The winter months in Minnesota always seem to crawl, but as the year picks up sometimes our good intentions of New Year’s resolution fall by the wayside. Take action to improve your business. Here are some ideas to accomplish your goals for 2022 and make it a better year.
Profit Planning and Expense Review - Now that 2021 is in the rearview, use the information recorded on your books over the last year to prepare for the new year. What gets measured gets improved.
Take a deep dive into your spending categories for 2021 and determine areas where you could reduce expenses or increase efficiency of those costs to get the most for your money in 2022.
Consider setting Performance metrics to benchmark your progress. Set goals to accomplish more.
Salary and withholdings review. The beginning of the new year is the ideal time to review the federal and state tax being withheld from paychecks‐ you can plan to avoid large tax balances due come April every year, and if you are unhappy with a tax balance due now is the time to manage this item. Consider increasing your withholding on wages.
Tax Planning – most taxpayers with a business that is a pass‐through entity such as an S
corporation or LLC, may be required to make quarterly estimates. The tax law is in constant
motion, and we always suggest that taxpayers be prepared to move on tax saving opportunities. The horizon of 2022 will present many tax law changes and we suggest you seek advice to be prepared to act once announced, and in time for tax strategy adjustments.
Set long‐term goals and create a plan to accomplish them. Do you have a plan to have
someone buy the practice should you become disabled, or if you are anywhere near retirement what is your exit plan? Start thinking and acting to seek advice to properly exit from your business.
Disaster preparedness - whether it be extreme weather, social unrest, or a pandemic we have learned that being prepared is vital in overcoming these obstacles. January is a good time to double check your systems to keep you protected in 2022.
Back up your financial data ‐ in case of an audit or tax notice, be sure to keep receipts of all your deductions and bank records and accounting systems. Ideally this would be stored and backed up electronically, but important papers should be in a box that you can grab in the event of an emergency or stored in a safety‐deposit box.
Protect your surroundings ‐ make sure firewalls are fortified, your passwords are updated and secured, and that your internet and physical security are safeguarded.
Protect your income and loved ones ‐ re‐evaluate your insurance coverage, If life events have changed your needs in the last year consider an insurance review to cover injury, unemployment, workers compensation, or temporary shutdown. Do you have an up to date will, durable power of attorney, and healthcare proxy?
Check on your internal controls ‐ with the squeeze in workforce, do you rely on one person to do many roles, leading to an opportunity to embezzle?
Clean House / Records Retention - Why wait until spring to organize and clean up your records? Below are some basic guidelines to know what to keep and what to shred.
Tax returns ‐ Statute of limitations is 3.5 years unless you grossly underreport your income (6.5 years) or do not file a return or file a fraudulent return (indefinitely).
Employment Tax records ‐ 4 years after date the tax becomes due or paid, whichever is later.
Records connected to property ‐ should be kept until the property is disposed, and then the 3.5‐year statute of limitations after disposal/sale. This provides substantiation for figures such as depreciation, amortization, and your basis in the property upon sale.
Business taxpayers ‐ the AICPA recommends permanent retention of certain items like canceled checks for tax payments, correspondence with IRS or states, depreciation schedules, payroll filing, and sales tax returns, and items that prove existence of carryforward items (for example– even if a net operating loss was created in a tax year more than 3.5 years ago, the loss is carried forward indefinitely until used ‐ keep records that prove the loss as the loss is carried forward year to year).
Non‐tax documents - other governing bodies may have longer statute than the IRS check before you shred (for example, insurance purposes)
Tackling some of these important tasks will help you start the year with some piece of mind knowing you can withstand difficulties and quickly pivot to take on new opportunities that come your way. The Vision Advisors http://www.thevisionadvisors.com/ are here to help if you need assistance in your insurance, technology, legal, tax and accounting needs as you use this checklist to kick off 2022.
Sara Johnston, CPA
Thomas E Pesch, CPA, CMA
Olsen Thielen & Co Ltd