Tax planning now can save at your bottom line

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.

  1. 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.
  2. 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.
  3. Take accelerated depreciation on purchased equipment to reduce your taxable income.
  4. 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.
  5. 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/.