If you own a small business, the best tax advice you’ll ever receive is that you need to be proactive and make tax planning a 365-day effort. Tax-saving opportunities happen from January to December. If you’re not taking advantage of them all year, don’t expect to find any quick fixes right before you file your tax return.
In reality, you need support. Even if you had the time to be proactive about your small business taxes, how would you know what to look for?
The following tactics are a start. But, keep in mind, if you’re not 100-percent comfortable with how to file these tax deductions or account for them throughout the year, let your tax preparer help you.
8 Tax Planning Tactics To Maximize Your Savings
- Consider changing your business structure to better reflect your company ownership, from a general or limited partnership to an LLC and beyond.
- Take a hard look at how you pay and report payments to employees and independent contractors. This is a common small business compliance concern.
- Pay yourself in January instead of December to reduce your taxable income and minimize your tax burden.
- Identify tax-deductible expenses before the year rolls out, and keep good records.
- Consider holding inventory-clearance sales which will offset your losses and reduce your income tax burden.
- Consider donating unused inventory, and take advantage of tax deductions and write-offs.
- If you’re planning to borrow money, take a loan in a slower period to get the maximum benefit from your interest deduction.
- Address all compliance issues immediately to avoid any tax penalties when you file.
Proactive tax planning enables you to save – rather than surrender – thousands of dollars you worked hard to earn. It could be the difference between a year or a quarter in which you make money and one in which you see a loss.
For as much hard work as you put into your business, you shouldn’t let your tax burden get in the way of your success, especially when you could be saving money in different areas of your business. Leverage any applicable tactics and be proactive to maximize your tax savings.
Do you have the support you need to manage your small business bookkeeping?
Schedule a 30-minute appointment to speak with a local small business adviser.