The Seven Best Financial Planning Tips For Business Owners And Executives Sands Anderson PC

With the end of 2021 just around the corner, here are Sands Anderson PC’s seven best year-end financial planning tips. Fiduciary and Estate Planning Team and Tax team are aimed at business leaders and managers:

1. Review your estate plan and trust your financial advisor and lawyer.

Due to the continuing evolution of federal law, your estate plan and trust may need to be amended to reflect current proposed legislation. For example, an earlier version of the Build Back Better Act included provisions to include the assets of the settlor’s trust in the settlor’s estate on their date of death for estate tax purposes. The provisions would have affected most standard irrevocable life insurance trusts, which are grantor trusts because trust agreements allow the trustee to use any income in the trust for the payment of life insurance premiums. Our attorneys can review your current estate plan and trust to determine if your goals can be achieved under current and proposed legislation or if your documents may require changes.

2. Consider maximizing tax-efficient contributions to the account.

Contributions to tax-advantaged savings accounts such as IRAs and 401 (k) for retirement savings and 529 plans for education spending are simple methods to maximize tax efficient planning. If you haven’t reached your contribution thresholds or ownership limits, making additional contributions to these tax-efficient savings accounts can be a simple and tax-efficient way to build wealth for the future.

3. Review COVID-19 relief programs.

If you or your business has received payments through federal, state, or local COVID-19 assistance programs such as the Payroll Protection Program, Employee Retention Credit Program, or the Employee Grant Program operators of closed sites, the end of the year is a good time to gather your documentation for each program and save it for your records in case it becomes necessary in the future. Government agencies and banks investigated the beneficiaries of the program. If you or your business is currently working on a relief program, the end of the year is also a natural time to get a status update and confirm that you are in compliance with the program requirements.

In addition, some relief programs remain open and it is worth considering whether your business may qualify. For example, employee retention credits for 2020 and the first, second and third quarters of 2021 are currently available to qualifying businesses through the use of amended returns. Under current law and IRS guidelines, employee retention credits for 2020 and the first, second, and third quarters of 2021 would remain available as long as the statute of limitations remains open, which is typically three years to from the date of filing.

4. Larger charitable deductions for 2021.

The 2021 tax rules provide for an additional tax value for charitable contributions or donations. People using the standard deduction can claim a charitable deduction of $ 300 (or $ 600 in the case of a conjugal marriage) for cash contributions made to qualifying charities in 2021. For people who itemize, the deduction for Charitable contribution is generally limited to a percentage of adjusted gross income, which typically ranges from 20 percent to 60 percent depending on the type of contribution and charity. Under the new rules, voters can apply a higher limit, up to 100 percent of their adjusted gross income, for cash contributions to qualifying charities made in 2021. For those planning to make donations charitable donations each year, depending on the size of the donation, it may be more tax efficient to save annual donations (or forgo future donations) and consolidate donations into a single tax year. Normally, the maximum allowable deduction is limited to 10% of the taxable income of a C corporation. Under the new rules, C corporations can choose to apply an increased deduction limit of 25% of taxable income for charitable contributions. cash to qualifying charities in 2021.

5. Prepare for tax season.

The 2020 tax season has been difficult for taxpayers, preparers and tax authorities due to uncertainty and constant change. Tax season 2021 will likely be just as tough. You can now get to grips with difficult issues and reap some tax planning benefits by preparing information about your company’s 2021 results and 2022 projections. If you have undergone major changes in your business or significant transactions such as the sale or purchase of a business or building, your advisors should be informed so that a reporting and tax strategy can be developed. . For example, if your business received a Payroll Protection Program loan, have you discussed with your accountant how to properly report such a loan on your business’s books? If employees are working remotely or your business is selling to new states, have you reviewed potential connections, sales and usage, employment law, and tax issues with your advisors? Likewise, any future plans for the company can be discussed now to develop strategies to limit liability and tax costs in the future. Now is the time to discuss these issues with advisors before they are pressed for time due to filing deadlines.

6. Succession planning.

Some business owners are thinking about retiring or at least slowing down. For owners looking to sell later, restructuring the business, cleaning up business formalities and books of account, and / or conducting due diligence can now generate value and reduce costs when the owner ultimately decides to sell the business. Our lawyers can help develop ownership and estate plans to pass the business on to the next generation of family members or managers or sell to third parties.

7. Employee loyalty.

In the era of the Great Resignation, employers need ways to differentiate themselves and retain their key employees. Think about your workforce. Are they engaged? What do they like about your workplace? Does dissatisfaction exist and, if so, why? Taking the time to assess and repair or improve this part of your business can reap benefits in the New Year. We can help develop employee share ownership plans to get employees to stay with the company and give their all.

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