End-of-year tax strategies are a key part of owning a business. It would help if you were planning for taxes throughout the year, but the end of the fiscal year is the last opportunity to do so before the IRS demands payment. You can make the IRS process a lot easier if you know how to manage your expenses. It will pay off to use multiple methods to organize your income.
Defer Income Until Next Year
You can’t cash checks or hold them, but you can delay sending out end-of-the-year invoices. You must claim any money received before December 31st. You could be penalized if you don’t claim the money. If you send your invoices after the 1st of each month, the money will not technically be income until next year. Your accountant will be able to help you coordinate all dates.
Use the Section 179 Expense deduction.
Section 179 expense deduction is for larger purchases like computers and another equipment financing that could have depreciation values. The Section 179 expense deduction allows you to spread the cost across many years, just like you would with depreciating. This deduction allows you to deduct the purchase price of your entire year from your taxes.
Maximize your ordinary operating expenses
It is possible to maximize your ordinary operating expenses. You can stock up on office supplies, printer paper, and ink. Buy bulk packing materials if you are using a lot of them before the 31st. This will allow you to be ahead of the pack when you buy things you already use. It will also increase your expenses and put more money back into your pocket.
Spend Weekends with Your Family
Your children and your retired family members can be hired. You will still need to withhold income tax, but you won’t have any other taxes. Retirees are not taxed in the same manner as other people. You will not only be helping yourself financially but also teaching your children a work ethic and making it possible for older family members to feel valuable.
Host a Holiday Party for Your Company
You can celebrate a productive year with your employees and show them how much you value them. A company holiday party is a beautiful way to end the year. You can also write off the expense as a tax deduction. You can deduct all the holiday party money from your taxes.
Put a Little Extra in Your Retirement Fund
Helping yourself after retirement is the best way to reduce your taxes. Your tax return will be boosted if you add more to your retirement account at year’s end. Discuss your options with your accountant to determine which type of account would be best for you. Paying taxes is a sign that you had a successful year. Finding ways to make your good year more profitable financially is essential. Spend a few minutes with your accountant to review all your income and expenses. There may be more tax strategies for the end of the year than you realize.