Year’s end can be awash in a flood of activity, but making some time for good year-end planning can ease the tax drain on your business’ bottom line. Here are five steps you need to take before December 31.
- Get together with your CPA to update your financial records so you can calculate your estimated tax for the current year based on your current financial records and position.
- If you have a lot of profit on the books, consider making planned purchases this year, instead of next. On the flipside, forego current expenses until next year if you are anticipating a loss.
- Take accelerated depreciation on purchased equipment to reduce your taxable income.
- S Corporation owners don’t necessarily have to draw a year-end bonus to zero out their profit at the end of the year. Avoid double taxation by leaving profit in and taking an S Corporation distribution.
- If at all possible, defer income into the following year to reduce current year taxable profits.
Want more? The IRS has a website specifically for small businesses at http://www.irs.gov/businesses/small/.