances. If you are one of our clients for management services, we will be providing your accountant with any information needed to facilitate your tax planning process.
As your tax preparer can further explain, the benefits to keeping your year-end cash balances low include: having more expenses paid this year to offset practice revenue and partner tax considerations (anyone who is going to be taxed on income should have the option of actually having that income in hand). Work with your accountant to see if you should be distributing additional payments to partners as those added draws need to be paid by the last payroll of the year. Also, consider paying January 2012 invoices before year-end to further pay down cash, and transfer expenses to the 2011 tax year.
In addition to tax planning, your practice should be working to ensure that all year-end staff bonuses are in the pipeline for processing in a timely fashion, and that all voluntary retirement contributions are communicated to your payroll and benefits administration vendors for processing prior to year-end.
Your human resource, accounting and payroll vendors should be able to provide you with maximum contribution tables for 401Ks, Simple IRAs, and Health Savings Accounts. If you are a management client of HCSWNY you will be receiving all applicable information by letter this week.
Remember that holidays can affect processing time for any requests, so be sure you know what days your vendors will be open to process your cash offsets, additional draws, invoice payments and retirement plans and contributions. The sooner you notify them, the more likely nothing will be missed by year-end.
If you have any questions and are not a current client, please contact 716-206-1580 or firstname.lastname@example.org for more information or to see if we can make next year easier for you. If you are a current client, you may contact us directly as you have in the past.