The Importance of 4th Quarter Planning
If you’ve worked with me or read our newsletters, you’ve likely heard me mention tax planning—it’s that critical! This especially matters for creative professionals like graphic designers, marketing agencies, photographers, and independent studios, where cash flow management, project-based income, and tax efficiency are key.
So, what exactly is tax planning?
Unlike tax preparation, which results in a finalized tax return, or accounting services, producing financial statements, tax planning involves a proactive, strategy-driven approach. We assess your current situation, identify ways to minimize your tax liability, and meet with you to tailor these strategies to your creative business goals. It’s like how you would plan a client project with phases, reviews, and goals.
Why focus on Q4 tax planning?
It’s an ideal time for creative professionals to take stock of the year’s projects, income variability, and expenses, allowing for meaningful tax strategies. Here’s why:
Targeted End-of-Year Deductions: We don’t advocate for unnecessary year-end equipment purchases—‘don’t let the tax tail wag the dog.’ But if your studio or agency needs new tech, software, or equipment, we’ll explore if buying now aligns with your goals and maximizes tax benefits.
Tax Loss Harvesting with a Creative Lens: While we aren’t financial advisors, we collaborate with your trusted partners to minimize tax on capital gains from investments, such as liquidating assets or creative-specific portfolios.
Strategic Retirement Contributions: Whether you’re an independent artist or running a small creative firm, understanding contribution limits, AGI phaseouts, and tax-deductible retirement strategies is critical to maximizing your financial health.
Quarterly Estimated Taxes Assessment: With project-based or fluctuating income common among creatives, Q4 is prime time to ensure estimated taxes are accurate—helping avoid penalties while optimizing cash flow.
At Larson CPA, we help creative professionals like you make the most of tax planning, ensuring every move aligns with your unique industry needs.