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End of year and cash in the bank - what to do?

swhswh subscriber Posts: 1
edited November 2006 in Accounting and Financial Management
I work with a new business that has been fairly profitable this year and they are going to have extra cash in the bank at the end of the tax year.  They plan on making some capital expenditures, but no where near the total amount in the bank.  They would really like to be able to use the money early next year for marketing expenditures, but the concern is a big chunk will be paid out in taxes.
The main question... How do you legally reduce your tax bill while still keeping the cash fluid for future marketing expenditures?  The company is an LLC and works with several 1099 consultants.  Is it possible to payout some of the money in bonuses to the owner and then next year the owner loan the money back to the business?  I realize this most likely is still taxable, but does anyone have any suggestions on keeping as much of the capital as possible in order to help build the marketing budget that will be needed to really grow next year?
Thanks.
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    stevesteve subscriber Posts: 14
    Do you already know where your marketing dollars are going to go? Are you comfortable making a deposit before year end?
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    swhswh subscriber Posts: 1
    Post card campaigns are currently the only confirmed maketing venues.  A vendor hasn`t been picked for the mailing lists, printing or mailing, but that could be done very soon.  Deposits sound like a great idea assuming the vendors can be trusted. Is this commenly done in the printing and mailing industry?
    The complete marketing plan hasn`t been defined at this time, so it`s hard to really know for sure which vendors and how much. Ideally the plan would be to build up a war chest of funds that can be used whenever and wherever once the marketing plan has been completed.  Other marketing venues that aren`t fully defined might include; hiring someone to do cold calling, eNewsletter advertising, pay-per-click search engines and traditional local advertising, which is in addition to the post card campaigns of up to eight repetitions.
    Thanks.
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    sreyssreys subscriber Posts: 0
    Has anyone done a tax projection so that you know how "big" the  "chunk" is?  Money in the bank does not necessarily translate directly to taxable profit.
    You`ll get some ideas here, including the good one of prepaying anything that can reasonably be prepaid (assuming its a cash-basis entity), but the owner needs to get some input from his/her trusted tax advisor before the end of the year.
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