Year-End Financial To-Do List
It’s no surprise that one of the biggest stressors for people, especially small business owners, is money. Sometimes, no matter how strictly you budget, or how much you earn, it can feel like you just don’t have enough cash to get by. With year-end comes a lot of spending between gifts, parties, and additional groceries for all those holiday meals, but it’s also the perfect time of year to reflect on your finances and get them in shape for the new year. In addition to being a good time to reflect on finances, there are also some tax-related financial tasks that must be handled by December 31st if you want to reap the benefits. Below, you’ll learn about some financial to-do’s you’ll want to look into before we roll into the new year.
1. Maximize retirement contributions.
If you’ve been putting money towards your 401(k) all year, you’re already off to a good start. For 2019, the maximum yearly deferral contribution is $19,000. If you have any cash left over at year-end, putting it away to try to max your contribution is a great idea. Maxing your retirement contributions not only helps your future self when you’re ready to retire, but it also can bring you a tax break when you file personal income taxes.
2. 529 Contributions.
A 529 account is used to save money for college. We all know that college costs keep increasing, and saving early can help your child, niece, nephew, or other beneficiary decrease any student loans when they are ready to attend college. A 529 comes with two major tax benefits: tax-free growth and tax-free distributions for qualified higher-education expenses. You can contribute to these plans throughout the year, but similar to a 401(k), if you have any cash left over, putting in a 529 plan can be a smart choice.
3. Don’t forget about FSA and HSA funds.
When using a flexible savings account (FSA), the funds typically have to be used by the end of the year. Some plans may have a carryover or grace period, so you’ll need to check with your plan for specifics. However, it’s safe to plan on spending the money in your account by the end of the year to ensure you don’t lose what you saved. Conversely, health savings accounts (HSA) can roll the balances over into subsequent years with a contribution deadline of April 15th.
4. Charitable giving.
Giving back to causes that are important to you is a win-win for the charity and your personal taxes. If you itemize your taxes, charitable donations can reduce the taxes you may owe. Non-cash charitable donations over $250 will require a receipt that includes a description of the item donated. Contributions made on a credit card are also eligible, even if you won’t be paying them off until the following year. If you consistently donate throughout the year, keeping your receipts in a safe, memorable place will make filing taxes smoother.
5. Check-in with your savings goals.
Did you have any savings goals this year? Since so many new goals begin in January, you’ll want to see how much progress was made on last year’s goals so that you can build off of them in the future. If some of your goals are more long-term, such as saving for your child’s college fund or buying a new home, you’ll want to examine how you did this year before creating a strategy for the new year. If you didn’t hit your target, don’t beat yourself up. Even though the end of the year is a heavy spend time, there are plenty of ways to get yourself back on track if you aren’t where you want to be. Setting challenges for yourself, such as no-spend days or saving every $5 bill you come across, can help you hit your goals before the end of the year.
Money can be stressful, especially when it’s mixed in with a busy year-end. If you want to start the new year in the best financial position, trying some of these tips might be able to help you out. If you’re particularly overwhelmed about finances, whether personal or for your small business, maybe consider reaching out to an accountant or bookkeeper as one of your new year’s resolutions. Checking in with a financial expert throughout the year can be a great step to a more solid financial future.
Is there anything that is on your year-end financial to-do list? Tweet us @SurePayroll with your tips for other small business owners.
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This website contains articles posted for informational and educational value. SurePayroll is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. If you require legal or accounting advice or need other professional assistance, you should always consult your licensed attorney, accountant or other tax professional to discuss your particular facts, circumstances and business needs.