Planning Ahead Can Save Money
Planning Ahead Can Save MoneyAuthor: Keith Huggett
The end of the year is approaching and now is the time to think about business tax planning. A little strategy and some forward thinking will go a long way toward saving you money and keeping more profit for your business. Work with a professional tax adviser to help maximize your profit by implementing these seven business tax planning tips:
- Use your accounting method to your advantage. If you use cash-based accounting, use the last month of the year to your advantage by delaying customer invoices and paying off as many pending bills as possible.
- Buy company equipment. If you have been waiting to upgrade a computer, smartphone or to make a major purchase, do it before the end of the year to increase deductible expenses and take advantage of bonus depreciation.
- Invest in your retirement plan. All eligible contributions to your retirement plan are deductible, so give as much as you can before the end of the year to reduce your income tax liability.
- Bump up your payroll and contractor expenses. Hire your children to help around the business and add them to the payroll. You can deduct the wages and even give them a holiday bonus to further reduce your tax liability.
- Buy a new company car. Take advantage of federal tax credits for purchasing an SUV or electric vehicle.
- Take a working vacation. Planning to travel for the holidays? Schedule some work meetings and write off a portion or all of your trip. Work with your tax adviser before you go to make sure you understand what you can and cannot write off.
- Start a 401(k). Even if you already have an IRA, setting up a 401(k) will allow you to save (and deduct) even more. Start the plan by the end of the year and make a contribution before mid-April.
