Tips for Business Tax Planning
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What are some business tax planning tips?
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.