Moving Words – Check-Up
“We all need a daily check-up from the neck up to avoid ‘stinkin’ thinkin’ which ultimately leads to hardening of the attitudes.” – Zig Ziglar
It’s that time of year again. And it’s not something that needs to wait until after January 1, 2018. It’s time for that annual business insurance and tax check-up. The purpose of your business insurance and tax check-up is to reduce your tax bite and ensure your insurance is covering the important risks and reducing costs by elimination of unnecessary coverage.
Number One: Before year’s end, it’s extremely important to review your business tax strategy. Sit down with your CPA/Tax consultant and look at adjusting taxable earnings for 2017. This could be accomplished by accelerating expenses or delaying income at year-end. If you’re a cash-basis taxpayer, you could boost deductions by declaring and paying bonuses in December rather than in early January. Look at having that major repair done before year’s end; or, if you’re looking to put new tires on your equipment the first quarter of 2018, it might save you a bundle in taxes to purchase and pay for those tires before the present year ends. Also, you may be able to defer invoicing, so that big payment doesn’t arrive until after January 1, 2018 – thus you’re not adding it to your 2017 taxable revenue.
Look into the “Section 179″ rule that allows you to take an immediate tax deduction for most purchases of business equipment. By deducting the full cost immediately instead of depreciating it over several years, you’ll cut this year’s tax bill. Or it might be time to make that big ticket purchase of those much-needed trailers so you can get that first year depreciation on your 2017 tax return.
This is also a good time of year to make sure you’re using the most appropriate form of business — whether it’s sole proprietor, S or C corporation, LLC, or partnership. The end of your business’ tax year is the best time to make the transition to a new form of business entity. Have your CPA explain any new changes to the tax laws that will affect you and your business. Have him or her explain the best strategy so that those changes will have the lowest impact on your taxes or how you can take advantage of them to reduce your tax bite.
Number Two: Review your business insurance coverage regardless of its renewal date. Risks change each and every time you add or remove a piece of equipment, expand or reduce the areas you service and add/subtract the number of employees and/or contractors you have. Have you added a new warehouse or office in another state? What are the insurance requirements for auto liability or Workers Compensation Insurance in the new state? These questions, along with many others, need to be asked at least several times a year: once when an insurance policy is up for renewal, any time your risk environment changes by adding or subtracting personnel and equipment or adding locations, and then at year’s end to make sure you’re moving forward into the new year with the right levels of insurance coverage.
Don’t wait until you’ve received your Insurance Renewal notice to try to change insurance companies or coverage. An insurance agent who’s looking out for your best interests with the best coverage of all your risks, needs from 90 to120 days to submit your information to each insurance underwriter. Insurance for the moving industry is complicated and requires time for hours of diligence to find the best coverage at the lowest cost.
Don’t just automatically write a check to renew your insurance policies when they come due. Instead, you should sit down with your insurance agent every year. Review your business operations, focusing on any changes. Discuss types of risk that could arise. Ask about new developments in business insurance. Use your agent’s expertise to identify risk areas and suggest suitable coverage.
Set aside time and invest it wisely the last quarter of each year by reviewing these two critical areas, taxes and insurance – because if either is ignored, it can cost you significantly.
An investment in knowledge pays the best interest. – Benjamin Franklin
