Right about now, you are dreaming of sugar plum fairies and all the excitement that comes with the holiday season. But are you thinking about your tax planning strategy as the year comes to a close? The end of the year is prime time to wrap up your accounting books and prepare to push your business forward. Without this careful planning, you could end up setting your company back. Not sure where to start with your small business tax planning? Here are a few year-end planning strategies to consider.
- Don’t wait- The end of the year is a busy time for small business owners. As you prepare to roll into the new year, don’t delay tax planning. The earlier you start, the more prepared you will be when it’s time to file.One solutions is to make a schedule for administrative business tasks to complete each week. Set aside an appropriate amount of time to finish your tax planning duties. To simplify tax preparation, organize your financial records, balance your books, and take note of deductible expenses. The end of the year is a good time to review your bookkeeping process.
- Spend Spend Spend- Who doesn’t love to spend money? Now is the time to buy any tax-deductible items you may need for your business. This way you can deduct them on the current tax return.
- Know Your Numbers- Before closing your books at the end of the year, find out which tax deductions you are eligible for. Know the deductions that apply to your business and how to correctly deduct them. Some common small business deductions include a home office, business use of a car, and employee expenses. Each expense has its own method for deducting. Make sure you follow the IRS rules before claiming a tax deduction. Remember, you can only deduct business expenses. The IRS does not allow you to deduct personal expenses. Keep accurate accounting records to prove your deductions were made for business expenses.
- Consult the Professionals- Set up meetings with your accountant or tax preparer before the year ends. Talk to your tax professional to find out which records you need and an estimate of your tax liability. Tax preparers are great at year-end tax planning for small business owners. They can give advice to help you get a higher refund and lower liabilities. And, tax preparers will help you avoid mistakes on your return.