Small Business End of Year Tax Tips  

December 4, 2015 by Ed Becker

 

Being near the end of the year it might seem like you can’t do anything to benefit your company for tax filing, but this isn’t always true. Even if you have not planned for your tax year in advanced in detail, you can still do many things that can benefit your filing. This discussion will offer tips to check out for your small business. It is always a good idea to check with your accountant or tax professional to ensure that your choices are beneficial.

Tips to do now

1. Defer income

Shifting any income to the following year can save you a large amount of money depending on what your income levels are each year.

2. Make purchases

Making purchases that are necessary for your business, allows you to deduct them in this tax year.

3. Run inventory checks

Depending on your accounting methods, and revaluation of your inventory you may be able to claim additional deductions.

4. Sell off bad investments to offset gains

Selling off investments to realize losses, called loss-harvesting, allows you to use the losses to offset taxable gains dollar for dollar up to $3,000. If you have more than $3,000 in losses you can carryover the excess, year after year.

5. Decrease revenue, increase expenses

Decreasing revenue is similar to deferred income. By not depositing revenue into the business account during the month of December, you will show less income for that year. You can then make a deposit in January.

Increasing business expenses, as in making business purchases, also shows less profit.

6. Make the most of gas deductions and auto expenses

Review your auto deductions, ensure that you are deducting all business mileage that you can. These things will also serve as expenses and further decrease your profit.

7. Take your Eco deductions if you have installed any new systems

If you have installed new systems that are Eco-friendly, there could be deductions that you have not considered before.

Review

1. Be careful of Alternative minimum tax

If you are subject to ATM, don’t pay your 2016 installments in December of 2015.

2. Check extended tax credits that were due to expire

Many tax credits that were set to expire have been extended. Check with your tax professional to see what may apply to your business.

3. Know your tax bracket

This goes along with deferring income and reducing revenue. You need to know where your tax bracket is to ensure that year end income and revenue don’t push into a higher tax bracket.

4. Ensure that all of your checks to the Department of Revenue have been cashed

This is a habit that should be done every year to avoid penalties from payments that did not get process timely.

Do it now and benefit this year as well as the future

1. Contribute or start a retirement plan

You should be contribution to a retirement plan that is tax beneficial.

2. Charitable contributions

Review your charitable contributions, you may be able to donate more this year for a higher deduction.

3. Pay attention to flex spending accounts
4. Start a health savings account
5. Go automated to minimize audit and penalties for sales tax

Nexus is ever changing with online sales taxes. If you sell online or out of your local area, going automated can keep you in compliance much easier.

Prepare for next year

1. Review Reports
2. Ensure that all of your tax exempt customers are up to date, to reduce audit risk
3. Look into S-corp benefits if your revenue is more than $500,000