Watch Related Videos
comments
Good business tax planning will help you maximize any tax refund you might be entitled to receive. Of course, this will also help you by keeping any taxes you need to pay in as low as possible. Your business tax planning should be begin near the end of the previous year so help set up some a favorable end to the tax year.
As with any type of household, knowing where your business stands financially, will help you with the current year income tax preparation. Take the necessary time to make sure all your accounting books are up to date and free of any errors. If possible, send them to an accountant to make sure that your business revenue, and pay outs, are up to date and accurate.
Bill for New Year
A common business tax planning tip is to bill your customers for the new year. This means that any type of income you would make during the end of December, hold off the billing until the beginning of January. Any income that you can defer until the New Year will not be counted onto the current years profit statements. Deferring your income to the New Year can make very good sense to a sole proprietor or small LLC.
Increase Your Expenses
Another great tip for planning your current year tax strategy is to increase your actual spending. Near the end of the year is a great time to make those purchases you will need for the upcoming future. For examples, if you need to buy a new set of computers to network your office, then buying them during the current fiscal year is better than waiting until the beginning of the New Year. There are a variety of items you can purchase.
•Office Supplies - Stock up on your supplies for the upcoming year. Get all the necessary items you will need like paper, envelopes, copier toner, printer ink, and stamps.
•Equipment Purchase - New office equipment is a great purchase to make near the end of the year. Computers, copiers, even company cars are all pieces of equipment that can be bought for the upcoming year.
Inventory Write Offs
This will depend greatly on your business, but if you have a storefront, service, or some other business where you sell something or have tangible products, then take an inventory of all you have. Take note of anything that is damaged, or needs to be replaced. The cost of replacement or the drop in value can account for as another deduction.
Retirement Plan Contribution
Set up a retirement plan and begin paying into it. Not only is this a great way to reduce your taxable income, but it will also help you plan for the future when you do retire. A 401K, Roth IRA, or a SEP are all great retirement accounts to think about.
Each business will be different regarding what you can do with your business tax planning. However, the key is to start planning early in the year so you can set aside money for year end purchases, and have a sound picture of where your business stands financially.
As with any type of household, knowing where your business stands financially, will help you with the current year income tax preparation. Take the necessary time to make sure all your accounting books are up to date and free of any errors. If possible, send them to an accountant to make sure that your business revenue, and pay outs, are up to date and accurate.
Bill for New Year
A common business tax planning tip is to bill your customers for the new year. This means that any type of income you would make during the end of December, hold off the billing until the beginning of January. Any income that you can defer until the New Year will not be counted onto the current years profit statements. Deferring your income to the New Year can make very good sense to a sole proprietor or small LLC.
Increase Your Expenses
Another great tip for planning your current year tax strategy is to increase your actual spending. Near the end of the year is a great time to make those purchases you will need for the upcoming future. For examples, if you need to buy a new set of computers to network your office, then buying them during the current fiscal year is better than waiting until the beginning of the New Year. There are a variety of items you can purchase.
•Office Supplies - Stock up on your supplies for the upcoming year. Get all the necessary items you will need like paper, envelopes, copier toner, printer ink, and stamps.
•Equipment Purchase - New office equipment is a great purchase to make near the end of the year. Computers, copiers, even company cars are all pieces of equipment that can be bought for the upcoming year.
Inventory Write Offs
This will depend greatly on your business, but if you have a storefront, service, or some other business where you sell something or have tangible products, then take an inventory of all you have. Take note of anything that is damaged, or needs to be replaced. The cost of replacement or the drop in value can account for as another deduction.
Retirement Plan Contribution
Set up a retirement plan and begin paying into it. Not only is this a great way to reduce your taxable income, but it will also help you plan for the future when you do retire. A 401K, Roth IRA, or a SEP are all great retirement accounts to think about.
Each business will be different regarding what you can do with your business tax planning. However, the key is to start planning early in the year so you can set aside money for year end purchases, and have a sound picture of where your business stands financially.
