As a small business owner, you’re probably looking for ways to end 2016 successfully, for the best tax season possible. Time is closing in on opportunities like deductions, but many of the tips below can help you throughout the year.
Cash accounting serves many small businesses, in that you don’t pay taxes on income until it’s received, and you can’t deduct an expense until the money is spent. At the end of the year, it might be in your best interest to accelerate a purchase or let customers hold off on paying you. Being in control of your cash flow can help you little by little on your taxes.
As a small business owner, you have a great luxury on your side – taking business deductions on things like your home office, car, laptop, and more. If you already know what your next expenses will be, consider making all of those purchases so that you can deduct them come tax season – or spread them out so that evenly benefit this year and next.
You know that you can donate as an individual, but did you know you can also donate as a company? You have until December 31st to donate – think old equipment, electronics, and unused supplies, or a simple cash donation. Make sure to get a receipt for your records.
This is the easiest EOY move you can make, as long as you haven’t reached the threshold, you should certainly take advantage. If you don’t have one, set it up now! There’s still time. We recommend an SEP IRA. It’s like a traditional IRA, but for those that are self employed or have a small business. The main advantage is that you have a larger contribution amount – business owners can contribute up to 25% of income or $53,000, whichever is less. The best part? These contributions are deductible.
Although you may not have employer-provided healthcare, you can purchase it during open enrollment. You may be eligible for an advanced premium tax credit to help you pay for it as well. Don’t forget to deduct premiums as a business expense.
We don’t shy away from giving you the nudge to organize your records and documents. Although you still have a few months to file, get organized now and thank yourself later. The best way is to scan and upload all relevant documents electronically, and save them both on an external and internal hard drive. If you enlist the help of a tax preparer, this will make things even easier!
Don’t forget to keep these tips in mind before tax season, but also throughout the year.