Small Business Tax Planning Strategies For Year-End
Tax season gets incredibly stressful for small businesses, but you can make it so much easier by finding ways to prepare for it year-round. The most important part of planning for a less stressful tax season is keeping your business documents and records organized. If you take the time to plan ahead for tax season instead of waiting until a few weeks before the April 15th deadline, you’ll be in much better shape.
Owning and operating a small business is already challenging enough, so find ways to cut back on some of that unnecessary stress.
Meet regularly with your accountant.
In order to make sure your accounts are as organized and up-to-date as possible, schedule regular meetings with your accountant. Make an effort to understand the basics of the accounts, so, when you have to, you can check up on some of the numbers yourself. If your accounts are accurate, you are more likely to avoid confusion or mistakes when it’s time to file your taxes. Rushed organization often increases the likelihood of making crucial miscalculations, which leads to expensive fees and potential trouble with the IRS down the road.
Make any necessary purchases in advance.
If you know you’ll be making a large purchase for the company in the upcoming year, go ahead and make that purchase before the year is over, if you have the financial means. You can write-off certain business purchases, so there is no point in putting it off if there is no reason to. However, if it’s not a necessary purchase, don’t simply put money towards something just because you think you’ll be saving money on your taxes. Tax deductions will not equal the amount you spent, so only make big purchases if they serve a purpose for the growth of your company.
Contribute to a retirement fund.
When you contribute to a retirement fund, you’re only helping yourself. That’s why it’s important to max out the amount you can contribute each year. You are making an investment in your future and, also, money contributed to a retirement fund is tax deductible. The same is true if you offer matching funds to employees’ retirement funds.
Keep as many detailed records as possible.
Ultimately, the best thing you can do for your small business is keep detailed records. Small businesses can get a variety of tax write-offs, so do your research and know which ones are available to you. Throughout the year, save your receipts and keep them in separate folders for different expenses, such as office supplies, travel, property taxes, etc. The more accurate your records, the more likely you are to receive the full tax deduction you are entitled to.