Year-End Tax Tips for the Small Business
January 17, 2012
I'm proud to be paying taxes in the United States. The only thing is—I could be just as proud for half the money. –Arthur Godfrey
As the year winds down, there are a few things you can do to save your business some money. Here are five tips to help you maximize your tax benefits:
1. Defer income
Each and every penny you make up until December 31st of this year will be included in this year’s taxable income. Deferring payments to the beginning of January will save you some money in taxes.
2. Make charitable contributions
‘Tis the season to give. It’s important to check your list twice and see if any of your charitable contributions can come at the end of this year rather than the beginning of next. This will maximize your deductions. Just be sure to keep your receipts.
3. Increase expenses
Don’t put off buying office supplies until next year: all year-end expenses are tax deductible and could save you a considerable amount come April of next year. Look to things you’ll be using soon, including office supplies and equipment. Also consider paying January bills early.
4. Check for inventory write-offs
Look through your inventory to see if any products are damaged or outdated. Noting market-value loss could provide you with additional tax deductions.
5. Contribute to your retirement plan
Small business owners should recognize that being your own boss means you are responsible for your own retirement. If you haven’t started contributing to a retirement account, now is the time. Any contributions made are tax deductible. And if you already have a retirement account, year-end contributions are a great way to boost your deductions.
Professional tax preparers can help you get the most from your yearly tax filings. But truth be told, they’re even more valuable when you enlist their help in year-round tax planning. Any good tax preparer worth his or her salt will save you more in taxes than they charge you in fees. Don’t wait to see how much a tax preparer could save you.
Allen Bostrom is the CEO of Universal Accounting.