What are the tax benefits of the year-end closing?
August 15, 2023 | 40,00 EUR | answered by Alice Heck
Dear tax advisor,
my name is Andreas Witzelmann and I am the owner of a small business in the hospitality industry. I am currently in the process of preparing my annual financial statements and I am wondering what tax advantages there are for me.
My company experienced a decrease in revenue last year, mainly due to the current economic situation and the associated restrictions in the hospitality industry. As a result, I have naturally generated less profit and now fear that this could have a negative impact on my tax situation.
I have heard that there are various ways to take advantage of tax benefits when preparing the annual financial statements, but I am not sure which ones are best suited for me in my situation. For example, are there depreciation expenses that I can claim to reduce my profit and save on taxes? Or are there other tax advantages that I could benefit from?
It would be very helpful for me if you could provide me with an overview of the different tax benefits when preparing the annual financial statements and suggest possible solutions on how I can optimally utilize them for my business. I want to make sure that I fully exploit all opportunities to minimize my tax burden and financially support my company.
Thank you in advance for your support.
Sincerely,
Andreas Witzelmann
Dear Mr. Witzelmann,
Thank you for your inquiry regarding the tax benefits of the year-end closing for your company in the hospitality industry. It is understandable that you are considering how to minimize your tax burden in your current situation, especially after a decrease in revenue last year.
There are indeed various tax benefits associated with the year-end closing that can help you reduce your tax burden. One option you have already mentioned is depreciation. Through depreciation, you can spread the acquisition costs of assets over a specific period of time and thus reduce your profit. This can help you reduce your tax burden, especially if you have made significant investments in recent years.
Another tax benefit you can take advantage of is provisions. Provisions allow you to account for certain liabilities or obligations that arose during the fiscal year in the profit and loss statement. This can also reduce your profit and save taxes.
Furthermore, there are tax advantages such as the declining balance depreciation method that can help minimize your tax burden. With this method, the depreciation of assets decreases over time, leading to tax savings.
It is important that you utilize all possible tax planning options during the year-end closing to optimize your tax burden. Therefore, I recommend that you consult with an experienced tax advisor who can help you identify and utilize the tax benefits that are suitable for your company. A professional tax advisor can also help you minimize potential risks and avoid tax pitfalls.
I hope this information is helpful to you and supports you in your tax planning. If you have any further questions or need assistance, please do not hesitate to contact me.
Sincerely,
Alice Heck, Tax Advisor
