End of Year Tax Planning Tips for Your Business

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Talking About Business Taxes

Hello, my name is Elona. Welcome to my site about tax services. When I started my own crafting business, I was unsure how to handle my profits and losses. I tallied all of the information and eventually took the documents down to my local tax professional. I learned a lot about the process of preparing and filing taxes during that visit. I would like to help other people handle their business tax documents and work effectively with a qualified professional. I would be honored if you could use my information to handle your taxes with confidence. Please come back again soon.

End of Year Tax Planning Tips for Your Business

30 November 2022
 Categories: , Blog

You might not have to have to file taxes for your small business until next spring, but the end of the year can bring a number of business tax planning opportunities for companies both large and small. If you want to try and reduce your tax bill next April, here are some planning tips you can focus on as the end of the calendar year approaches.

Consider Deferring Income until January

Is your business at risk of putting you into a higher tax bracket that will eat away a larger percentage of your income? One way you could avoid this would be to defer some of your December income with a little creative invoicing. For example, let's say you do work for someone on December 20. If you can figure out a way to not send your invoice until January 1, the work you did in December will be paid for by the customer in January, allowing you to count it as income for next year, not this year.

Add to Your Expense Report

Another way some businesses will try to get themselves into a lower tax bracket is to increase their expenses for the last month of the year with some big-ticket items. Your profit is revenue minus expenses, and adding a few more expenses to your bottom line can keep you in your desired bracket. If you need to upgrade your computer or office furniture in the near future anyway, you might as well do it now so you can take advantage of the purchase for this tax year.

Calculate Your Taxes Early

Even if you don't plan on actually submitting your tax forms immediately, you should still do the math at the end of the year so you will know how much money you need to put aside for taxes. Calculate this amount as soon as you can and consider putting it into a business savings account if you are not going to make the payment until April. You can continue using this account to hold the money for future tax payments, allowing you to always be prepared for tax season.

Contact a Tax Professional

While the above tips can be used by a savvy business owner, a dedicated tax professional might know of even more tips or tricks to help reduce your tax bill. Contact a local accountant or bookkeeper, like Golden Tax Relief, to discuss business tax planning ahead of the New Year.