This may seem impossible – but come tomorrow, it will be December. This happens every year, too. Things are chugging along, feeling normal, and then suddenly, we embark on the rapid downhill to the end of the year. As we are now on that descent, though, there are some things one can think about when it comes to taxes before the calendar turns to 2023.

For business owners, if you are feeling comfortable and not worrying about how the bills will be paid through the rest of the year, there may be some expenses you can pay ahead of time that can lower your 2022 tax bill. And from the other side of the equation, you may want to think about if it is possible to delay receiving any income. These both work toward the overall equation that lower income plus higher expenses equals a reduced tax bill. Making sure you comfortably get to the end of the year is most important, but if you have some wiggle room, that is something to think about.

Those two pieces make up a large proportion of your bookkeeping, as well. The income half of this concept is easier to take care of usually. With minor regular bookkeeping, you can track what you were paid, for what you were paid, who paid you for it, and when it hit your bank account. It takes much more effort, however, to keep full track of expenses. Do you really know what was purchased with each Amazon transaction that is debited from your bank account? Can you properly justify that these are all business expenses and not for personal use?

There are more businesses who do not have this stuff fully documented now than those who do. This is one of those tasks that is not immediately necessary to accomplish for the business to keep working and therefore often gets left behind. Putting some effort into it now, though, can help decrease the tax season crunch when you try to get all this information in order under a deadline and can also help you make sure none are missed, thus again putting yourself in the best possible tax position.

Finally, when we come to this time of year, it is always a good moment to see if you can make any charitable donations. Sure, this potentially may come with tax implications that benefit you, but it is worth doing even beyond that. There is one type of feeling good that comes with having your finances in order, there is another type of feeling good that comes with helping fellow humans who need it. Please do not be afraid to embrace both.

Warmly,

Josh Bousquet
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This is a special week in the US when everyone seems to get a chance to flip into holiday mode. It’s the welcome start of winding down toward the end of the year. So, here’s an initial hope that you get a chance around this week’s holiday to switch off a little bit and relax.

I know that this will not be easy for everyone. Outside forces have made for a turbulent last few years and that makes that switching off more difficult if you feel them constantly pressing upon you. At the same time, though, if you are feeling that, I would say that indicates that it is even more necessary to make a steady effort to pull back and do what you can for a reset.

So wherever you find yourself on that spectrum, may you still be able to find something to be thankful for during this season. Even if it’s small, even if it’s not what you wish it could be, latch onto that bit of light that is still there. For no matter what that thing is, you still deserve that break.

And lastly, thank you for being here with us during this time and may it only serve as the start of a fruitful and restful holiday season.

Warmly,

Josh Bousquet
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As I write this on Monday morning, which party will control the United States House of Representatives is still in doubt almost a week following Election Day. No matter how one feels about this, it is difficult for either party to claim that their favored forward path has overwhelming support. This, though, may just raise more questions about what will happen during the lame duck session of Congress before the new members are sworn in next year.

As a bit of a caveat, saying this does not mean that anything is destined to happen. It is just as likely that very little happens over the final weeks of the year and things stand as they do now. However, it is also easy to pick out possible tax laws that each side (or even both!) would like to see passed. It is not my role here to cast any predictions on what may happen.

It is my role, however, to point out that things may happen. And if things happen now that affect the tax return you will be putting together in just a couple months, well, that was pretty impossible to plan for. Clearly there is value in tax planning so that you are not completely surprised when you do file that return, but it is simply not possible to plan for everything all of the time down to the penny.

And this does highlight something that we often mention in this space – you can only operate under the rules that are in place. These recent close elections help display just how divided each side is on either side of pretty much every issue. It then is obvious that not everyone is going to be happy with where tax law stands at any time.  Heck, I would even say that it may be difficult/impossible to find anyone who thinks everything in this area is exactly as it should be. But there will be this continual push and pull and compromise as each side tries to get some pieces it wants and allows some concessions to get them.

How close things are also show how difficult it is to predict who will hold power, never mind what they can do once they get there. No matter what the final results are here, they are closer than almost everyone guessed they would be. So if you were putting a lot of hopes into things turning out one way and planned accordingly thinking it would be a trigger … well, that didn’t work out.

Even when things aren’t clear, though, we can continue to plan, and we will continue to plan according to the rules in places – no matter what they are.

Warmly,

Josh Bousquet
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It is a situation that nearly every business owner experiences at some point – things would be so much better if everyone just paid what they owed you. You’re working a lot, your slate is full, but the numbers in the bank dwindle. Apparently, this is something that the government deals with, too, as recently it was reported that the tax gap (the difference between taxes owed and those paid on time) for the years 2014-2016 is estimated at $496 billion annually and that number is estimated to rise to $540 billion annually for 2017-2019.

I don’t want to get into all the numbers involved with this, so please read this article if you
would like to really dig in. Some highlights, though:

• $398 billion of the gap is from underreporting (taxes understated on timely returns). So look at how much money could be received if people just followed the rules.
• $68 billion annually has been estimated to have been collected through late payments and IRS payments during the 2014-2016 period, dropping the gap’s current total to $428 billion.
• In 2021, the IRS collected more than $4 trillion in taxes and penalties. This shows how what they are not collecting is not negligible.

These numbers bring up conversation about the billions that the IRS received in the Inflation Reduction Act, partially to help it close this gap. And if that money actually goes to places that help close the gap, well, that sounds like good business – it would be spending some money to bring in many times more.

So much of the discussion around tax policy becomes quickly polarized. This is easy to understand even beyond the heavy divisions we see, well, everywhere because that policy almost always ends up in some group paying more money in taxes than they were before. It is then not difficult to understand that group being upset by the new rules.

When one looks at these gap numbers, though, maybe it is possible to take a step back and just understand that there is a problem. After all, these taxes are being collected to fund the government. And like any budget, if the money you expect to come in isn’t arriving, then something must be done to try to close that gap so that what must be done can be accomplished. So maybe this need for enforcement can be some common ground and hopefully it can start being handled in a way that pleases (mostly) everyone.

Warmly,

Josh Bousquet
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Earlier this week, I saw a headline for an article concerning how much it costs to charge your smartphone for a year. Well, the article did not bury the lead and quickly let it be known that the phone probably uses less energy than anything else in your home and likely costs less than a dollar PER YEAR to charge your phone.

Well, hey, at least that is good news.

From there, though, my mind spun off into wondering how many things we pay for that we don’t really know what they cost. I mean, in this case, we just pay our electricity bill every month, maybe with memories of our parents telling us to turn off the lights or close the refrigerator door if it’s higher that month, but it is just this mystical total number, and we don’t know exactly what makes it up.

Now in this case, there probably isn’t a whole lot that we can do to get into the intricacies of that total number. For business owners, however, it is important to break things down whenever possible.

There have been many, many times when we have seen business owners (frequently early in their journey), whose accounting consists of making sure there is money in the bank. As long as there is, they feel they are moving in a positive direction. And sure, to some degree this is true, because everything is taken care of, they are not left with stress weighing on them about how to pay their bills.

But as opposed to what is actually contained within your electricity bill, you CAN figure out just where your money is going in your business. And when you actually have those numbers, you may be surprised at some and start to actually think about what you are spending. Or, of course, you may look through those numbers, find that you aren’t necessarily spending too much, but realize you aren’t bringing in enough income to be where you want to be.

No matter just how things look, though, actually having those numbers gives you the power to make decisions to reach that desired point. No matter how you choose to get there, you can only reach that destination by having that definite information. So keep an eye out in the near future for some more writing from us in this spot about ways that can be accomplished.

Warmly,

Josh Bousquet
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