As a business owner, it is important to have a business tax plan in place. In addition to easing your year-end tax burden, it can prepare you for a variety of events that will occur throughout your operating year. It also will keep you within your budget in a variety of accounts.
There are a variety of business tax planning moves you can take to make your tax burden more manageable. Here are some suggestions:
Wait until mid-December to mail out your invoices for work done that month. That way, you probably will not receive the income until January.
Pay as many outstanding invoices as possible by year-end. This is a great way to clear the slate for accounts payable. Plus, it decreases cash and expenses on your books. In turn, this gives you a lower net income. Net income is the figure you use on your income tax return for reporting your business income.If self-employed, make a contribution to your ROTH IRA. This decreases your net income, also.Transfer your personal assets into your business. By doing this, you can deduct associated expenses.Put your car into business use. This provides many expenses and deductions for you. You can claim depreciation (restrictions apply), mileage or standard rate, etc.Put your business sign on your car. That is a great way to use your car as an advertising tool.Start using a competent, complete tax accounting program. Have it integrated with your accounting software program. You can deduct this as an administrative expense. Plus, it is to your advantage to have proper recordkeeping.
Hire your kids, spouse, or parents in your business. They must perform legitimate, honest work to qualify for an IRS deduction, however.Have a home office that qualifies for the IRS deduction. This is a great way to decrease your residence expenses.Provide fringe benefits to your employees. Have an onsite fitness/health club. Have a daycare operating onsite. An onsite game room is another fringe benefit you can offer your employees.Open a KEOGH retirement plan by year end. These are but a few ways to help you with your tax planning. Contact a professional tax planner for more insight.
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