The lazy days of summer are behind us and the busy holiday season looms ahead. Before that kicks into full gear, and before your clients become bogged down by year-end catch-up responsibilities, make a plan this fall to get ahead of the chaos and help your clients get organized now.
Fall is a good time to assign them some tasks they won’t have time for later in the year. They may groan now, but they’ll appreciate it when year-end rolls around. Whether it’s tax support, financial advice or help with corporate compliance, you are a vital part of your clients’ success story. Here’s how to help them help you.
Did any of your clients start new businesses in 2019? In order to get the startup tax deduction, make sure you remind your clients of the rules regarding what qualifies as a startup expense. Per the IRS, the costs of getting started in business before you actually begin business operations are capital expenses. These costs may include expenses such as advertising, travel, or wages paid to employees during training.
Did your clients try to start new businesses, but failed? Whether or not those expenses are deductible depends on the specifics involved. For example, if there were expenses involved before the client made a decision to buy or start a specific business, then the costs are not deductible. Simply investigating a business opportunity does not constitute a deductible expense.
However, if they incurred expenses actually trying to acquire or launch a specific business that didn’t work out, these costs are considered capital expenses and can be deducted as a capital loss.
If your clients have employees, they may be able to claim a tax credit for some of the “ordinary and necessary” costs of starting a retirement plan such as a SEP, SIMPLE IRA or qualified plan.
For your self-employed clients (and others who may have side gigs), let them know about the new IRS online tax withholding estimator. It can help them estimate how much tax to have taken out of their pay. The tool also alerts users about special tax benefits available to self-employed people, including the self-employment health insurance deduction.
Money, Money, Money
Your clients most likely want more from you than just bookkeeping and tax advice. Now is a great time to sit down and talk about both short-term and long-term financial goals. Prepare for the meeting by sending clients a survey about their goals for the next three months, one year and five years. Include an end-of-year checklist for the important documents and information your clients need to provide you, so they can avoid that frantic last-minute hunt for files when the year comes to a close.
The holidays are notorious for consumers and businesses alike forgetting to pay bills or making late payments. To improve your clients’ cash flow, encourage them to send out their invoices on time, prepay what they can and build up a cash flow cushion in case an unexpected expense comes up.
To light a fire under your clients and get them to accomplish these tasks ahead of time, offer an early-bird discount. Set a reasonable deadline and you’ll be alleviating some of your end-of-year stress, too!
Keeping your business clients on top of their corporate responsibilities benefits both of your businesses, so make it a point to check on where they stand in terms of annual filings. Before the end of the year, see how you can help with the following:
- Corporation Annual Report: This is an official update on officers, shareholders, and any changes in business direction.
- Articles of Amendment: Make sure clients file corrections for any changes to company name, address, or share distribution.
- Articles of Conversion: Your client may have changed business structure, such as going from a sole proprietorship to a C Corp.
- Trademark renewals: Trademarks must be renewed between the 5th and 6th year after registration and then every 10 years.
- Business license updates: Make sure clients regularly renew their business licenses.
If your client closed a business this year, it’s important to remind them there are legal steps they must take to properly close a business. If the business is not legally shut down, the client may still be responsible for filing annual reports, state and federal tax returns, and more.
Corporations, LLCs, and partnerships must vote on closing the business; this vote should be recorded in the meeting minutes. Business owners should also file an Articles of Dissolution form with the Secretary of State’s office and notify the IRS. For more on closing a business, see the IRS Closing a Business Checklist.
Finally, if you know your client is planning on incorporating in the new year, inform them that many states offer the option of “delayed filing.” Delayed filing lets the business owner set the date when the new corporation is officially recognized, which also delays having to pay the state franchise taxes.
Getting a head start on all that’s involved with year-end financial issues will make all the difference when December rolls around, and will help with next year’s tax filings, too. What steps do you take to get your clients moving?