Yes, the year is almost over and sure you’ve already earned most of the year’s income, but as a business owner you still have a variety of ways to reduce the amount of income tax you owe.
Nope, it’s not too late! Get your books in order. Not only are they the eyes and ears of your business but they’re critical to leveraging your tax savings.
There’s still time to make strategic moves to reduce your tax bill before the end of the year.
Here are some common strategies available to business owners to reduce taxes.
Business Tax Strategies
If you own a business there are a range of business-related costs you can take as deductions.
Making anticipated business-related purchases at the end of the year rather than the beginning to maximize your deductions in the current year.
Prepaying next year’s business expense at year-end to enable you to take the deduction in the current tax year.
i.e. if you regularly spend $2,000 on a business-related cost, consider bulk purchasing that expense at year-end. Prepaying next year’s cost will enable you to deduct that business expense in the current year.
Pay bonuses at year-end
Paying employee bonuses at year-end instead of at the beginning of the year.
Note: the idea is to remain in the same tax bracket or move to a lower tax bracket.
Deferring income from the current year into next year is one option for delaying/ reducing your current year’s taxable income. The less income you realize in the current year the better your chances are to reduce this year’s tax bill.
Make IRA Contribution
Contributing to a traditional retirement account can be tax-deductible in the year you make them.
Note: there are different IRS rules for different situations.
Schedule time with an
accounting professional for
business tax preparation