Hi there Jackrabbit fans! Amber here from the Jackrabbit Marketing Team with some year-end reporting tips from our friend and CPA, Sean Dever.
Not only has 2020 been different for your youth activity program, but the financial side of your business has been turned on its head as well. To help end 2020 the right way and prepare for 2021, Sean sat down with us for a live webinar to discuss many business tips for our Jackrabbit clients and friends in the industry.
2020 Year-end tax planning tips for business owners
With Sean’s expertise as a CPA and former gym owner, he is the best in the business when it comes to knowing how to close out the year and get ready for the next! He covered a lot of ground, but we took out the top 5 things you should know when it comes to year-end reporting for 2020.
1. Make sure you have the right team on your side
You’ve got great staff on board to work through the day-to-day of running a youth activity center – instructors, office staff, marketing specialist, etc. Obviously, that’s how you got to where you are.
But, it’s also very important to have a professional accountant in your corner. And if you didn’t have one before the pandemic, 2020 has shown you that you definitely need an expert guiding you through the actions you need to take, questions you need to ask, and plans to make in order to keep your program pushing forward no matter what comes your way.
You want to make sure this person has you and your youth activity center’s best interest at heart!
2. Know how the timing of processing tuition affects your tax year
Timing is everything. Especially as you get closer to the end of the year in regards to tuition. If you charge monthly tuition, you should consider whether processing tuition payments should happen by December 31st (making them count in the 2020 tax year) or on or after January 1st (making them count in the 2021 tax year).
Knowing your numbers – with the help of an accountant of course – will aid in making the best decision for your youth activity center based on where you are at so far this year.
3. Purchase equipment you need prior to the end of the year
Purchasing equipment for your youth activity center provides deductions for you at tax time. With the current administration, there are larger deductions for equipment, so it’s a great opportunity to capitalize on that benefit before the end of the year and before the new administration takes over.
Need new mats for the gym? Or new barres for the dance studio? Now is the time to consider those purchases before the end of the year.
4. Swipe now but pay later
When it comes to your business credit card, you can use the card anytime between now and the end of the year but not pay the bill until January. Swiping your card now gives you the deduction even though you aren’t paying the bill until the next tax year.
Make sure that you are using your business credit card for this and keeping proper documentation with receipts. Something small but yet an easy deduction to help you for the 2020 tax year. In the past, this may not be something you even considered, but with the events of 2020, it’s a great way to strategize and help you get the most of your tax year.
5. Prepay expenses using the IRS safe harbor
If 2020 is showing a profit for your youth activity center, consider pre-paying your January 2021 rent by December 31, 2020, for example. By doing so, you have another deduction for the current tax year.
And on the opposite end of the spectrum, if you are not showing a profit in 2020, consider pushing expenses to the next tax year. This strategy is often referred to as bundling and pushing. Just make sure you check with the service provider or your landlord to make sure you can do so without being penalized!
As always, Sean sheds a lot of light on topics that are important to you as business owners. If you didn’t catch the session live with Sean, you can get full access to this session (and much more) by registering for BOOST 2020. It’s getting close but it’s not too late, yet!