The new tax season is still a few weeks away, but it’s never too early to get a head start on your tax prep! There are some steps business owners can take at the end of the year to set themselves up well in the new year and help them achieve some extra savings.
Here are a few tips for you to consider this December.
Consider deferring income
Any income you receive before December 31 counts as income for the current tax year. It may be beneficial for you to shift some income to after January 1 to delay it from being counted as income. Depending on your business’s cash flow this could save you a significant amount of money on your taxes for this year.
Review financial reports
The end of the year is a great time to dig through your financial reports and investigate how you performed this year. Did you meet your expectations and goals? This process will help you set goals for the new year, and also familiarize yourself with some of your important documents and data that you’ll need to collect anyway for tax purposes at the start of the new year.
Make purchases
If you feel like you can still get some more benefit out of your deductions, now is a good time for you to make some business purchases. If
you’ve been meaning to upgrade some equipment, stock up on office supplies, improve your furniture or get a new vehicle, for example, now would be a great time to make that purchase so you can get the full tax benefit right away. You could even pay off some vendors in advance if you think doing so would be financially beneficial.
Make charitable contributions
There are multiple benefits to making charitable contributions at the end of the year. First, it’s simply a good thing to do, especially during the holiday season. There are a lot of great organizations that can use financial support to achieve their goals and help others. But it’s also an opportunity for you to claim a deduction on your taxes. You don’t necessarily have to donate money—you can donate equipment, clothing, toys, vehicles, etc. Get the proper documentation to prove your donation so you can use it as a receipt for your tax records.
Check your inventory
The end of the year is also a good time for you to run an inventory check so you can determine how much inventory you currently have and whether you qualify for additional deductions based on drops in market value of that inventory.
These are just a few of the strategies you can implement at the end of the year to get the most out of your business taxes. For more tips and information, we encourage you to contact us at MCG Solutions!