It is almost the end of the year. Many small business owners are starting to think about their budgets and goals for next year, but have you thought about the things you can still do this year to reduce your tax bill? You can get significant tax savings with proper planning. Below is a list of some tax strategies for business owners that you can still enact this year.
- Buy a heavy SUV, pickup or van – if your business has a need for a large vehicle, now is a great time to invest in one. Under the Section 179 instant depreciation deduction privilege, you might be able to claim a current year write-off of up to $25,000 of the cost of a new or used heavy SUV, truck or van that is put to business use before the end of the year.
- Defer income and accelerate expenses – any income you receive by December 31 counts as income for the current year. In some circumstances, it may be beneficial to delay income to the next year, either by sending out invoices a little later in December to receive payment in January. Also, you could accelerate expenses by prepaying some bills that are due in January to ensure the deduction applies to this year.
- Take a look at your company retirement plan. There are several retirement plan options to choose from and a qualified plan offers a deduction for your contributions.
- Maximize entertainment expenses. Entertainment expenses are legitimate deductions if you follow specific guidelines. The IRS allows up to a 50% deduction, but be sure to keep proper notes and receipts.
- Take advantage of the 12-month prepaid expense rule. For cash basis businesses, you can prepay for items up to 12 months in advance and take the deduction right away. You can use this rule for monthly subscription plans on software services or monthly training courses.
End of year tax planning can help you significantly save money on your taxes. Now is the perfect time to schedule an appointment with your CPA to discuss if these strategies would be beneficial for you and your business. Contact us today to schedule an appointment.