Your Year End Business Check Up

Your Year End Business Check Up

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With just weeks left in the year, businesses will soon close the books on another business year. But before the calendar flips over, you’ll want to ensure that several matters including tax issues are addressed well before then. Let’s take a look at some of the important matters that you should review before the year comes to an end.

1. Defer your income. Perhaps you had a good year, maybe it has been so good that you have a large tax bill pending come tax time. If you can, shift some of your income to the new year to reduce your tax burden for this year. Your accountant can help you here: he or she may advise you to defer some payments until January to ensure that your tax hit for this year isn’t as bad.

2. Buy it now. Business owners that have been putting off purchases may want to go ahead and make those purchases now. The reason is that some items, including advertising, are deductible and can be reflected on your tax return. Consider a few other areas where buying now makes sense such as purchasing office supplies or making vendor payments before the year comes to a close.

3. Increase your expenses. Related to the previous step, you can reduce your tax burden by increasing your expenses for the current calendar year. Pay your bills early, purchase equipment, pay for your subscriptions now and book and pay for your upcoming travel the new year. If you have been putting off an equipment repair, then get that done this year.

4. Make a charitable donation. Charities are always asking for support and you can lend your assistance by contributing funds through your small business. Money is not the only thing that they’ll take. Gift-in-kind contributions such as materials, clothing, toys and goods can also count. Services typically do not count, therefore check with your accountant to learn what you can deduct. Always document your contributions; obtain receipts from qualified charities.

5. Bolster your retirement plan. Small business owners can reduce their tax burden by making a contribution to their retirement plan. For those individuals without a plan, starting one now makes sense. Find out what your maximum annual contribution is and endeavor to make that amount if possible. You’ll reduce your tax burden too.

6. Meet with your accountant. If possible, schedule a meeting with your accountant before the holiday season heats up and certainly before the year comes to a close. Your accountant can advise you on other deductions that may be available to you as well as outline a plan of action for the coming year. Your accountant may also be able to organize your tax data while it is still slow.

Tax Considerations

Business owners, including small business owners, must find ways to reduce their tax burden. By being alert to what deductions you can take in this calendar year, you can reduce your tax bill accordingly.

Further Reading

5 Tax Tips for Small Business Operators

4 Tax Preparer Tips and Warnings

Common Tax Deductions for the Self Employed

6 Important Tax Tips for 2012

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