As year-end approaches business owners and managers should be preparing for year-end.  Year-end planning is crucial to minimize 2014 taxes, comply with year-end reporting and leave you in the most favorable position going into 2015.

Minimizing 2014 taxes is important but owners and managers should consider what their expectations are for 2015 when deciding whether to accelerate expenses in 2014 to minimize taxes or to defer purchases until 2015 for a larger tax benefit overall.

Effective October 1, 2014, new sales tax rules went into effect in North Carolina for service contracts.  Service contracts are defined as a contract where the obligor under the contract agrees to maintain or repair tangible personal property or a motor vehicle.  Examples include extended warranty contracts, maintenance agreements, and repair contracts.

Service contracts on real property are excluded from the sales tax.  Additionally, a service contract on tangible personal property which has been permanently attached to the real estate is exempt from being subject to the sales tax unless the service contract is entered into at the time of the sale prior to the asset becoming permanently attached to the real property.  An example would be purchasing a garage door opener and simultaneously purchasing a service contract prior to having the opener installed.  A service contract purchased after the installation would be exempt.

Saving for College

When saving for college parents typically use one of the following four investment plans:

1) 529 plans
These plans provide a tax benefit of not taxing the growth on the account as long as the funds are used for qualifying educational expenses.
2) Invest in accounts owned by the parents
These are taxed at the parents’ income tax rate but can be used for other purposes if not needed for college.
3) Invest in accounts owned by the child
These are taxed some at the child’s income tax rate and some at the parents’ rate.  The drawback is the funds are owned and controlled by the child when they reach the age of majority (typically age 18).
4) Invest through a trust
Trusts allow for a lot of flexibility and control by the grantor (contributor) to the trust

Consolidating Accounts
Many people have bank accounts and investment accounts at multiple locations.  By combining these type accounts you reduce the amount of paperwork you receive and the number of advisors you are dealing with.
Automating Payments
For many people paying your monthly bills is a dreaded chore.  Having your bill payments automatically drafted or setting up automated bill payments through your financial institution is a great way to save time.