Year-End Services to Offer Your Business Clients

This is the time of year that lists are made (and checked twice). It’s also a great time for CPAs to consult with clients and offer much-needed year-end advice. Here’s a year-end checklist for critical end-of-year tasks to get your clients in top shape for 2019.

1—Review overall performance and objectives

What do small businesses clients really want from their CPAs? Most small businesses need services beyond bookkeeping and tax advice to stay financially healthy, and they need help making smart financial decisions. Offering such services can help you set your CPA firm apart from the competition. To offer truly useful business advisory services, start by drawing insights from your client’s performance over the past year. Map out business goals for the next 12 months and then discuss long-term plans for the next three to five years. Advise your client about any challenges you see stopping them from achieving these goals. Does your client need to improve cash flow, profitability or change their spending?

2—Tax reform

The Tax Cuts and Jobs Act (TCJA), passed in December 2017, made tax law changes that will affect every business and individual in 2018 and the years ahead. Your business clients need to be aware of tax rate changes for pass-through entities, changes to the cash accounting method for some, limits on certain deductions and more. Two changes affecting the end of this year include Section 179 expensing changes and the new 100%, first-year bonus depreciation.

Section 179 refers to the amount a taxpayer may elect to expense in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million.
The 100% depreciation deduction applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.

To stay up to date on the Tax Reform changes relevant to your clients, bookmark the IRS Tax Reform News page and check back often.

3—Closing an inactive business

If your client is closing a business or closed a business this year, make sure you explain the proper procedures to legally shut down a business, otherwise they could be personally responsible for filing annual reports, filing state/federal tax returns, and maintaining miscellaneous business licenses and other filings for a business that no longer exists.

If your client has been operating as a corporation, LLC, or partnership, all members need to vote on closing the business and the final vote should be recorded in the meeting minutes. If shares are involved, two-thirds of the voting shares must also vote on the dissolution. For a corporation where no shares were issued, the Board of Directors must approve to dissolve the company (similar rules apply to LLCs).

Next, the business needs to file an Articles of Dissolution form with the Secretary of State’s office and close the business’s federal and state tax accounts by notifying the IRS and closing the Employer Identification Number (EIN). Finally, the company needs to pay off any debts and contact the county where the business is located to cancel the business license, seller’s permit and any other permits.

4—Delayed filing

If your client plans to incorporate in the new year, most states offer the option of “delayed filing,” which allows business owners to set the date when they want their company to be officially recognized. Delayed filing is extremely beneficial for businesses changing their entity type and an effective date of January 1 means your client doesn’t have to file two separate tax filings with the different entity types. In addition, your client can avoid paying state franchise taxes for the year the registration forms were submitted. When you can submit a delayed filing varies from state to state, but to avoid the bombardment Secretary of State offices receive at the beginning of a new year, your client might appreciate a head’s up about the option.

5—Year-end compliance

In addition to making sure your clients are in compliance with their financial document and tax sales tax regulations, your corporate clients should be aware they may have several other filings to take care of before the end of the year. Some annual filings to note are:

Annual Report: an update on officers, shareholders, and business direction.
Articles of Amendment: changes to your company name, your address, or your share distribution.
Articles of Conversion: if your client as changed business structure (from a corporation to an LLC or another switch)
Trademark renewals
Business license updates

There are plenty of opportunities to help your clients get through the end of 2018 and start off the new year on the right foot. Make sure you’re there to guide their way.

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Nellie Akalp is a passionate entrepreneur, business expert and mother of four. She is the CEO of CorpNet.com, a trusted resource and service provider for business incorporation, LLC filings, and corporate compliance services in all 50 states. Nellie and her team recently launched a partner program for accountants, lawyers, and business professionals to help them streamline the business incorporation and compliance process for their clients.