The year seems endless in the first few months of the year. Then, come December, we often ask ourselves where the year went. Indeed, 2021 seems to have flown by.
With just days left before the calendar turns to 2022, it’s time to take stock of your domain investing business. By running profit calculations now, you can time end-of-year purchases and domain sales to minimize your tax burden and get off to a great start in the new year.
Here are some things to do now to finish the year on a strong note and set yourself up for a successful 2022.
Run a preliminary P&L
Domain investing is a business. It’s important to understand how you’re doing financially to decide which end-of-year moves you want to make.
Run a profit and loss calculation to see where your profits are so far this year. Are you ahead of last year? Then you’ll likely owe more in taxes, so you should make a provision for that. If you’re not doing as well as last year, it might give you the motivation to close out some last-minute sales.
Renew domains early
Most people put off expenses as long as possible. But some domain investors might have an incentive to renew their domains early. While each person’s tax situation differs, and you should check with your accountant, you might benefit from renewing domains that expire next year before the end of December. This may allow you to deduct renewal costs as a business expense in 2021 instead of 2022. If your preliminary P&L shows a nice profit, renew your domains early. If you think next year will be better, perhaps you should wait and incur the expenses then.
Think about purchases you can make this year
U.S. domain investors who use assets in their business can deduct most small purchases on this year’s taxes. Need a new laptop for your domain investing? How about a sit-stand desk? If you buy them before the end of the year, they might qualify as business expenses for this year’s taxes.
Finish sales
It might be wise to wrap up some of your domain sales before New Year’s celebrations. Buyers could be motivated to complete transactions now to tidy up their own books. And deals that don’t complete by the end of the year move into the busy January month and can be harder to close.
Of course, if you want to delay income for tax reasons, there’s a benefit to waiting until January to finish a domain sale.
Do a domain audit
The end of the year is a perfect time to do a domain audit. Many domain investors are surprised to find out that some of their domains are pointing to the wrong nameservers, listed with incorrect prices, or otherwise under-optimized. This can mean lost sales opportunities. Here’s what to check:
- Are all of your domains pointing to the correct parking/marketplace nameservers? If not, visitors to the domains might not know how to contact you about buying your domains. Run your domains through a bulk Whois checker or sort the domains by nameserver in your registrar account.
- Are all of your domains listed for sale? Investors who own a lot of domains can sometimes forget to list a handful of them for sale on the major domain marketplaces. This means fewer sales. Check that each of your domains is listed for sale with your preferred marketplaces. While you’re at it, list them in the Namecheap Marketplace to increase your chances of sale.
- Are your domains priced correctly? There are two things to check here. First, make sure your prices are consistent across marketplaces and landing pages. Second, re-evaluate your prices to see if you should change them. Some terms are hotter this year than last year (e.g., metaverse) and might warrant a price increase. Conversely, if your marginal domains aren’t selling, it might be time to test lower price points.
It’s also valuable to check your parked domain stats. Evaluate how much traffic the domains are getting and if they are worth holding onto.
Take time to celebrate
2021 has been another wacky year with plenty of ups and downs for people across the world. The same goes for domain investors. But you’ve made it. Take a moment to reflect on this year’s successes and failures, and make business resolutions for what you want to achieve next year.
End-of-year domainer checklist .