Year-end Small Business Tax Tips
- 1. Update your accounting: it is vital that you must have a well understanding of your company's financial situation as part of your year-end tax strategy. Make some time to guarantee your books are up-to-date and correct. It won’t take so much if you plan time with your accountant for year-end advice, particular to your operations.
- 2. Defer Income: Any payments your company can receive for the duration of the first week of January as compared to December lessen your tax bill. Each cent that was overdue until January this year will not owe taxes until April next year. Every deferral strategy will reply on your profit and losses for the year and business legal structure.
Relying upon your income tax rates in the projected new-year delay of income can be the best sense for many sole proprietors, partnerships, LLC's, and S corporations. Ensure your cash flow can handle the deferred income.
- 3. Increase Expenses: Buy stuff your business will need in the nearby future to make the most of the deductions for this year. Buy them now if you can observe a need for goods and services in the primary quarter of the new-year if cash flow permits. Count the following items for expenses:
- Office Supplies: Stock up on fax paper, printer cartridges, stationary, and other office items.
- Pay Bills Early: Pay your bills before the new-year in areas such as; cell services, subscriptions, rent, insurance, and utilities.
- Equipment Purchases: Consult with an accountant to examine your circumstance and company structure to maximize your deductions. In addition, your equipment will have to be in your office, "in use" by year-end.
- Other Items: This category includes: pre-payment of subscriptions, travel bookings, equipment repairs, and maintenance.
- 4. Inventory Write-Offs: Your accounting methods depend on how you may hope to check inventory for goods that have been dented or have become outdated. The fall in market value of the inventory can offer your company with additional deductions.
- 5. Contribute to a Retirement Plan: Pay to your retirement plan or plan one before the year-end to cut your income for this year. Verify the contribution limits for your type of plan. Talk about the best strategy with your financial planner or accountant.
Business owner's situation and accounting method are different therefore these year-end tax tips will apply differently to each. The cash method of accounting permits for deductions and income reported for the year they are compensated or received. The accrual accounting method concerns income and deductions in the year incurred. Make time to review the best approach with a professional advisor and take advantage of the year-end tax planning for your small business.