Don’t Put Off Tax Planning
It seems almost cruel to bring up the topic of taxes this far in advance of year-end, but now is the time of year when smart business owners are thinking ahead and making adjustments that will minimize the number of dollars that go into Uncle Sam’s pocket on April 15.
Yes, taxes are complicated. Everyone knows that, but unfortunately, they still have to be done. It can help make this arduous task simpler, though, if you have someone who can give you the advice you need.
Here are some things to ask yourself as you go throughout the year, so that taxes will be much simpler come tax time.
Who’s sitting down with you on a regular basis to determine the tax impact of your key decisions including major purchases and sizing your personal paycheck?
You can deduct more money than ever before for equipment purchases. You can also take tax deductions on expenditures that your company would usually need to write off over the next several years, and get an immediate tax deduction. Depending on what tax bracket you fall into, your tax break could be anywhere from $15,000-$39,000.
Who’s helping you develop a tax-savvy strategy for your year-end income and expenses?
In general, the mantra for year-end tax planning is, “Delay income and increase expenses.” This can be as simple as paying your January mortgage early or prepaying for magazine subscriptions early as well. This helps you keep the tax money out of Uncle Sam’s hands for an extra year. However, if you’ve had a bad year and expect that the next year is going to be better, the opposite approach is probably better.
Who’s educating you about tax saving opportunities you may not even be aware of?
Take care in check for those frequently missed deductions. For example, you could set up what’s called af “Dependent Care Assistance Program.” You can put more money in your employees’ pockets this way. Every year, you can reimburse employees for up to $5,000 in childcare expenses, tax-free. They don’t pay income taxes on the reimbursement, and you don’t pay payroll taxes on that amount, either.
Of course, your CPA has a job to do when he or she prepares and files your returns. However, it’s nice to know that there’s somebody who really understands your business and works with you, so that you can develop a long-term tax strategy.
Taking legitimate deductions is simply smart business, but you have to make decisions based on what is good for the long-term health of your company, not just on what reduces your taxes.
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