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Planning for 2013 tax season should start now

With 2012 drawing to a close and worries looming large about the impending fiscal cliff, some entities may have forgotten that they need to start thinking about year end corporate tax planning.

With 2012 drawing to a close and worries looming large about the impending fiscal cliff, some entities may have forgotten that they need to start thinking about year end corporate tax planning. Filing deadlines for individuals will be coming up in March, but certain franchisees may need to file by February, while other businesses may run on a calendar instead of a fiscal schedule. Regardless of when in the next few months taxes are due, the financial period they pertain to is ending now, so organizations should start to gather essential documentation.

Get the necessary information
The first thing any entity must do is determine what date it must submit tax information by in order to remain compliant. Some states do not require filing while others do, so checking with local authorities is the next step. If a company does not yet have a tax ID, the Small Business Administration has information on how to acquire this number, as well as resources for locating forms and contacting other tax offices that might be of assistance.

Look for advantages
Once the needed files are assembled, companies should meet with a preparer or start searching on their own for benefits and boosts they can claim to reduce their tax burdens or get more money back from their filings. A number of exemptions and credits are currently available to different kinds of organizations, so understanding where they exist and how to use them is essential.

Forbes wrote that certain acquisitions before the year ends, including hiring veteran as employees, offering lower-cost, private health insurance to staff members and acquiring property, can be partially written off or help business avoid penalties. These bonuses could be especially useful to S corporations, the source mentioned, if they find themselves in a bind with employee stock options as incentive plans or are seeing a problem with flow-through in terms of tax debt.

In year end tax planning for 2012, companies may also want to consider their situation for next year and choose to defer some revenue until 2013. This is a viable option for reducing this year's burden, so long as it is accomplished before the start of the new year, so that goods or income will not be tendered in a way that would impact the current fiscal period. Forbes noted that this can have its own tax repercussions for the coming year, as there is no way to know beforehand what 2013 will bring, and could therefore result in a worse situation in the future.

Ask for more time
In the worst case scenario, businesses should always file a tax extension. Now is a good time to start looking through files, collecting financial statements and filling out paperwork in order to dodge that status, but sometimes it cannot be avoided, especially if certain statements have not yet been received from investment sources, contractors or other organizations. In that event, filing an extension gives companies one to six months, depending on the kind of tax and filing body, but this is always only an extension on filing - any anticipated tax owed needs to be paid with the extension, or else fees can be accessed and the extension is no longer valid.

 

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