As the year draws to a close, business owners should focus on three key areas to ensure compliance and optimize future success:
1. **Tax Planning:** Proactive tax strategies can significantly reduce your tax burden. Review potential deductions, explore opportunities for tax credits, and consult with a tax professional to maximize savings.
2. **Corporate Formalities:** Maintaining proper corporate formalities protects your personal assets and reinforces the legitimacy of your business structure. Accurate record-keeping is essential, especially for LLCs, as it shifts the burden of proof to the IRS in case of an audit. Over-documenting business expenses and activities provides added protection.
3. **Strategic Planning for the New Year:** Use this time to evaluate your business performance, identify areas for improvement, and set clear goals for the upcoming year. Develop a comprehensive business plan to guide your operations and drive growth.
**Document Everything: Shifting the Burden of Proof**
For LLC owners, thorough documentation is crucial. Maintaining a detailed tax diary empowers you by shifting the burden of proof to the IRS. With solid documentation, the IRS must actively disprove the validity of your claims, providing a significant advantage during audits.
**Annual Meetings: A Valuable Opportunity**
Ensure you conduct your annual meeting before the year concludes. This meeting doesn’t have to be a chore; make it engaging. The location is flexible, allowing you to combine business with travel within the continental United States. Holding the meeting abroad, in Hawaii, or Alaska is permissible if you can justify the business purpose for that location.
**Streamlining Corporate Minutes and Meetings**
1. **Notice or Waiver of Notice:** For corporations, written notice of the annual meeting must be sent to all shareholders via certified mail. However, if you are the sole shareholder, a waiver of notice is sufficient and can streamline the process.
2. **Meeting Minutes:** Document all discussions and decisions made during the annual meeting in the minutes. These minutes serve as an official record of your business activities and can be created even while engaging in other activities. A business owner could hold their annual meeting while skiing, jotting down ideas for the coming year in between runs.
3. **Resolutions for Significant Decisions:** Resolutions are formal decisions made during the annual meeting. While resolutions aren’t necessary for routine activities like client dinners or attending seminars, they are essential for significant actions such as renting new office space, opening a new bank account, or purchasing a vehicle. When in doubt, create a resolution to ensure proper documentation.
4. **Medical Reimbursement and Educational Assistance Plans:** Establish written medical reimbursement and educational assistance plans. These plans, readily available online, are simple to implement and can provide valuable benefits to you and your employees.