Taxes can be confusing. This is why CPAs have to be trusted because you don’t know what they’re talking about and you are hoping that they do. Here are some tips for your small business and some tax-saving advice that you may not have known.
Tax season does not exist. Planning for tax season takes all year and should be treated as an everyday part of your small business. Being smart and knowing what you can and cannot deduct can save you a small fortune so please read with caution. It is not hard to imagine that being organized is a clear start. You want your books to be clean and recent and bookkeepers are great for this responsibility. Be on top of your cash flow and inventory and even if you don’t know everything, hiring a trustworthy consultant can save you a lot of hassle and eventually money. Tight margins and limited money are a big reason to trust someone else for advice and in the end you are only helping yourself and your business.
One obvious method is increasing your expenses towards the end of the year. You can do this by buying any office supplies that will be needed in the immediate future, paying any outstanding bills early, taking care of purchases or maintenance that you have been putting off and also business trips to existing or potential clients. You will have a few decisions to make, such as using these purchases as an immediate write-off for the current tax season or using them as depreciation spread out over a few years. In order to claim a deduction, the purchases must be used by your business by the end of the year; including set-up of equipment or even travel arrangements.
If you are lucky enough to be in this particular boat and can afford deferring income to the next year, the lower the income the lower the taxes. This is not usually doable in this economy but December to January doesn’t have to be the end of the world if you prepare in advance. Hence the second paragraph, tax season does not exist and preparation is everything. It may not seem legal, but even splitting income amongst “hired” family members can reduce your tax liability and make April a little less stressful.
I know retirement seems way off and also can seem like a dream that will never come true. But like everything else in life, you must prepare for it. This can help reduce your tax obligation if you set up a retirement plan before the end of the year. Saving for your future is important; do not put it off for long!!
When it comes to taxes more than anything, maybe even as important as preparation, you must be aware. Be smart when it comes to your money, even the money you must give away. Tax deductions are out there for a reason and you must take full advantage of and be familiar with what you are entitled to claim. Here is a small list but can maybe get your mind on the right track. For more detailed information about tax deductions, chat with that consultant that is mentioned above. It is what they are getting your hard-earned money for anyway.
- Advertising and Promotions
- Bank fees
- Charity contributions
- Business gifts
- Education (related to your business)
- Fees towards conventions or conferences
- Furniture or Equipment
- Health Insurance Premiums
- Insurance
- Fraud or theft losses, natural disaster damage
- Means and Entertainment
- Membership Fees
- Moving Expenses
- Office Rent
- Supplies
- Postage and Shipping
- Legal fees
- Taxes
- Maintenance and Repairs
- Salary
- Software
- Communication (Phone, Internet)
- Travel
- Utilities
Remember that all of these must be business related; you do not want to lose your head and get in trouble. Save everything, mainly because you won’t remember it when the fourth month rears its ugly head. And bring questions and concerns year-round to your tax consultant. That is what they are there for and you want to make use of every dollar that you must spend. Bonne chance!!
