As the year winds down, it’s time for small business owners to get their tax affairs in order. Although you don’t need to file your taxes until April, there are a few things you can do before the end of the year to potentially save big come refund time. Add the following items to your to-do list to make your life a little easier when April 15th arrives.
If your business is doing better than you expected when budgeting for your tax payments, you may want to consider deferring some of your end of year income. Any payments you receive by December 31 will count towards your tax burden for the current year. You may want to consider delaying a few invoices to receive payment at the beginning of the new year to bump the taxes owed on those amounts into the following tax year.
You probably already know that you can deduct certain business purchases like office supplies from your taxes. If you’re looking to decrease your tax burden, consider stocking up on supplies at the end of the year. Making a big purchase like a new computer before December 31 could decrease your tax bill in April. This is also a great opportunity to upgrade your POS system or add more terminals to your checkout process.
Contribute to a Retirement Plan
Take a look at your retirement plan and see if you’ve maxed out your contributions yet. If not, you may want to make a large contribution before the end of the year to decrease your taxable income. Not only will you be setting yourself up for the future, you may be cutting yourself a break in the present when it comes to taxes.
Make a Donation
Contributing to charity through your business will not only help you build goodwill in the community and help those in need, it can also help you decrease your tax bill. Charitable donations are tax-deductible, and there’s no better time to give than the holidays. Consider making a monetary donation, or donating products created by your business. Both will be tax deductible as long as you get the proper documentation from the charitable organization.
Enroll in Health Insurance
Don’t miss out on the open enrollment period for health insurance. Signing up for a healthcare plan could make you eligible for an advanced premium tax credit. You’ll also be able to deduct your premiums as business expenses in the coming year.